Bouncebackability: the cold reality of parachute payments
Clubs relegated from the Premier League will receive £48 million in parachute payments over four years after Football League chairmen voted in May in favour of a new proposal.
The new payments will start from next season and are part of a package of solidarity payments from the Premier League to the Football League.
Previously, relegated Premier League clubs earned £16 million a year over two years.
The League One and Two clubs had initially blocked the change at a meeting at the end of April, but were told by the Premier League that the deal was a take-it-or-leave-it offer.
A Football League spokesman admitted that many clubs had expressed fears about the changes.
The spokesman said:
“Following a frank but constructive meeting, Football League clubs have voted to accept the Premier League’s revised solidarity and parachute payments proposals. Whilst many clubs expressed concerns about the proposals, their acceptance was considered the only viable way forward. The Football League will now work in good faith, with the Premier League, to ensure that the resulting contract and regulatory changes are good for both competitions and football as a whole.”
The payments amount to £16million for each of the first two seasons and £8million for each of the next two.
Clubs in the Championship who do not get parachute payments will receive £2.3million a season, League One sides £325,000 and League Two sides £250,000.
Under the current package, Championship sides received between £1.4million and £0.75million per season for three seasons.
The Premier League have been keen to push through the changes to satisfy chairmen of mid-ranking top-flight clubs who fear relegation would have a devastating financial effect.
The reservations of many Football League clubs can be explained by two factors. Smaller clubs outside the Championship fear increased money in the second tier will widen the gap with League One and League Two, making the prospect of promotion followed by sustainable survival in a higher division unlikely. However, there are also severe reservations from within the Championship. Swansea City chairman Huw Jenkins said:
“We are facing the prospect of seeing six or eight sides in the Championship having double or treble the amount to spend that others have. All that’s going to do is push wages up and make it difficult for clubs like us when it comes to trying to keep our best players.
If you look at the facts of the situation, there are some in our position who might not want to get out of bed in the morning, but you have got to relish that challenge and that’s what Swansea City will do.
Let’s not hide from the fact, the financial gap is going to widen over the next few years and that’s going to make it harder for clubs like us. We will work to make sure that we bring players through our youth set-up and we will make sure that we have a very good scouting system in place.”
It would appear that much like the Premiership, where it is frequently said that there are several “divisions within a division” due to financial inequalities, this trend is about to be paralleled down the English divisions, most notably in the Championship.
It could indeed be argued that the trend is already in place with the runaway promotions of Newcastle United and West Bromwich Albion last season.
West Bromwich Albion might be said to be a club defined by parachute payments: too good for the Championship helped by parachute payments; not good enough for the Premier League in the absence of sufficient owner funding, evidenced by repeated promotions and relegations between the two divisions in the past decade.
For supporters of Football League clubs without recent appearances in the Premiership, the playing field has just become less even, and the prospect of less competitive divisions more likely.
This threatens to remove one of the main attractions of lower league football compared to the Premiership, namely that any team in a division can beat any other team on any day, not a boast the top flight can offer.
All this because the Premier League and its chairmen inch towards a closed shop through protective parachute payments. For many Football League clubs, the struggle starts here.
Written by: Richard Prew
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