Divided We Stand: the Problem of Parachute Payments

Posted by on May 25, 2010 in Uncategorized | 5 Comments

The Premier and Football Leagues reached a deal over restructured solidarity payments from the former’s coffers two weeks ago, but with the Play-Offs and pre-World Cup mutterings taking precedence there’s been frustratingly limited coverage of the landmark agreement in the national press.

First established in 2007, the payments sought to ensure that a proportion of Premier League income was redistributed down the professional football pyramid, and were welcomed by the then Football League Chairman Lord Mawhinney as a “generous gesture”. The intervening years have witnessed an unabated rise in Premier League revenues, and following a record-breaking overseas broadcasting rights bonanza it was no surprise to see an improved deal on the table following the expiry of the original agreement. The offer was made up of the following increases from the 2007 agreement:

  • Championship clubs: from between £0.75-1.4m per season (depending on final standing) to £2.3m per season
  • League One clubs: from £103k to £328k per season
  • League Two clubs: from £69k to £250k per season

At a first glance, these improved handouts would appear to be genuinely good news for one and all, clashing with the Premier League’s Greed is Good character. However, when viewed alongside the corresponding increase in parachute payment terms, a jump from around £25m across two seasons to a whopping £48m across four, all this seemingly good progress goes straight out of the window.
The new terms have now been signed and sealed, but they didn’t go through without a fight from sections of the Football League. Indeed, the deal was initially rejected by members last month before their hand was forced after being told by the Premier League that it was a “take-it-or-leave-it offer” and realising that Championship clubs might well form a breakaway division if the proposals were rejected.
Perhaps missing the point somewhat, Middlesbrough chairman Keith Lamb had a message for those of his colleagues, based in Leagues One and Two in the most part, who opposed the deal: “I acted in the best interests of the Football League, not necessarily Middlesbrough […] The ratio of increase to the Championship is something like 260% whereas for divisions one and two it is well over 300%.” For a start, Lamb’s argument is weakened by how the payments for Leagues One and Two sides were ridiculously low in the first place, but he also sidesteps the real issue: that of parachute payments which, unsurprisingly, stand to earn his indebted club a pretty penny.

Several chairmen have shown their hands since, decrying how the Premier League has been able to push through its agenda at breakneck speed. Lincoln chairman Steff Wright dubbed the meetings a “farce” and reserved most of his ire for the new parachute payments: “What has been created by default is a Premier League Two […] The decision has created a massive distortion and represents a poor day for football.” Far from the original stated aim of “solidarity” payments, the only redistribution going on here seems to be that of the league-within-a-league problem that blights the top flight so.Recalling uncomfortably a Phil Gartside-led attempt to create a two-tier Premier League that was thrown out earlier this season, Wright lays bare the underhand protectionism that lies at the heart of this unjust deal. Candidate for lower league hero of the moment Tony Pulis has said as much in an interesting Daily Mail article (no, really), and his opinion that fairytale rises along the lines of Stoke and Blackpool’s may well no longer be possible will fan the flames of dissidence.


As if the above hasn’t been depressing enough, there are some grim addendums to the agreement. The most noteworthy is the radical proposal to change the way that clubs are compensated when EPL sides poach their players before the age of 16, which Richard Scudamore is trying to rush through before next season when top-flight teams must for the first time have at least eight ‘home-grown’ players in their 25-man squads. Instead of the current system whereby a tribunal settles the compensation fee, the Premier League is proposing a fixed level of compensation related to how highly rated a club’s youth set-up is, with more of an onus placed on clauses such as future first team appearances.

Besides treating teenagers like commodities, this provision is objectionable on so many counts. It would seemingly pave the way open for bigger fish to stack and rack their youth and reserve teams, and it moves towards a convoluted route of recompense by which those clubs with ever-increasing pressures on their finances have to wait for years before they see the money they’re due. What’s more, it would appear to give rise to a situation where lower league talent is cherry-picked, forcing a further power swing towards the top of the pyramid which would see lower league clubs ever more reliant on parachuting temporary loan signings from higher up the chain into their sides.

A perhaps less significant but equally odious detail comes in the form of the Premier League’s plan to part-finance these increases by transferring its £4m community investment funding to the solidarity payment pot. As this When Saturday Comes piece says, at a time when the Premier League’s TV income is once again set for a notable increase this smacks further of pure greed.
I’ve seen no official evidence that the pertinent issue of youth player compensation has been resolved, but there’s no doubt that the Football League member body was backed in to a corner and given an impossibly short deadline to make the best of the proposed changes to parachute payments. With the start of pre-season training for the new season just over a month away, budgets had to be set accordingly and the opposition was given no time to build their case and raise proper support. New Football League chairman Greg Clarke has likened football clubs to old mining communities in that they’re at the heart of daily life. He is going to have to step up if they’re not to go the same way.

Lloyd
is co-editor of The Two Unfortunates. He’s 30, supports Plymouth Argyle and takes a particular interest in the fortunes of those Football League clubs west of Bristol.

3 Comments

  1. gerschenkron
    May 25, 2010

    An excellent, if somewhat depressing, article spoiled only by a link to a Daily Mail story.

    What next? “PARACHUTE PAYMENTS IN BREAST CANCER HOUSE PRICE SHOCK!” headlines?

    Reply
  2. Stanley
    May 28, 2010

    A story on the Guardian website today casts a pencil-thin light on the issue of compensation for young players. A 12-month `review' of the Premier League proposal is the latest development. That Greg Clarke appears to be taking a conciliatory tone at this stage is understandable, but his reference to `paranoia' is somewhat troubling. The view that PL clubs will hoover up young, talented players from their FL counterparts without regard to the long-term health of the lower leagues is not `paranoia'. It is already happening.

    Reply
  3. TTU Awards 2009/2010: Crimes Against Football | The Two Unfortunates
    September 14, 2012

    […] spirit of the game at this very moment; we gave extensive (for us, anyway) treatment of the parachute payments issue a week ago. To round it off, he’s apparently a Bristol City diehard, which makes his attitude […]

    Reply

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