Premier League parachute payments gap 'a major concern' says EFL

Fulham have been promoted or relegated every year for the past five seasons

A widening gap between clubs receiving parachute payments and the rest of the Championship is a "major concern", English Football League chief Rick Parry has warned.

Research carried out for the EFL says the issue is showing a "continuing, alarming, and upward trend".

It concluded clubs receiving parachute payments were three times more likely to be promoted than other clubs.

But Parry says the Premier League's stance on the issue is "disappointing".

He has written to MPs taking issue with comments made about the subject by Premier League boss Richard Masters.

What are parachute payments?

Parachute payments are a series of solidarity payments the Premier League makes to relegated clubs, for up to three years, to help them adapt to reduced revenues back in the Championship - with significantly less TV revenue. They have been worth about £30m per year to clubs, on average, in recent seasons.

The issue has proved a stumbling block for the EFL and Premier League, who are in talks about changing the distribution system for football revenue so more money makes its way down the football pyramid from the Premier League.

The EFL wants to abolish parachute payments while securing a bigger share of the wealth generated by the top flight.

The Premier League, meanwhile, believes the payments help clubs to be competitive once promoted, and has pointed to the fact there are eight clubs in the league this season that were promoted without parachute payments.

A report into parachute payments found:

The study based on independent research from Sheffield Hallam University carried out for the EFL looked at Championship clubs from 2016 to 2021. As well as finding clubs were now three times more likely to be promoted, it also said:

• Clubs received £233m in parachute payments in the 2020-21 season, an average of £33m per club.

• The average revenue of clubs without parachute payments was circa £20m

• Clubs receiving parachute payments generated an average points gap of +16 in 2020-21

• The average points gap over the five seasons, for clubs in receipt of parachute payments, was +8.6

• Clubs that have parachute payments are far less likely to get relegated from the Championship than those that do not have them

• "Parachute payments continue to distort Championship competition, fuelling losses at clubs who are simply trying to 'keep pace'."

The average finishing position in the league table for parachute-payment clubs during the five-year period looked at was ninth. In that time, 22% of clubs in receipt of parachute payments were promoted to the Premier League, Parry said.

This rose to 29% last season - and if Sheffield United, currently second in the Championship, join already promoted Burnley in the Premier League next season, that will rise to 40% of clubs.

However it is understood the Premier League has questions about the research, such as what impact the "natural size" of clubs would have on the data.

What is happening?

Parachute payments are one of the areas English football's new independent regulator, recently announced in a government White Paper following a fan-led review, will be tasked with addressing.

"A gap has built up. What I think we are trying to address is to close that gap, specifically between parachute and non-parachute clubs in the Championship," Premier League chief executive Masters told MPs last month.

He added that the removal of the payments "would create significant difficulties for promoted clubs. It would affect the competitive balance of the Premier League".

However Parry has written to the Digital, Culture, Media and Sport (DCMS) select committee to challenge some statements made by Masters.

In the March hearing, Clive Efford MP said the Premier League had told him they did not believe it was true that parachute-payment clubs were three times more likely to be promoted.

Parry says this "indisputable" claim was based on the Sheffield Hallam University research.

"It is disappointing to hear that this has been dismissed as untrue in meetings with MPs," he added.

"The impact of these payments on the competitive balance of the Championship, and on the sustainability of all other clubs, is a major concern for the EFL," Parry said.

"The issue of parachute payments remains one of the main reasons why so many football clubs are financially unsustainable and why the Premier League and EFL have not yet agreed the football-led solution that both the Fan Led Review and White Paper have called for."

Parry has urged the DCMS committee to give the issue "further scrutiny".

"This study gives the lie to any suggestion from the Premier League that parachute payments are not having a distorting effect on competition for those trying to reach the top flight's promised land," said committee chair Julian Knight MP.

Your views - what fans say

Tom in Nottingham: Nottingham Forest were promoted after 23 years away from the PL with absolutely nothing from the parachute payment pot. So it can definitely be done if everything is aligned and a bit of luck on the way.

Andrew, Millwall fan: Parachute payments are essential to ensure that teams promoted to the Premier League are given the opportunity to make a proper go of it. But the idea that they don't have an impact on sporting fairness in the Championship is absurd. Millwall have battled their way into play-off contention against the odds. Our unlikely success shouldn't be used as an argument for parachute payments not creating an uneven playing field in the Championship. The reality is that we're a well-run club that's punching above its financial weight and against the odds. The same goes for Luton!

Adam: I understand the idea of parachute payments - it allows teams promoted to the Premier League to spend to become competitive, without fear of financial issues should they get relegated. However, in the landscape of the Championship, it's making the playing field far from fair. It's making the rich clubs richer and the poor clubs poorer. Look at Reading. They're being punished for their spending 3-4 years ago in a gamble for promotion that didn't pay off. The kinds of money they spent, however, is nothing compared to those on parachute payments are able to spend. The key issue is that parachute payments do not work in tandem with FFP.

Andy, Coventry fan: As our new owner recently said - teams in the Championship without the benefit of parachute payments are effectively competing for one promotion spot - via the play-offs. The automatic places are out of reach. The disparity of budgets is huge (and unfair). Highlighted perfectly when we played Burnley at home this season - competed pretty well for an hour, they bring on three multi million pound substitutes, won 1-0.

Jamie, West Ham fan: In the top 10 of the Championship, seven have been in the Premier League, three haven't. Three teams in the top 10 are currently receiving parachute payments as are three teams outside the top 10. Parachute payments are not a guarantee for success. They do enable teams who have been promoted though to invest and compete in the Premier League without undue worry about relegation.

Anon: I feel like a vital component of parachute payments is being missed. Burnley will not receive a parachute payment this year because they have been promoted. The money spent by them this season is from player sales when they were relegated. It's far too simple to just blame parachute payments for one club's success or failure. The way they are run, management appointments and lots of other points come in to play

Ralph: The principle of parachute payments is entirely unsporting, but without them many 'bigger' clubs would go the way of Bury FC. Football clubs are run as businesses now and there is a toxic money culture in the PL - owners will sacrifice whatever they can to get there and stay there. And when it goes wrong, it's the fans that suffer. I support Fair Game, as does my club Carlisle.

Andy, Newcastle fan: From the current 24 teams in the Championship, only five have never been in the Premier League. Two of those are in the top six and none in the bottom six. That still seems a fairly even spread of opportunity to me. Parachute payments don't get you promoted, retaining the competence that got you promoted in the first place does. Various clubs have slid further down Leagues 1 and 2 despite payments that have at least kept them solvent.

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