Are parachute payments now just 'trampoline payments'?

Marti Cifuentes will lead Leicester's Championship promotion push after being appointed as manager last month

Ipswich Town, Southampton and Leicester City begin their quests for promotion back to the Premier League this weekend - but is it practically already a done deal for at least two of them?

The trio, relegated from the top flight in May, are among just four clubs in the Championship who will be in receipt of parachute payments in 2025-26.

Sheffield United are the other, having dropped back into the second tier 12 months earlier.

"Senior figures across the English Football League are sounding the alarm over a growing imbalance in English football," said football finance expert Kieran Maguire.

"Their concern? That the Premier League is quietly morphing into a 24/25-team elite, where newly-promoted sides struggle to compete financially, only to be swiftly relegated, while parachute payments give relegated clubs a springboard back to the top flight."

To emphasise the point, in each of the past five seasons two of the three teams promoted from the Championship were receiving parachute payments.

And to emphasise the widening gap between the top two divisions, in each of the past two campaigns the three promoted sides were all then relegated straight back out of the Premier League.

Are parachute payments really working?

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.

The issue has proved a stumbling block for the EFL and Premier League, who have been 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, on the other hand, believes the payments help clubs to be competitive once promoted.

In April 2023, EFL chairman Rick Parry described the widening gap between clubs receiving parachute payments and the rest of the Championship as a "major concern".

The gap has only widened further since.

How big has the financial gap become?

Maguire says "the numbers paint a stark picture" in terms of both revenue and spending power when comparing the 'haves' with the 'have nots'.

"Back in 2014-15, Championship clubs receiving parachute payments earned an average of £31.8 million in revenue - nearly double the £16.1 million brought in by their non-parachute counterparts," he explained.

"Fast forward to 2023-24 and that gap has exploded. Parachute clubs averaged £62.9 million in revenue, while the others averaged just £26.7m.

"With greater revenue comes greater spending power.

"In 2014-15, the wage bill gap between parachute and non-parachute clubs stood at £10.4 million. By 2023-24, it had ballooned to £43.3 million.

"That disparity is reflected in squad investment, too, with parachute clubs fielding squads worth an average of £157 million last season, compared to just £19 million for the rest.

"This financial edge creates a self-reinforcing cycle. Promoted clubs often lack the resources to compete, leading to swift relegation. Meanwhile, parachute-funded sides dominate the Championship, making it harder for others to break through.

"The result? A Premier League ecosystem that increasingly favours the same group of clubs - less a meritocracy, more a trampoline for the fallen elite."

But have the play-offs become more open?

Although it seems increasingly difficult to finish in the Championship's top two, the fight for a play-off place was more open than ever last season.

While Leeds, Burnley and even third-placed Sheffield United disappeared off into the distance, finishing on 100, 100 and 90 points respectively, Sunderland, Coventry and Bristol City all finished in the top six despite being without parachute payments.

Sunderland then upset the Blades at Wembley in the play-off final to win promotion.

And, while two of the three promoted teams have been parachute payments clubs for five seasons running, that does mean there has always been one bolter.

"That only four clubs are receiving parachute payments in the Championship this season just goes to show the impact of the trampoline effect," added Maguire. "But it does create an opportunity for other Championship clubs to compete for play-off places.

"Wrexham and Birmingham in particular are in a very strong position to compete after winning promotion from League One."