PREMIER League clubs breaching financial rules may be the hot topic of the day, but the lack of competitive balance in the division below by way of parachute payments continues to be a significant cause for concern.
That’s the view of leading football finance expert Rob Wilson, of Sheffield Hallam University.
Last season’s relegated trio of Leicester City, Southampton and Leeds United – all armed with significant ‘parachute’ money – occupy three of the top four places in the Championship, with a very real chance that a ‘clean sweep’ of clubs returning to the top tier at the first time of asking could happen.
Research carried out for the English Football League concluded last year that clubs receiving parachute payments were three times more likely to be promoted than other clubs.
Speaking to The Yorkshire Post in late 2022, EFL chief Rick Parry cited the ‘cliff edge’ disparity of £89m between sides who finish at the bottom of the Premier Division and at the top of the Championship as evidence of the gross unfairness of the current system.
Wilson said: “The biggest challenge is the retaining of parachute payments and until they get rid of them and redistribute differently, I think that the ‘cliff-edge’ will always exist as you will always have the haves and have-nots.
“You have nine clubs in the Championship who are receiving parachute payments. They are already four times the size of any other club and in some instances, up to ten times bigger.
“So they are three times more likely to be promoted than anybody that has not got a parachute payment, which completely distorts the balance of the division and influences financial decision making.
“Parachute payments are worth something in the region of £270m a year, so if you took that and distributed it evenly across all of the member clubs, then the Football League could come up with a formula to say: ‘right, Championship clubs will receive 70 per cent of that, League One clubs receive 20 per cent, with League Two clubs getting ten per cent’. Everyone would be enabled by it.
“You would make competitive balance closer which means that leagues themselves would be more prosperous.”
While the outstanding feats of the likes of Ipswich Town, Luton Town and Coventry City in recent times have proved that teams without parachute payments can still compete – with Hull City and Middlesbrough being two other such clubs in the top six picture this season – Wilson believes that these ‘outliers’ remain exceptions to the general rule.
He continued: “The trouble is the clubs coming out of the Premier League don’t want to hear it as they want the parachute payments so they can get back up.
“It (parachute payments) takes the fun out of it. Fans want clubs to ‘push the boat out’, but the harsh reality is that most of the time, that fails and you end up with the financial consequences of it.
“Sheffield Wednesday did that and pushed it and failed and ended up having to sell the stadium and couldn’t pay player wages and ended up trying to crowd-fund….There has to be a better way of financially distributing that (parachute) cash.”
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