Premier League bails out parachute scheme
THE Premier League has defended its use of parachute payments to relegated clubs in the wake of criticism by EFL chairman Rick Parry at a Parliamentary Committee.
Parry gave evidence to the Digital, Culture, Media and Sport Committee (DCMS) on Tuesday, where he told MPs: “I do think we need a complete reset, we do need to look at the retribution of the revenues.
“I touched on parachute payments, which I think are an evil that have to be eradicated because we have six clubs in the Championship in receipt of parachute payments which is giving them an average of £40m per club – the other 18 clubs get £4.5m each, so they’re struggling to try to keep up.
“I do think we need a reset, I wouldn’t call it a bailout, I’d call it a restructuring and a rethinking and, for me, it’s overdue and it’s necessary.”
However, a Premier League spokesperson has told Sky Sports News the payments are a ‘vital mechanism to give relegated clubs financial support’ when they drop down to the Championship.
“Parachute payments give newly promoted clubs the confidence to invest in their squads to be competitive in the Premier League,” said spokesperson.
“They are also a vital mechanism to give relegated clubs financial support while adjusting to significantly
the lower revenues and having a higher cost base related to their playing squads.
“The Championship is a highly competitive league with attendances, viewing figures and revenues the envy of second-tier leagues around the world. “We see no evidence that parachute payments distort performance at that level and are an essential part of this highly competitive environment.
“We also provide solidarity payments to every other EFL club – payments without parallel elsewhere in leagues around the world.”
Parachute payments have been around since the 2008/09 season, which is enough time to get some reasonable decent data about the
I do think we need a reset, a restructuring. It’s overdue and it’s
necessary
benefits to recipients. If they truly are a massive advantage to the clubs coming down from the Premier League, then sure we have seen a huge increase in the number of clubs who drop out of the Premier League only to immediately bounce back?
For a start, there is the obvious point that of the last nine sides to have come down from the Premier League, only West Brom and perhaps Fulham currently look on track to make a return to the top tier.
Cardiff and Swansea are in midtable, and Hull, Middlesbrough, Stoke City and Town are all within three points of the Championship relegation zone.
The other club, Sunderland, have spent the past season-and-a-half in League One.
The Examiner has assembled and examined the five-year performance of every club to be relegated from the top flight since the 1972/73 season, and things are much the same.
We’ve already talked about how important it is to bounce straight back up, because otherwise you’d better prepare for a long stay.
Yet there has been no significant increase in that happening since the introduction of parachute payments.
And the number of sides getting promoted within two years of their relegation from the top flight – no increase.
What parachute payments have done is reduced the number of teams who fall out of the Premier League and just keep plummeting down the divisions.
Of the 30 sides relegated between 1997/98 and 2006/07, ten found themselves playing in League One or lower within five years.
Since then only six sides have befallen that fate – in other words, the parachute payments are doing what they were designed to do for all but the most poorly-run and penniless clubs – but nothing more than that.