EFL chief says parachute payments are 'an evil that must be eradicated'
The chairman of the EFL, Rick Parry, has criticised the Premier League for failing to help lower-league football as he admitted to a potential £200m black hole in club finances by September.
Parry, appearing before the House of Commons digital, culture, media and sport committee, called for a “complete reset” of the way football is run, including the introduction of a wage cap and an end to parachute payments, which he described as “an evil that must be eradicated”.
Parry said talks with the Premier League over a “rescue package” for the lower leagues had not proved fruitful. “I would love to see money trickling down but I’ve not seen any evidence of it yet,” he said. “The [Premier League’s position] is that if they are allowed to play we will be able to talk; we await that day. Discussions to date have been limited.”
Asked by the Conservative MP Philip Davies whether a Premier League “bailout” was necessary for the English Football League to stay afloat, Parry said: “We need a rescue package but we also need to address the long term; the two need to go hand in hand. We face a £200m shortfall at the end of September and we need a rescue but we can’t just go from bailout to bailout.
“We need a complete reset and we need to look at the redistribution of revenues. Parachute payments are an evil that needs to be eradicated.
“We have six clubs in the Championship receiving parachute payments which means on average they get £40m per club; the other 18 get £4.5m each. So they’re then struggling to try to keep up. Lower down [in Leagues One and Two] solidarity money is welcome but becomes very small. I don’t like to call it a bailout, I call it a restructuring and a rethinking, but it’s overdue and it’s necessary.”
Regarding wages, Parry said: “Salary caps and cost control are absolutely essential and there is a lot of debate about that. We’re not talking about reimposing the maximum wage. We would not be capping at an individual level, we would be capping the total amount that individual clubs could pay – we are talking about capping the budget.”
Parry said that resuming this season behind closed doors would be of limited economic value to EFL clubs. “It’s finely balanced but probably almost neutral and for a lot of clubs it would cost to play,” he said. “The main argument for a resumption would be for reasons of sporting integrity.”
He added that relegation from and promotion to the Premier League should take place in full. “We expect three Championship clubs to be promoted – the Premier League are aware of our position on that. The Premier League expects three clubs to be relegated.
“The lawyers are going to get wealthy [if relegation from the Premier League was removed]. There would be a degree of outrage from a number of clubs in our Championship, and it would be a breach of the tripartite agreement. The safe answer is that it would get very messy.”
The Premier League defended the parachute payment system. A spokesperson said: “Parachute payments give newly promoted clubs the confidence to invest in their squads to be competitive in the Premier League. They are also a vital mechanism to give relegated clubs financial support while adjusting to significantly lower revenues and having a higher cost base related to their playing squads.
“The EFL 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.”