Clubs relegated from the Premier League into the Championship receive parachute payments
The Premier League and English Football League must “urgently” agree on sharing more revenue with clubs down the football pyramid, or risk having a settlement forced on them, say MPs.
A report by the Culture, Media and Sport Select Committee says that if no funding settlement is reached soon, the government should bring forward the setting up of an independent football regulator “to impose a deal”.
The MPs want “an increased, strategic redistribution from all leagues down to the grassroots” in order “to safeguard the long-term stability of the game”.
“Unless the football authorities get their act together soon on agreeing a fairer share of revenue, we risk more clubs collapsing, with the devastating impact that can have on local communities,” said chair Dame Caroline Dinenage MP.
“It’s in the best interests of all involved to get this sorted quickly.”
The committee took evidence from the football authorities in February when talks between the Premier League and EFL over a new funding settlement were scrutinised.
The plan for a regulator, recommended by a fan-led review, has been confirmed by the government.
Ensuring a fair distribution of money filters down from the Premier League is one of its aims, along with stopping clubs going out of business, giving fans greater input and introducing a tougher owners’ and directors’ test.
Putting the broadcast revenues of both leagues into a shared pot is one proposal being considered, although parachute payments to clubs relegated from the Premier League have been a sticking point for the two organisations.
The regulator will have ‘backstop’ powers to impose a new financial settlement if agreement cannot be reached, effectively forcing the Premier League to share more money down the pyramid.
EFL chairman Rick Parry wants a 25% share of pooled broadcast revenue with the Premier League, merit-based payments across all four divisions, and the abolition of parachute payments to teams relegated from the top flight.
In April he said the Premier League’s stance on the payments was “disappointing”.
Parachute payments are solidarity payments made to help relegated sides adjust to lower revenues. The Premier League believes they help clubs be competitive once promoted, and has pointed to the fact there were eight clubs in the league last season that were promoted without parachute payments.
The payments have been criticised for creating ‘yo-yo’ clubs and financial disparity between sides in the Championship.
The Premier League has said it gives away 15% of its revenue already, and in 2020 also agreed a £250m rescue package to help ease the financial challenge faced by EFL clubs as a result of the Covid-19 pandemic.
This month Sports Minister Stuart Andrew MP said he was “optimistic that discussions between the Premier League and EFL will find a solution on this urgent issue”, and was “hopeful that the resolution will be found soon”.
He added: “I would urge both sides to reach a deal as soon as possible. It is in the game’s interests to avoid the risk of further financial uncertainty.”
Both the Premier League and EFL declined to comment.