Relegated Clubs to Receive £60m in Parachute Payments

April 16, 2013

Football clubs relegated form the Premier League are set to receive in excess of £60m ($92M) over four years, although the exact figures are yet to be released by the League.

The controversial decision will see the money raised from £48m ($73M) and there have been a large number of managers and pundits who have criticised the payments, suggesting it will hamper the progress of other clubs in the Football League.

Lawyer Daniel Geey of Field Fisher Waterhouse, who is an expert in football law told iSportconnect: “The increase is significant for a number of reasons including competitive balance, financial fair play and wider distribution issues.

“Some clubs may argue that relegated clubs will have a greater financial advantage because of the greater payments on offer. This allows relegated clubs to spend more than their fellow championship competitors.

“For FFP purposes, it could theoretically allow relegated clubs more leeway in breaking even, although they are likely to have higher wage costs due to the clubs time in the Premier League. 

“The increased parachute payments may also spark a wider debate about how Premier League solidarity payments should be redistributed. Some argue that parachute payments should be reduced and all Football League club payments should be increased.

“This is obviously something that forms part of the complex negotiations between the football’s relevant stakeholders.”

Ex Barnsley manager Keith Hill said in 2012: “I’ve never been rewarded for doing anything wrong or being relegated. Clubs that get relegated get rewarded financially, how does that make sense?”

Football pundit and commentator Stan Collymore also gave his thoughts on the new developments: “We need to get rid of parachute payments because they are going to have a terrible impact on the future of English football.

“It means that the gap between sides relegated from the top-flight, and those that have not been there, is going to grow. Especially for those who do not have a sugar daddy investing in players.

“My other concern is that we are heading towards a time when the Championship has its first £100,000-a-week player. You might think that sounds ridiculous, but it could happen!”

The 24 Championship clubs held a meeting last month with the Football League, but talks were said to be inconclusive.