Championship clubs receiving parachute payments are three times more likely to be promoted to the Premier League than those without the additional income, according to a new report.
Sportsmail has seen independent research conducted by Sheffield Hallam University’s Business School into the impact of parachute payments, with the authors concluding that they distort competition and fuel unsustainable losses at rivals clubs, such as those that have seen Derby and Sheffield Wednesday on the brink of liquidation.
The research was commissioned by EFL chairman Rick Parry as negotiations continue with the Premier League over reforming the parachute payment system, with Dr Rob Wilson and Dr Daniel Plumley asked to look at the impact on Championship clubs between 2017 and 2021, compared to previous research covering 2006 to 2017.
Fulham, pictured winning promotion in 2020, are on course to make an immediate return to the Premier League this season as they lead the Championship table
The report’s findings include:
- Clubs with parachute payments were three times more likely to get promoted over the past four seasons, (a 22 per cent chance of going up versus 7.3 per cent for those without the extra funding), compared to twice as likely from 2006 to 2017
- Non-parachute clubs are three times more likely to be relegated to League One (15.9 per cent vs 4.9 per cent), a change from being one-and-half times more likely over the previous period.
- The average value of parachute payments for each club per season has increased significantly from £12.8m between 2006 and 2015 to £29.5m over the last five years.
- The average points gap between parachute and non-parachute clubs increased from +5 in 2017 to +8.6 over the last four seasons
The increased impact of parachute payments on the Championship has been attributed to their rise in value.
The precise size of parachute payments given to each club varies depending on when they were relegated from the Premier League, but last season a total of £233million was given to seven clubs, averaging out at £33m per club.
The average revenue of clubs with parachute payments was £53m compared to £14.5m for those without, with Dr Wilson arguing that they are damaging the competitiveness of the Championship.
‘Despite what the Premier League say there is clear evidence of parachute payments distorting the competitive balance of the Championship,’ Wilson told Sportsmail.
Sheffield United got relegated last year but have been boosted by parachute payments
They are now pushing to join Fulham in making an immediate return to the Premier League
‘To compound this the payments force other clubs over-stretching themselves to try to keep up, which leads to financial instability and the danger of them going bust.
‘The whole system is broken. The parachute money should be ring-fenced and redistributed more equally across the whole of the EFL.’
The EFL want parachute payments to be abolished as part of a fundamental reset of the game’s finances, with EFL chairman Parry calling on the Premier League to redistribute 25 per cent of their £3.3billion-a-year TV revenues and impose stricter controls on clubs’ spending.
Negotiations with the Premier League remain ongoing with little sign of a resolution.
EFL chairman Rick Parry (pictured) commissioned the research into parachute payments
Presented with the findings of the report an EFL spokesperson said: ‘This updated report comes as no real surprise and serves as a further reminder of the hugely damaging effect parachute payments have on fair competition.
‘The League’s position has been made clear on a number of occasions and parachute payments are not a form of solidarity; they distort the financial eco-system and increase the gap between the Championship and Premier League.
‘If football is to become sustainable across the pyramid then these payments should be removed as part of a fundamental reset of football’s finances alongside the introduction of improved regulation.’
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