As English football prepares for financial and regulatory overhaul, reports have suggested that parachute payments are the key stumbling block in finding a universal conclusion on funding between the EFL and the Premier League.
Nonetheless, in a key development for the talks, Premier League CEO, Richard Masters, has told the government that the top flight would be willing to pool its lucrative broadcasting income with the lower leagues, something that the EFL has long called for in order to safeguard the league’s stability.
Masters stated: “The Premier League has had exponential growth over the last 15 years, the EFL less so.
“A gap has built up. What I think we are trying to address is to close that gap, specifically between parachute and non-parachute clubs in the Championship, and to do that in a systemic way.
“Part of Rick (Parry, Chair of the EFL)’s proposal is to look at a new mechanism to share revenue, which is called net media revenue. Essentially, you put our media revenue, the EFL’s media revenue in a pot, you take away costs and you divide it on a preordained formula which means that going forward, our growth is the EFL’s growth, and vice versa, so our success is shared, it aligns the two organisations in a different way and ensures that gaps don’t build up in the future.”
It comes after Parry called for 25% of the Premier League’s broadcasting revenue to be distributed across the football league based on merit – with the EFL chairman Parry remaining staunchly against the prospect of parachute payments.
Parachute payments have been identified as a key cause of the financial imbalance of the EFL Championship – with several second tier clubs having endured significant financial issues in recent years. Huddersfield Town, a club that has recently had its parachute payments come to a conclusion, has been in the news recently after financial issues hit the club, with the threat of administration looming until a buyer was identified.
However, Masters has underlined the importance of the parachute payments as ensuring that promoted clubs can retain competitiveness when they are in the top tier.
The Premier League chief warned that if parachute payments were removed, it would create ‘significant difficulties’, in spite of opposition from Parry and the EFL, adding that the league’s proposal does include supporting relegated clubs.
He told the DCMS Select Committee: “Obviously the gap between parachute clubs, the size of parachutes has grown over time. Our proposal seeks to address the gap between parachute and non-parachute clubs, but they’re one of the few actual genuine sustainability instruments – albeit for a small group of clubs – that exist within football.”
Talks between the Premier League and the EFL in recent years have been strained, particularly with projects such as ‘Project Big Picture’ swirling around. However, the publication of the government’s long awaited White Paper on the future of English football as well as the ascension of Rick Parry to the helm of the EFL have made those talks more palatable to both parties.