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Premier League to increase payments to the Football League

Wed 24th Mar 2010 | Money & Finance

The Premier League is considering an additional £100 million payment per season to the Football League, according to the Times, as a way of addressing the financial gap between clubs. Premier League chief executive Richard Scudamore has proposed a deal where clubs relegated from the top flight after next season will receive “parachute payments” for four years instead of the current two years. The hope is that this will create a more financially stable situation. The proposal also talks of increased “solidarity payments” to the Football League and its 72 member clubs. This deal is yet to be ratified but if it goes through it will be a big financial boost in addition to the £21 million three year deal that the Football League has signed with npower.

As per an agreement signed in July 2007, the Premier League is making solidarity payments of £20.6 million a season to the Football League. The amount is split in terms of £5.4 million for youth development, £4 million for community programmes and £11.2 million for the 72 clubs. This is in addition to the £11.2 million for clubs relegated in either of the previous two seasons as parachute payments. With the new proposal there can be a maximum parachute payment of £48 million per club. The payments can potentially start at £16 million in the first season and continue to £8 million in the fourth season if the club has not managed to win a promotion back to the top tier. The idea is to avoid the kind of financial crisis that developed in clubs such as Watford and Southampton when the parachute payments ceased.

There is an awareness that this could lead to two levels in the Championship with recently relegated teams having a financial advantage over other teams and every effort will be made to avoid this. The additional solidarity payments to the 72 clubs are prompted by this idea and with the understanding that this money will be well invested in infrastructure and skill building.

 

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