Football League accepts increased parachute payment scheme
Tue 11th May 2010 | Money & Finance
The Football League has voted to accept parachute payments from the Premier League over four years instead of two after the two parties finally reached an agreement on the controversial proposals.
Clubs relegated from the Premier League will now receive £48m over four years instead of £16m a year for two years
The level of parachute payment over the last three years has been in the region of £12m per season per club for two years.
It was to have risen to £16m per club per season for two seasons under the existing rules but under the new rules agreed by the clubs, relegated clubs will receive £16m per season for the first two seasons, then a further two payments of £8m per season.
There were fears that if an agreement was not reached, the Championship clubs would form a breakaway division.
The Premier League reportedly planned to stop solidarity payments if the 72 clubs rejected the proposals and said it was a take-it-or-leave it offer.
At a meeting last month, the offer was rejected amid concerns that it would create a second tier Premier League in all but name. This would make it more difficult for clubs currently in Leagues One and Two to climb up the divisions.
Clubs in the lower two leagues unanimously refused to approve the plans, even though they would boost the money each club receives from £108,000 to £325,000 in League One, and from £72,000 to £250,000 in League Two.
Commenting on the decision to agree to the new set of figures, a Football League spokesman said: ‘Following a frank but constructive meeting at Walsall's Banks's Stadium, Football League clubs have voted to accept the Premier League's revised solidarity and parachute payments proposals.
‘Whilst many clubs expressed concerns about the proposals, their acceptance was considered the only viable way forward.
‘The Football League will now work in good faith, with the Premier League, to ensure that the resulting contract and regulatory changes are good for both competitions and football as a whole.’
A minimum of 51% of the 72 league clubs - including 51% of Championship clubs - needed to agree to the proposals.
Football League chairman Greg Clarke explained how the lower league clubs had been made aware of the situation throughout the discussions.
‘They asked for more information, they wanted to know how their interests would be protected and I explained to them how we would involve them in formulating our policy with respect to youth and development and youth transfers.
‘They accepted that, we had a lively debate, everybody got heard and we ended up with a strong majority.
‘This is not a perfect deal, this is a deal that, in the round, is the right thing for the Football League to do.
‘We stuck to our position, we got some reasonable compromises agreed with the Premier League and I think this a deal that works for both parties so I don't feel in any way hard-done by.’
The amount of money the top flight shares with the rest of the professional game has been a source of controversy since 1992 when the formation of the Premier League meant it negotiated its own broadcasting deals, ending the obligation to share its media revenues.
Don’t forget to subscribe to F.C. Business Magazine to keep up to date with the latest comment from the football world. Click here to subscribe
Wed 26th Apr 2017 | Money & Finance
The business model carried out by the owners of Watford FC is unlikely to be adopted by too many sectors outside of football, but by hiring and firing a conveyor belt of managers, they have managed to...
Wed 26th Apr 2017 | Money & Finance
Newcastle United and West Ham United have been targeted by HMRC for alleged Tax and National Insurance fraud. Officers are understood to have raided the offices at St James’s Park and the London...
Thu 20th Apr 2017 | Money & Finance
Premier League clubs’ revenues increased to a new record of £3.6bn in 2015/16, according to Deloitte, the business advisory firm. Analysis of the financial results of Premier League clubs...
Thu 13th Apr 2017 | Money & Finance
CEO, Lewis Holland and the team at DiscountIF team have been studying various merchandise stores of football clubs in the UK. This article was originally posted here. We’ve compiled a short list...