Are parachute payments creating a divide in the Championship?

The full force of the Premier League was in clear view last year when the Football League was forced into accepting a new financial agreement. The League One and Two clubs had initially rejected the proposals over concerns that it would create a second Premier League in all but name. However there were fears at the time that if they not did agree, the Championship would form a breakaway division. This made it almost impossible to reject a deal when the Premier League made them a take it or leave offer.

This new deal has reduced the amount paid to Football League clubs from £88 million to £65 million. As part of this agreement, clubs relegated from the Premier League will now receive £48 million in parachute payments over four years instead of £16 million a year for two years as they received previously.

Looking back, the concerns of the lower league clubs at the time were understandable. Already this season we have witnessed the financial clout of the likes of Leicester City who have spent vast amounts of money in comparison to some of the smaller teams in the teams like Coventry and Watford, who both have financial problems.

The fact that a team relegated from the Premier League now receives £48 million while a team going in the opposite direction to League One will actually lose £3.7 million shows the sort of disparity that exists between the two leagues. This makes it extremely difficult for the relegated team to bounce straight back unless they actually have the financial aptitude as Norwich and Leicester showed. It will be even harder for the smaller teams to get back into the Championship but much easier for teams coming down to get out it.

The difference in central payments in the Championship and League One is already substantial. The television and solidarity payments that come into the football league are split 80 per cent Championship, 12 per cent League One and eight per cent League Two. Although the money the other two leagues receive has increased, it is nothing in comparison with that of the Championship.

Every year, we hear about clubs spending beyond their means to remain in or try to reach the promise land of the Premier League before seeing them go into financial trouble when this does not materialise. What is the Premier League doing to prevent this situation apart from giving them even more of an incentive to spend with the fall-back of parachute payments?


The biggest danger is that a divide takes place – leaving the clubs outside of the top two divisions isolated in no man’s land, taking away the dream of one day playing in Premier League. I am not suggesting that parachute payments shouldn’t be given to relegated teams – they are needed to ensure a smooth transition to the Championship. But with this sudden increase, these teams will now benefit for four years. How is this fair on other teams in the league and those outside it? The fixation with making the Premier League the best in the world is just encouraging teams to spend more money while reducing the chances of the smaller teams ever reaching the Premier League.

How long will it be until there are two separate tiers of English football, where promotion and relegation does not exist? We seem to be going more and more towards the American example of the franchise system where Television and money completely dominate the game.

It would seem that Premier League Two is not too far off.

This could lead to the death of the traditional English football clubs and the game outside of the top two divisions. The loyal fans would probably remain at these clubs but would the money still come in from the richer elite leagues? If this was divide was to take place, the long-term future of lower league football clubs outside the top two divisions would be very bleak indeed.

Follow me on twitter @aidanmccartney for more thoughts and views about the beautiful game.

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