English football regulator to be ordered not to reduce number of relegations first division Clubs receive parachute payments, as confirmed by the new legislation.
According to the draft law, which was published by the government on Thursday and has begun its processing in parliament, any financial redistribution agreement determined by the regulator “should not… result in a smaller amount of relegation revenue distributed to a club.”
This appears to confirm the message from Secretary of State for Culture, Media and Sport Lisa Nandy, who promised Premier League clubs on Wednesday that parachute payments would not be abolished despite Labor including them in the scope of the regulator.
This view was reiterated on Thursday by Sports Minister Stephanie Peacock. He said Labor had tabled an opposition amendment calling for parachute payments to be included in the regulator's mandate. “One of the changes we have made is to add some words that make it very clear that they cannot be abolished,” he said.
The wording of the clause leaves open the possibility that parachute payments may become less important over time. Although the bill requires that the figures involved cannot be reduced, it does not say that they must increase with each new deal, meaning a deal could be reached where money shared between the Premier League and the EFL as part of “solidarity” within English football could be more evenly distributed.
The Premier League voluntarily shares 16% of its income with the football pyramid (including youth development) and good causes. Parachute payments are the name of the money paid as part of this process to relegated clubs, helping them adapt to life in the lower divisions, where television income is much lower. In 2020, the amount redistributed in parachute payments amounted to £233m, while solidarity payments to the other 69 EFL clubs amounted to £79m.
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The Premier League is a strong defender of parachute payments, arguing that they allow promoted clubs to spend on players without fearing the consequences if they are relegated. The EFL has long opposed it and its chairman, Rick Parry, described them in 2020 as “an evil that must be eradicated”. However, it is understood that the EFL has recently changed its position and is no longer calling for the payments to be scrapped, but only for them to be reformed.
