A revamped distribution of solidarity and parachute payments would prevent 97% of clubs below the Premier League from potentially losing millions of pounds each year, according to new research from Fair Game.
The coalition of 34 clubs, from Luton Town in the Championship to non-League, say most second-tier teams should get £6.3m a year under a new system that would be fair compared to the current method of massively favoring those recently relegated. of the Premier League.
Last season four clubs – Fulham, West Brom, Sheffield United and Bournemouth – paid £39m in solidarity and parachute payments, compared to £4.8m for most of their Championship rivals. EFL chief Rick Parry has campaigned for the parachute payments system to be abolished in favor of a deal that would see clubs further down the pyramid receive 25% of Premier League broadcast revenue, but the talks are deadlocked.
Fair Game believes it has the answer through a ‘sustainability index’ in which teams will be entitled to a fairer annual payment once they have met a series of good governance-focused criteria designed to prevent clubs from becoming find themselves in financial difficulty.
Under their proposals and based on last season’s pool, Championship sides would earn up to £11.1m, League One £5.1m and League Two £3.1m sterling, non-league clubs and teams in the top two divisions of women’s football also benefit.
The index would weight payout based on a club’s score on four criteria: financial viability, good governance, equality standards and fan and community engagement.
“The Index is essential – we need a new approach to financial flows. But the Index is not just about distribution for distribution’s sake. We must also seek to bring about a culture change” , Fair Game chief executive Niall Couper said, “We need to encourage clubs to be financially sustainable, to embrace good governance, to treat equality standards as more than just a box-ticking exercise and to have meaningful fan and community engagement.
“The Premier League can help secure the football ecosystem. If not, then clearly the responsibility must lie with a new independent regulator. The status quo betrays the 157 municipalities who are currently seeing their clubs lose out. “.
Earlier this year, Fair Game said 52% of clubs in England’s top four divisions were technically insolvent before the pandemic. They hope a version of the sustainability index will be implemented as part of the independent regulator plan being assessed by the government.
The analysis of the parachute payments was carried out by academics including Mark Middling, lecturer in accounting at Northumbria University. He said: “The findings are striking. Replacing the current financial flow with one based on a fairer measure would benefit 97 per cent of clubs below the Premier League.
“The financial structure of the game also needs a refresh. There are many different reporting approaches across the top four divisions and a lack of transparency. Football needs to look at itself closely. It’s an important crossroads.”