Last season four clubs – Fulham, West Brom, Sheffield United and Bournemouth – made £39m in solidarity and parachute payments compared to £4.8m for most of their Championship competitors as Fair Game group underlines alternative distribution model
A revamped distribution of solidarity and parachute payments would stop 97% of clubs below the Premier League from potentially losing out on millions of pounds every year, according to new research from Fair Game.
The coalition of 34 clubs, from Luton Town in the Championship down to non-League, say that most second-tier sides should get £6.3m a year under a new system that would be equitable compared to the current method of overwhelmingly favouring those recently relegated from the Premier League.
Last season four clubs – Fulham, West Brom, Sheffield United and Bournemouth – made £39m in solidarity and parachute payments compared to £4.8m for most of their Championship competitors. EFL chief Rick Parry has been campaigning for the parachute payments system to be abolished in favour of a deal that would see clubs lower down the pyramid receive 25% of Premier League broadcast income but discussions have been deadlocked.
Fair Game believes that they have the solution through a “sustainability index” in which teams will be entitled to a more equitable annual payment once they meet a series of criteria focused on good governance designed to protect clubs from ending up in financial trouble.
Under their proposals and based on last season’s pool, Championship teams would earn up to £11.1m, League One £5.1m and League Two £3.1m with non-League clubs and teams in the top two divisions of women’s football also benefitting.
The index would weight payment according to how highly a club scores on four criteria: financial sustainability, good governance, equality standards and fan and community engagement.
“The index is essential – we need a fresh approach to the financial flow. But the Index is not just about distribution for distribution’s sake. We must also look to deliver culture change,” Fair Game chief executive Niall Couper said. “We need to encourage clubs to be financially sustainable, to adopt good governance, to treat equality standards as more than just a tick-box exercise, and to have meaningful fan and community engagement.
“The Premier League can help secure football’s ecosystem. If not, then it is clear that the responsibility must fall to a new Independent Regulator. The status quo betrays the 157 towns that are currently seeing their clubs losing out.”.
Earlier this year Fair Game said that 52% of clubs in England’s top four divisions were technically insolvent before the pandemic. They hope that a version of the sustainability index will be implemented as part of the independent regulator plan being appraised by government.
The analysis of parachute payments was completed by academics including Mark Middling, a senior lecturer in accounting at Northumbria University. He said: “The findings are stark. Replacing the current financial flow with one based on a more equitable measure would benefit 97% of clubs below the Premier League.
“The financial structure of the game needs a refresh too. There are many different reporting approaches in the top four divisions and a lack of transparency. Football needs to take a long hard look at itself. This is an important crossroads.”