Are Championship Parachute Payments Making The Premier League A Closed Shop?

Norwich, Watford and Bournemouth could all return at the first time of asking...
14:00, 04 May 2021

This season, for the first time since the Premier League was launched in 1992, all three relegated sides could return to the top flight at the first time of asking. Norwich City, under Daniel Farke have won the title for the second time in three seasons and will be joined by Watford after they wrapped up second place to seal an instant return to the big time. 

Meanwhile, the third relegated side last season, Bournemouth, will enter the play-offs looking to make it a hat-trick having rallied under Jonathan Woodgate following the dismissal of Jason Tindall. But why are these clubs able to sweep beside all before them in the second tier, is it unfair and should parachute payments be assessed following this campaign?

Well, there is a clear financial disparity between the Premier League and the Football League and parachute payments, based on the broadcast income of the top flight, were brought in to make the step down easier for the clubs to transition between the two. Even EFL chairman Rick Parry has called for them to be scrapped in the past to narrow the gap between the two divisions but that could lead to clubs falling into severe financial difficulty following relegation. 

Norwich are the perfect model on how a club should be run. For all the jibes about a ‘yo-yo club’, Delia Smith’s Canaries are a side who spend within their means, and make a huge amount of money off their academy players. Having spent less than £5m on new players in their disastrous season in the Premier League twelve months ago, the club were able to tie young players down to long-term contracts with the club on a stable financial footing. 

Ben Godfrey left for Everton for £25m and Jamal Lewis to Newcastle for £15m but the club were able to keep hold of Max Aarons, Todd Cantwell, Teemu Pukki and newly-crowned Championship Player of the Year, Emi Buendia. That core of players has won them the title while the £40m raised in sales helped bridge the gap between the two divisions. However, without the extra £42.6m they were given in parachute payments, they may have been forced to sell another one of those four stars.

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Along the same lines, Bournemouth sold Aaron Ramsdale, Nathan Ake and Callum Wilson to raise funds while players such as Arnaut Danjuma have come to the fore. Watford sold players including Abdoulaye Doucoue to recoup £45m but for these two teams who had enjoyed several consecutive years in the Premier League, they had amassed a squad more than good enough to compete at the top of the Championship - even with those sales. 

Watford retained the services of £27m man Ismalia Sarr and Joao Pedro, a move that has won them promotion but parachute payments do seem to be too heavily weighted in favour of the relegated sides. For example, in 2017-18 the Premier League paid £243m in parachute payments to eight clubs who dropped out of the top flight in the previous three years, while the remaining 64 Football League clubs got £100m in solidarity payments split between them. 

Not exactly a level playing field. However, despite these huge payments, that money doesn’t guarantee success. Huddersfield were paid £42.6m in 2019 but finished 18th, Sunderland were paid 90m across three years but suffered a double relegation and are still struggling to get out of League One. 

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“Huge though the parachute payments are, increasingly they don’t bridge the gap,” former Sunderland director Charlie Methven argued. “The fans think, ‘We’ve got £45m coming in in a division where a top budget is £25m.’ No. You’re carrying a wage budget which means players who have already proven they’re not good enough to be in the Premier League are being paid five times as much as a player of almost identical ability at a Championship club.”

This has the potential to be the first season in which all three relegated sides go back up and it has come with its own unique circumstances. Norwich’s sensible squad building made them a contender before a ball was kicked while Watford and Bournemouth had both enjoyed five consecutive seasons in the Premier League, and reaped the financial benefits of their success. 

Clubs often overspend to stay in the Premier League and then must face a huge reality check to deal with the reality of relegation. Parachute payments were introduced to stop clubs spiralling out of control and those current Premier League clubs are all too happy to see the same clubs come back up - Norwich and Watford’s instant return has already saved them £83m between them. 

This saved money should not go to Premier League sides, but instead be distributed to the EFL clubs who have struggled so much during this pandemic. The circumstances this season were unique, and it is unlikely that Sheffield United, West Brom and Fulham will repeat the feat in twelve months time, but if the Premier League becomes the closed shop we all feared the Super League was - serious changes must be made.

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