A storm is brewing between the Premier League and the incoming football regulator over parachute payments – with officials vowing to resist any move to set the amount paid to relegated clubs.
As Mail Sport reported, the controversial system was included in the Bill put forward by Labour after the Conservatives had previously excluded it. That effectively means that the regulator will be able to intervene over the £49m currently handed to sides relegated from the top flight.
Ministers claimed the controversial system ‘causes wage inflation and increases debts’, while the EFL says it distorts the playing field and provides an unfair advantage to those who drop into the Championship.
However, the Premier League say the development would see direct interference by the regulator and will see newly-promoted clubs afraid to invest in the transfers needed to make themselves competitive amid concerns they will end up in financial trouble without the safety net of parachute payments to fall back should they be relegated.
Culture Secretary Lisa Nandy told clubs in a meeting on Wednesday that parachute payments would not be abolished. She added that there was ‘significant evidence’ that the payments ‘in their current form cause significant wage inflation in the Championship and increased debt in the Premier League’.
The Premier League are set to oppose moves for the regulator to control parachute payments
Nandy said that the payments would be included in the regulator’s remit so they could be considered ‘as part of the sustainability of the whole game’.
While the move has been welcomed across the EFL, it has raised eyebrows at a number of Premier League clubs and within the league itself.
‘We remain concerned about the regulatory framework,’ the Premier League said in a statement.
‘Specifically, we believe rigid banking-style regulation, and the regulator’s unprecedented and untested powers to intervene in the distribution of the Premier League’s revenues, could have a negative impact on the League’s continued competitiveness, clubs’ investment in world-class talent and, above all, the aspiration that drives our global appeal and growth.’
Parachute payments stretch to three years if necessary. The first year sees 55 per cent of broadcasting revenue paid out, followed by 45 per cent and 30 per cent.