Premier League confirms parachute extension
Premier League clubs have agreed in principle to increase parachute payments to relegated clubs from £22.4 million to a mammoth £48 million, to be paid over four years.
However, the deal has to be approved by the Football League, and at present there is no guarantee that all the clubs would vote in favour. Current payments stand at £11.2 million paid each year for two seasons. Many Championship chairmen are staunchly against any increase to parachute payments which they feel will give further imbalance in favour of clubs dropping out of the top flight.
The plan was revealed at the last Premier League meeting in March, with the funds coming from the increased overseas television revenues. It has now been given the green light by chief executive Richard Scudamore and will be rubber-stamped at the Premier League's AGM in June.
Relegated Premier League clubs would be paid £16 million in the first two seasons following relegation. Years three and four would see a payment of £8 million each. However, should a club be promoted back into the top flight then the money would be distributed evenly among the 21 Championship clubs.
Portsmouth, in a dire financial state, and Hull City, who are said to be facing financial turmoil should they, as seems likely, be relegated are sure to welcome any increased parachute payments.
Portsmouth administrator Andrew Andronikou told ESPN Soccernet: "This is going to have an impact throughout football, not just the Premier League because it's a package of proposals and the Premier League plan to give more money to the Championship clubs and to the Football League as well.
"It's great to see the big and the mighty Premier League clubs sharing their wealth with the rest of football. As for the parachute payments being extended from two years to four, that's obviously going to be a direct benefit to a club like ours. The bottom line is it will smooth out our cash flow over a long period of time and will make us more attractive to a potential buyer.
"It's difficult, in fact nigh on impossible to instantly transfer from being a Premier League club to a Championship club, it certainly can't happen overnight. The two-year parachute payments were inadequate because we have seen the yo-yo affect with clubs like West Brom going up and down - this could alleviate that problem."
West Ham owner David Sullivan told Soccernet: ''I think its a very good thing. It will hopefully prevent clubs overspending fearing relegation and putting their financial future at risk as a result.
''The 3rd and 4th year payments are only 25% (I think) and in reality won't cover the huge wage burden that relegated Premier League clubs have to carry.''