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Apr 29, 2010

Football League stalls on parachute payment plans

Plans to extend parachute payments to relegated Premier League clubs could be in doubt after Football League clubs failed to rubberstamp the proposal at a meeting on Thursday.

• Parachute payments extended

At present, clubs which drop into the Championship receive £11.2 million for two seasons to ease the burden of relegation. Earlier this month, the Premier League confirmed that the payments would be extended for four years at a total of £48 million paid over four years. For the first two years the payment would be £16 million followed by two further installments of £8 million.

However, this has to be approved by the 72 Football League clubs and while Championship bosses were generally supportive it is believed that League One and Two chairmen blocked the move.

This is possible due to an 80% increase in revenues from overseas television rights, but there are grave concerns that such inflated parachute payments will create a gap between those relegated from the top flight and clubs already in the Championship. There would almost be a league within a league, not to mention the gap that would emerge between the lower leagues.

A Football League spokesman said: "Our clubs have had a full and frank discussion of the Premier League's parachute payment and solidarity proposals. Football League clubs did not approve the proposals as they stand and have mandated the board and executive to seek clarification of a number of issues.''

One un-named Championship club chairman said that there had been a general split between Championship sides and the rest but insisted there was no danger of a breakaway forming. He said: "Understandably the Championship clubs were in favour because it means a lot more money for them but the League One and Two sides are worried it will create a big gap. But there is no appetite for a breakaway - we need to sort this out between ourselves.''

However, Football League chairman Greg Clarke denied there had been an insurmountable split between the Championship and Leagues One and Two.

Clarke told BBC Five Live: ''I wouldn't say there was a split, I would say there was a difference of opinion. For example, there is a higher propensity among the Championship to accept this deal but they still have reservations about it.''

Clarke was cautious about the possible implications and added there would be further discussion.

He said: ''It may distort competition and we need to understand that more. Some of the regulation changes may have an economic impact and the clubs want clarity on that and we have got to engineer a consensus and try and move ahead.

''I think there has been an acceptance within English football for nearly 20 years that parachute payments are a fact of life. The main issue here is not a fundamental dissatisfaction with the offer, the main issue is there are certain areas that need clarification and other areas we need to discuss.''

Under the wider proposals, clubs in the Championship who do not get parachute payments would receive £2.3 million a season, League One sides £325,000 and League Two sides £250,000. Under the current package Championship sides received between £1.4 million and £0.75 million.

The Premier League are keen to push through the changes to satisfy a number of chairman of mid-ranking top flight clubs who fear that relegation would have a devastating financial effect.

West Ham co-chairman David Sullivan insisted the plan was vital to stabilise clubs dropping out of the top flight. He told Soccernet: "It's only 25% in years three and four. In reality, relegated teams need more than two years to adjust their wage structure as many players are on three, four and five year contracts.

"Anything that puts more money into teams in the Championship helps football as it gives them money to spend on players, often from lower divisions.

"Teams like Palace and Charlton and Leeds have had enormous problems with two of them going into administration and Crystal Palace might cease to exist within a few weeks, the third and fourth year reduced level parachute payments might have made the difference."

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