Parachute payments

[SecretSam]

Grauniad article suggesting these might be binned. Thoughts? 

Article in the Grauniad about ending Parachute Payments

[daored]

2 minutes ago, SecretSam said:

Grauniad article suggesting these might be binned. Thoughts? 

Article in the Grauniad about ending Parachute Payments

Hopefully , we could have a scenario of Newcastle coming down with these payments!

[Maesknoll Red]

Sooner the better, the Championship is becoming ruined by them.

[Bristol Rob]

Obvious fix is to increase the solidarity payments so the playing field is level, but that won't help relegated clubs cope with the wage bills and transfer installments they'll be liable for, and whilst you could build in relegation clauses to players contracts, if you were signing a contract with a bottom 5 club in January, you would probably request that your top flight wage is unrealistic to compensate for the likely drop in salary.

My preferred option would be that parachute payments be held centrally and can only be used to pay the difference between the Premier league salary and the expected Championship salary for players relegated and signed no later than the penultimate transfer window. Purely to stop clubs from starting their Championship assault in their last Premier league season, with one flurry of last window activity.

(Edit. Obviously, with the unclaimed money being evenly distributed across all clubs).

Edited November 30, 2021 by Bristol Rob

[Lrrr]

Main question is what are the PL wanting in return, sounds like PL are negotiating it now rather than if an independent regulator getting appointing and forcing it on them 

[Bristol Rob]

9 minutes ago, Lrrr said:

Main question is what are the PL wanting in return, sounds like PL are negotiating it now rather than if an independent regulator getting appointing and forcing it on them 

I'll be surprised if there is too much opposition from most Premier league clubs, the top 6 expect to win most of their games - which the exception of games against other top 6 sides, mid table sides expect to beat the newly promoted sides.

Promoted sides expect to struggle.

If the Prem can 'level the Championship' playing field, it will likely mean a more competitive Championship without the relegated sides having such a big advantage and therefore being less competitive on promotion to the Prem.

The only clear objection would be if it took money out of their pockets. Aside from that, I would guess the only opposition will be from Premier League stragglers and clubs that have made parachute payments work for them.

Might make it more competitive in the Championship, but the same challenge will remain for those promoted clubs... survival.

[ExiledAjax]

1 hour ago, Lrrr said:

Main question is what are the PL wanting in return, sounds like PL are negotiating it now rather than if an independent regulator getting appointing and forcing it on them 

Which, to be fair, was what the Crouch review asked them to do. I think we might see a new system come in soon. Then when the regulator is formed it will take over enforcing the new system (and might well tweak it if needed).

[Waconda]

1 hour ago, Lrrr said:

Main question is what are the PL wanting in return, sounds like PL are negotiating it now rather than if an independent regulator getting appointing and forcing it on them 

one less relegation place is the safe bet.

[sh1t_ref_again]

It's a case of have and have nots, the prem teams looking over their shoulders that could one day get relegated will seek the backing from their mates in the bigger clubs to ensure if they are unfortunate to go down they will have the massive advantage of PP to come straight back up.

EFL will crumble with the offer of a few more pieces of silver to go away and shut and be grateful as normal.

We will be left with a broken corrupt system, where at least 2 teams each year get promoted with PP and FFP prevents a rich owner funding a challenge

People moan about F1 about how only the best car can win, but at least each team can match each others spending if they can afford to

If this was a game of poker where the cards had been fiddled and stacked against you, when you find out your would not want to play anymore as you only have an outside chance of winning.

The premier league greed is / has ruined football, - fans / clubs need to start voicing the anger against PP

 

[Bristol Rob]

Of course, the other option would be Prem 1 and Prem 2.

Reduce the number of teams in the Championship, add a few sides for  regional representation, throw in 2 SPL sides, two almost closed shop leagues of 20 clubs each with 2 up and 2 down from PL 2 to PL 1 and maybe from PL 2 down to League 2.....

A more even split of the revenue across the two PL divisions and a new 'product' to sell to the emerging markets.

Basically, create a league that broadcasters will go potty over, owners can balance the books, and the fans get served a shit sandwich but are sold a dream that very few people will buy, but eventually they'll accept.

In one move, you could kill the SPL of the last remaining interest, make Leagues One and Two part time and then not really need parachute payments at all.

There you go. A flawed alternative!

[Major Isewater]

I certain that when we get to the Prem, perhaps not this season, that will be the very moment that parachute payments are ended. 

[Red-Robbo]

1 minute ago, Major Isewater said:

I certain that when we get to the Prem, perhaps not this season, that will be the very moment that parachute payments are ended. 

 

So they're continuing indefinitely then...

[Davefevs]

1 hour ago, Bristol Rob said:

Of course, the other option would be Prem 1 and Prem 2.

Reduce the number of teams in the Championship, add a few sides for  regional representation, throw in 2 SPL sides, two almost closed shop leagues of 20 clubs each with 2 up and 2 down from PL 2 to PL 1 and maybe from PL 2 down to League 2.....

A more even split of the revenue across the two PL divisions and a new 'product' to sell to the emerging markets.

Basically, create a league that broadcasters will go potty over, owners can balance the books, and the fans get served a shit sandwich but are sold a dream that very few people will buy, but eventually they'll accept.

In one move, you could kill the SPL of the last remaining interest, make Leagues One and Two part time and then not really need parachute payments at all.

There you go. A flawed alternative!

This failed before.  The Bolton chairman - RIP tried it because he realised Bolton might get relegated.  Basically Prem clubs don’t want to share it more evenly, nor with anyone else

[wendyredredrobin]

If you overspend, then you should pay the consequences.  Parachute payments are ruining the Championship as we can't compete with the beneficiaries. It's unjust and unnecessary.

 

[JoeAman08]

I don’t mind PP so much but surely it would be easy enough to place teams coming down under some sort of embargo. You can have the PP money for what it was intended for but you can’t use it as income. Only to pay the wages you have committed too in a higher tier. 
 

Something like can only spend what you sell and get rid of. So if relegated side sells a player on 80k a week for 15m. They can spend 15m and 80k. They still have a massive advantage but they have to weaken themselves or let an asset go first. 
 

Example Fulham have spent around 20m this summer but only sold 4. And, this is an educated guess, have added more than they have subtracted in terms of wages. This wouldn’t be allowed with an embargo such as one I stated. It supports better run clubs too. Such as Norwich, with or without embargo, think they’d have done pretty much same business as they have sold. 

[BTRFTG]

As and when parachute payments cease shortly thereafter will follow removal of promotion to / relegation from The Premier, else what might be the point?

The move is simply to make the top flight a fixed and exclusive cartel. The big 4/5 will love it as it'll reinforce their desire to breakaway to Europe, the lower strugglers will be free to live in losers limbo without threat to their lifeblood.

For the likes of us, not well be troubling it soon, why bother with excitement at the Top of the Championship, it'll only be a nominal trophy .

[East Londoner]

The problem isn’t parachute payments in isolation, it’s being magnified by ffp which then creates a double whammy effectively removing a clubs ability of keeping up with those relegated clubs and that then creates a derby scenario where a owner will try and use more creative ways to try and make up the shortfall and we all know how that turned out.

Its naive of the efl to think that the problem is entirely of the premier leagues making. They could either amend the ffp rules for those who aren’t receiving parachute payments to even up the playing field or they could introduce a rugby style salary cap or they can continue what they’re doing it the moment is moaning about it and not much else 

What’s interesting is fans seem to view ffp breaches as cheating but grudgingly accept parachute payments when they’re basically the same thing 

Edited November 30, 2021 by East Londoner

[BUTOR]

I am incredibly suspicious as to why the Premier League have suddenly u-turned on this. If recent events are to be considered there is unlikely to be a lesser evil lined up. 

 

That being said, Tracy Crouch has put the pressure on and forced through some positive re-forms recently. Perhaps the premier league is feeling it. Not for the want or love of her party, I do think we have a good egg in our corner. 

Edited November 30, 2021 by Bouncearoundtheground

[Bris Red]

7 minutes ago, East Londoner said:

The problem isn’t parachute payments in isolation, it’s being magnified by ffp which then creates a double whammy effectively removing a clubs ability of keeping up with those relegated clubs and that then creates a derby scenario where a owner will try and use more creative ways to try and make up the shortfall and we all know how that turned out.

Its naive of the efl to think that the problem is entirely of the premier leagues making. They could either amend the ffp rules for those who aren’t receiving parachute payments to even up the playing field or they could introduce a rugby style salary cap or they can continue what they’re doing it the moment is moaning about it and not much else 

What’s interesting is fans seem to view ffp breaches as cheating but grudgingly accept parachute payments when they’re basically the same thing 

You have beaten me too it, you are spot in what you are saying.

Parachute payments are aren’t an issue overly IMO, with the absurd amounts of money you need to compete and just stay in the Prem its common sense that initially when you drop out and the TV money dries up clubs are going to need some help financially.

What should then change is as you have said the ffp rules for the rest of us. If a billionaire chairman of a club without parachute payments wants to plough in the same amount to be able to compete then they should be allowed too.

[ExiledAjax]

21 minutes ago, Bouncearoundtheground said:

That being said, Tracy Crouch has put the pressure on and forced through some positive re-forms recently. Perhaps the premier league is feeling it. Not for the want or love of her party, I do think we have a good egg in our corner. 

The matter is considered in depth in Chapter 9, and whilst the Report is critical of the existing system, it also recognises that it's aims and intentions are 'laudable' and that "Parachute payments do perform an important economic function in helping clubs transition to a new economic reality and mitigating the risk of a financial collapse for a club that has been relegated.".

The Report states that of all the funding provided by the Premier League to the lower divisions between 2019 and 2022, 52% (£647m) is in the form of parachute payments. A small handful of clubs receiving that much cash is just crazy if you are truly seeking a 'fair' and balanced competition in the Championship and beyond. The Report says that "A more even distribution of these funds would support the sustainability of the pyramid, raise the level of competitiveness in the leagues and help create a more diverse and competitive set of entrants to the Premier League."

So far so known to everyone that pays any attention at all to this stuff.

As to solutions, well Crouch's report is cagey on that. Ultimately the Report stops short of proposing major suggested solutions. The Report states that it is aware of discussions (presumably those same ones that OP links to in the Guardian article) and will allow football until the end of 2021 to come to a resolution on this issue. If nothing comes about, then it is proposed that the new regulator would have backstop powers to impose it's own solution.

The smaller relevant recommendations made by the Report are:

Recommendation 39 is the only one that could come in before the regulator is established, and doesn't actually do anything to cause parachute payments to stop. It's a good idea though, and one that clubs should look to implement so far as the market allows.

I have big reservations over recommendation 40, and 41 is pretty wooly. 

Ultimately I thought this was one of the weaker parts of the Crouch Report. Personally I think the Review have trod carefully here. They know this is the area that would spook the Premier League (and certain Championship) teams the most and they want to seem as though they are allowing football to control it's money before imposing huge reforms and regulation. I think that is smart.

Out of interest, according to Crouch's Report, the EFL's current position is this:

[Harry]

I haven’t thought this through in any detail, just off the top of my head now, but is there some way of incorporating something into a players contract. A clause that MUST be legally added to all contracts. 
 

If you get relegated, and there is no relegation salary reduction clause in the contract, then the contract should be renegotiated, and if no renegotiation can be reached, the contract can be cancelled immediately. 
 

So promoted teams can still sign someone on £100k per week on a 5 year deal, but if they go down, they have to restructure the contract to, say £40k per week, or completely cancel the contract and the player becomes a free agent. 

As said, not thought through in any detail, but there surely must be a way of putting this back on the players heads - otherwise they are essentially being paid ridiculous wages for failure. Get paid loads, get relegated, still get paid loads. 
Surely there must be something that says you must reduce the wage in line with projected income. 

[Pezo]

15 minutes ago, Harry said:

I haven’t thought this through in any detail, just off the top of my head now, but is there some way of incorporating something into a players contract. A clause that MUST be legally added to all contracts. 
 

If you get relegated, and there is no relegation salary reduction clause in the contract, then the contract should be renegotiated, and if no renegotiation can be reached, the contract can be cancelled immediately. 
 

So promoted teams can still sign someone on £100k per week on a 5 year deal, but if they go down, they have to restructure the contract to, say £40k per week, or completely cancel the contract and the player becomes a free agent. 

As said, not thought through in any detail, but there surely must be a way of putting this back on the players heads - otherwise they are essentially being paid ridiculous wages for failure. Get paid loads, get relegated, still get paid loads. 
Surely there must be something that says you must reduce the wage in line with projected income. 

Isn't this the reason PP were introduced -  certain players didn't want to go to teams if there was a risk of lower pay and being locked into a contract.

Some players bring over and pay for a whole entourage with them, they might have to send there family home after year 1 of a 3 year contract and as such don't want to commit.

[Harry]

7 minutes ago, Pezo said:

Isn't this the reason PP were introduced -  certain players didn't want to go to teams if there was a risk of lower pay and being locked into a contract.

Some players bring over and pay for a whole entourage with them, they might have to send there family home after year 1 of a 3 year contract and as such don't want to commit.

I think my thoughts are that this has to be included on every contract, not just the promoted teams. So if someone is signing a contract with Brentford it would still need to be added if they were signing for Newcastle or Burnley etc. 
 

Also, there is the ‘get out’ for the player too. If they don’t renegotiate down, they can leave. 

Edited November 30, 2021 by Harry

[Davefevs]

1 hour ago, JoeAman08 said:

I don’t mind PP so much but surely it would be easy enough to place teams coming down under some sort of embargo. You can have the PP money for what it was intended for but you can’t use it as income. Only to pay the wages you have committed too in a higher tier. 
 

Something like can only spend what you sell and get rid of. So if relegated side sells a player on 80k a week for 15m. They can spend 15m and 80k. They still have a massive advantage but they have to weaken themselves or let an asset go first. 
 

Example Fulham have spent around 20m this summer but only sold 4. And, this is an educated guess, have added more than they have subtracted in terms of wages. This wouldn’t be allowed with an embargo such as one I stated. It supports better run clubs too. Such as Norwich, with or without embargo, think they’d have done pretty much same business as they have sold. 

This was the principle behind the proposed Champ salary cap, e.g. for contracts agreed before the introduction of the cap, they would be capped at £720k p.a (£14k p.w average in the Champ).

22 minutes ago, Harry said:

I haven’t thought this through in any detail, just off the top of my head now, but is there some way of incorporating something into a players contract. A clause that MUST be legally added to all contracts. 
 

If you get relegated, and there is no relegation salary reduction clause in the contract, then the contract should be renegotiated, and if no renegotiation can be reached, the contract can be cancelled immediately. 
 

So promoted teams can still sign someone on £100k per week on a 5 year deal, but if they go down, they have to restructure the contract to, say £40k per week, or completely cancel the contract and the player becomes a free agent. 

As said, not thought through in any detail, but there surely must be a way of putting this back on the players heads - otherwise they are essentially being paid ridiculous wages for failure. Get paid loads, get relegated, still get paid loads. 
Surely there must be something that says you must reduce the wage in line with projected income. 

Cancelled by who, club or player?  Not sure it works well for either party.

Not sure relegation should be put back on the player per se.  What if they’ve had a stellar season personally, but the rest of the club is crap?  It’s why there are contracts!  FA / EFL / PL could change the rules to ensure all future contracts contain “suitable” relegation clauses.

[Harry]

5 minutes ago, Davefevs said:

Cancelled by who, club or player?  Not sure it works well for either party.

Not sure relegation should be put back on the player per se.  What if they’ve had a stellar season personally, but the rest of the club is crap?  It’s why there are contracts!  FA / EFL / PL could change the rules to ensure all future contracts contain “suitable” relegation clauses.

Ideally, your last sentence is what would be installed. A relegation clause MUST be added to all contracts. 
But failing that, I guess my idea was ultimately what boils down to a 1 year contract, with the club having the option for a compulsory extension if they stay up or have to renegotiate the extension if they go down. 

[Pezo]

40 minutes ago, Harry said:

Ideally, your last sentence is what would be installed. A relegation clause MUST be added to all contracts. 
But failing that, I guess my idea was ultimately what boils down to a 1 year contract, with the club having the option for a compulsory extension if they stay up or have to renegotiate the extension if they go down. 

I get the intent but I think there are clear scenarios where this doesn’t work.

Your going to ask someone like Dennis at Watford to sign a contract that says “if we get relegated you will get paid X amount less” which in reality to him probably means “if we get get relegated your not going to be able to see you family in the football season” or mutual termination which would mean Watford taking a massive risk (losing 15m worth of player) Instantly he won’t sign it because there is a high chance of relegation or Watford (and all promoted teams) only then look for free/low transfers to mitigate there risk.

Personally I think there is a choice but it’s a bit catch 22 - you either have the same teams getting relegated that just came up (and keep the championship competitive) or you have the same teams getting promoted that just got relegated (and the bottom of the prem is competitive) but because of the vast differences there’s always going to be a problem. The prem holds the cards because they have the money and they prefer that competition is in the prem and they don’t even think of the consequences to competition in the championship.

this was quiet eye opening for me but there is a bit at around 18 mins when they discuss independent regulation and distribution of funds.

 

Edited November 30, 2021 by Pezo

[Harry]

11 minutes ago, Pezo said:

I get the intent but I think there are clear scenarios where this doesn’t work.

Your going to ask someone like Dennis at Watford to sign a contract that says “if we get relegated you will get paid X amount less” which in reality to him probably means “if we get get relegated your not going to be able to see you family in the football season” or mutual termination which would mean Watford taking a massive risk (losing 15m worth of player) Instantly he won’t sign it because there is a high chance of relegation or Watford (and all promoted teams) only then look for free/low transfers to mitigate there risk.

Personally I think there is a choice but it’s a bit catch 22 - you either have the same teams getting relegated that just came up (and keep the championship competitive) or you have the same teams getting promoted that just got relegated (and the bottom of the prem is competitive) but because of the vast differences there’s always going to be a problem. The prem holds the cards because they have the money and they prefer that competition is in the prem and they don’t even think of the consequences to competition in the championship.

 

Yep. That was the one main flaw I had in mind when I was thinking about this earlier. 
But I guess there’d be some kind of balancing, as most clubs in the bottom half would all be after the same players and the same clause would have to apply to whatever team Dennis signs for. And generally, most teams in the bottom half have at least some reasonable chance of relegation. 
So Dennis would have this clause whether he signed for Watford or for Southampton. 
Ultimately something has to be put in place to adjust this within the players contracts as opposed to clubs simply just getting more cash for failure. 

Edited November 30, 2021 by Harry

[Harry]

17 minutes ago, billywedlock said:

Add in that that transfer fees need to be accounted for immediately in the accounts . 

100%. 
This is something that should be applied across the board. 
If you’re gonna pay £20m for a player, you pay it now. All of it. Upfront. 
Not spread across 5 years or whatever. 
I don’t leave the supermarket with 4 tins of beans and say “I’ll pay you for one now, cuz I’ll be having it tonight, I’ll then pay you for the 2nd tin next Sunday, then the 3rd tin next month etc”. 

Transfer fees should be paid in full, upfront. 
That’ll solve cash flow issues if you haven’t got the money you can’t buy the player. 

[BTRFTG]

1 hour ago, East Londoner said:

The problem isn’t parachute payments in isolation, it’s being magnified by ffp

That would be the FFP brought in on behest of top European clubs to maintain their cartel and not the imagined and oft misquoted ffp that supposedly has anything to do with bringing a sense of realism to football.

[Pezo]

5 minutes ago, Harry said:

Yep. That was the one main flaw I had in mind when I was thinking about this earlier. 
But I guess there’d be some kind of balancing, as most clubs in the bottom half would all be after the same players and the same clause would have to apply to whatever team Dennis signs for. And generally, most teams in the bottom half have at least some reasonable chance of relegation. 
So Dennis would have this clause whether he signed for Watford or for Southampton. 
Ultimately something has to be put in place to adjust this within the players contracts as opposed to clubs simply just getting more cash for failure. 

I think the reality is there would be too many barriers, clubs that couldn’t take the risk or players that couldn’t take the risk so they stay where they are and never come here. Then the prem doesn’t attract the best talent and that’s a slippery slope.