The Premier League have proposed a radical plan to alter how they redistribute money across the EFL, adopting a merit-based system which would reward clubs for how they finish in each of the three divisions plus the reduction and reform of divisive parachute payments.
The Times report that, in light of Government warnings over how they deliver revenue further down the pyramid, the Premier League want to mirror their own funding structure and pay clubs on performance over the course of the season. They hope it would reduce the financial drop-off between the Premier League and the Championship with £1.6billion pledged over the next three years throughout the EFL.
The report further states, however, that talks have reached a deadlock because of the top-flight's desire to have control over the funding, due to concerns over the number of clubs in the EFL who are operating under unsustainable business practices and that simply giving them more money will fix long-standing problems.
A Premier League spokesman told The Times : "The Premier League and the EFL are in productive dialogue about all options for improving funding flows to the EFL, including the reform of parachute payments and reducing the 'cliff edge' between the Premier League and the EFL Championship. And importantly to also address similar cliff edges between the Championship and Leagues One and Two.
"It is our view that it is not as simple as more money to the EFL automatically leading to greater sustainability; we know from experience this is not the answer. However, collective reform, paired we new and robustly enforced financial controls, is the right way to address the current challenges."
Bristol City majority shareholder Steve Lansdown has long been a critic of the way money is distributed via parachutes payments, which pays clubs substantial fees over three seasons following their relegation from the Premier League.
It has created a culture whereby those demoted can effectively gamble for 1-2 seasons by spending Premier League-level money on transfer fees and wages in the hope promotion can then be secured. It has been pronounced in the two seasons during the pandemic with Fulham, Bournemouth and Norwich City all possessing financial capabilities far beyond their rivals.
City are one of a handful of clubs in the Championship who have never received parachute payments, given they've never played in the Premier League which Lansdown, and CEO Richard Gould, claims has created an immediate financial disadvantage and a glass ceiling for the Robins.
However, City would also now fall into the category of clubs existing with unsustainable business practices given their 2020/21 accounts showed losses of £38.4m and a wage bill that represented 212 per cent of revenue, leaving them at threat of failing the EFL's Profit & Sustainability rules for next season.
Research conducted by Sheffield Hallam University's Business School earlier this year revealed that the average value of parachute payments over the last five years is £29.5m annually, and those in receipt are three times more likely to be promoted than those who don't.
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