English Football League chairman Rick Parry has challenged evidence given to a parliamentary committee about parachute payments by the Premier League’s chief executive Richard Masters.
Parry and Masters appeared before the Digital, Culture, Media and Sport committee last month and were asked about the payments, which are made to clubs who are relegated to the Championship.
Parry highlighted research by Sheffield Hallam University at the hearing on March 28 which found that, over the five seasons ending in 2020-21, clubs in receipt of parachute payments were three times more likely to be promoted back to the Premier League than clubs who did not receive them.
Masters said the Sheffield Hallam research also found that the Championship was “the most competitive league in Europe”.
Parry has now written to the DCMS committee to challenge Masters’ comments.
He said he had re-read Sheffield Hallam’s research after the hearing and was “content that there is no claim whatsoever” that the Championship was the most competitive league in Europe.
He added: “So concerned were the writers (of the report) with the competitive imbalance caused by parachute payments that they suggested the EFL should consider a handicapping system whereby clubs with parachute payments should start each season on minus five points.
“Therefore, the reality is the polar opposite of the Premier League’s assertion to the select committee, and again, that is disappointing.”
DCMS committee chair Julian Knight says the payments are “shutting the door” on clubs seeking to reach the Premier League.
“This (Sheffield Hallam) study gives the lie to any suggestion from the Premier League that parachute payments are not having a distorting effect on competition for those trying to reach the top flight’s promised land,” Knight said.
“The current financial arrangements amount to the big clubs shutting the door on those below. The Premier League must commit to working to find a fairer solution to safeguard the health and sustainability of the game.”
The EFL and the Premier League, along with the Football Association, are in talks over a ‘New Deal For Football’ which includes discussions around parachute payments.
The Premier League is understood to be willing to reform parachute payments but does not think they should be abolished. It believes the payments are essential in order to give promoted clubs the confidence to invest in their squads and therefore be competitive in the top flight.
The ‘New Deal’ talks are taking place at a time when the Government is committed to introducing an independent regulator for football. The Government proposes the regulator will have backstop powers to impose a financial settlement on the EFL and the Premier League if they cannot agree one themselves.
The Government’s white paper on football governance, published earlier this year, identified “a clear need for football to reassess both the magnitude of revenue distributions and the way in which money is allocated between teams”.
The paper added: “The current approach has affected competitiveness and led to financial risk-taking by clubs – the persisting revenue disparities encourage clubs to take financial gambles in an attempt to achieve promotion or avoid relegation.
“This is accentuated by parachute payments, which can distort competition in the Championship and encourage greater financial risk-taking by clubs that are not in receipt of them.”
The PA news agency understands the Premier League has offered the EFL an additional £125million of funding per year as part of the ‘New Deal’ talks.
Approximately £450m will be provided to EFL clubs under an existing deal – excluding parachute payments – over the current broadcast cycle from 2022 to 2025. That is part of an overall package of support to the wider pyramid totalling £1.6billion to the end of the cycle.
Independent research found the Championship was the fourth most competitive league out of the 10 first and second tiers of Europe’s ‘Big Five’ leagues over the last 25 years up to and including the 2021-22 season, using the same index to assess competitive balance which was employed in the Sheffield study.
It was the third most competitive over the last five years, and the most competitive in 2021-22, the research found.
Outcomes for clubs promoted to the Premier League are broadly comparable with the other four big European top flights, but clubs relegated from the Premier League performed worse on average than the clubs dropping down from the top divisions in Spain, Italy, France and Germany between 2001-02 and 2018-19.
