New research conducted into the advantage of parachute payments has concluded that clubs are three times more likely to earn promotion back into the Premier League while fuelling unsustainable losses at rival clubs.
Bristol City owner Steve Lansdown, chairman Jon Lansdown and CEO Richard Gould have all been critical of the system in the past and the unfair playing field they create.
When teams are relegated to the Championship, they receive three payments that are divided as an equal share of broadcast revenue paid to Premier League clubs to help mitigate the huge drop in revenue that fails to cover the wage bills accumulated.
As reported by Mail Online, with research conducted by Sheffield Hallam University's Business School, the average value of parachute payments over the last five years is £29.5million annually.
The research was commissioned by EFL chairman Rick Parry while negotiations continue with the Premier League over a potential reform of the parachute payment system. Information was gathered from the last four years in comparison to previous research conducted from 2006-2017.
It confirmed that clubs have a 22 per cent chance of being promoted in the last four years with the extra cash compared to 7.3 per cent without - also meaning sides are twice as likely to go up compared to the years prior.
Clubs who are not receiving payments are also three times more likely to be relegated. They now have a 15.9 per cent likelihood of dropping to League One compared to 4.9 per cent in the years prior.
The payment has increased from an average of £12.8m between 2006 and 2015 to £29.5m over the last five years while the average points gap between parachute clubs increased from plus five to plus 8.6 over four seasons.
The research also confirmed £233m was handed to seven clubs last season averaging at £33m per club meaning sides with the payments had an average revenue of £53m compared to £14.5m.
The disparity has been evident this season with Fulham set for an immediate return to the Premier League while being able to keep the likes of striker Aleksandar Mitrovic on top-flight wages and Bournemouth also likely to take the other automatic play-off spot as they experience a second season of parachute payments following their relegation in 2019/20.
West Brom, relegated in 2020/21, may have struggled in the league but they flexed their muscles in the transfer market having spent £7.7m on striker Daryl Dike in January.
Last season Norwich and Watford were promoted last season at the first time of asking, while Bristol City are only one of five Championship clubs who have never played in the Premier League, along with Luton, Millwall, Preston and Peterborough. It means clubs who have not received extra funding are having to take a gamble in a bid to earn their promotion - often leading to huge debts.
Derby, Reading and Sheffield Wednesday are just some examples of those while City could also face a potential points deduction next due having posted losses of £38.4m.
Dr Rob Wilson, who helped conduct the research, told Mail Online: "Despite what the Premier League say there is clear evidence of parachute payments distorting the competitive balance of the Championship.
"To compound this the payments force other clubs over-stretching themselves to try to keep up, which leads to financial instability and the danger of them going bust.
"The whole system is broken. The parachute money should be ring-fenced and redistributed more equally across the whole of the EFL."
In February, Steve Lansdown called for a better distribution of money filtered from the Premier League during an interview with The Times, highlighting the disproportionate advantage.
He said: "Fans always like to see a name coming in but we can’t really afford that. If you’ve been in the Championship for a long time like we have, without ever having featured in the promised land, the problem is you don’t have those parachute payments.
"The Championship has effectively got to become Premier League 2 and a better distribution of the monies down through the pyramid would improve things.
“The parachute payments don’t really help. Stoke is a good example, a very well-run club. They’ve had the parachute payments, they spent it and haven’t made it [back up], so they’re having to readjust quite a lot. You’ve had the Boltons in the past that have got it wrong and gone all the way down. It’s more controlling expenditure when you come down. Parachute payments create an unfair playing field.”
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