• Asset Growth
    Asset GrowthShow More
    SKU (Stock Keeping Unit) function in Inventory Management
    Benefits and Risks of Investing in Single Stock Futures
    Halving mechanism on several well-known Altcoins
    Examples of Wealth Tax Implementation in various countries
    Understanding Marginal Propensity to Consume (MPC)
  • Financial Advice
    Financial AdviceShow More
    Examples of Famous Bail Out Cases
    Phases in Kondratieff Cycles
    Bayesian Network principles in economics
    What are the Negative Impacts of Goodwill
    The Impact of Clientele Effect on Stock Investment
  • Investment Bank
    Investment BankShow More
    Determining Investment Objectives
    Comprehensive Strategic Partnership (CSP)
    Negative impact of nationalization of foreign companies
    Impact of Quantitative Easing (QE) on Bond Markets
    Understanding Bank Investment Contract (BIC)
  • Loan Facilities
    Loan FacilitiesShow More
    Common causes of balance overdue (BOD)
    Impact of Irrational Factors on Finances
    Advantages of Managed Floating Exchange Rate
    Types of Corporate Actions
    Calculating Ease of Movement
  • Marketing Strategy
    Marketing StrategyShow More
    Shifting Mechanisms in Business
    Factors Inhibiting Economic Freedom
    How Dark Pools Works and the Purpose
    Reasons for the State to Implement a Debt Ceiling
    Generalized System of Preference (GSP)
  • Contact
    • Terms of Use
    • Privacy Policy
    • About Us
Reading: Parachute Payments: The Premier League’s Financial Double-Edged Sword
Bringing Financial News Closer To You
Aa
klxnewsklxnews
  • Adventure
Search
  • Home
  • Categories
  • More Foxiz
    • Contact
    • Blog

Discover Finland’s 5 Exotic Islands: Hidden Gems for Nature Lovers

klxnews klxnews
Facebook Like
Instagram Follow
Youtube Subscribe
Tiktok Follow
  • Asset Growth
  • Financial Advice
  • Investment Bank
  • Loan Facilities
© Foxiz News Network. Ruby Design Company. All Rights Reserved.
klxnews > Blog > Economy > Parachute Payments: The Premier League’s Financial Double-Edged Sword
EconomySports

Parachute Payments: The Premier League’s Financial Double-Edged Sword

By klxnews 4 Min Read
Share
SHARE

Introduction

Parachute payments—financial cushions provided to clubs relegated from the Premier League (PL)—are designed to ease the shock of lost broadcast revenue. Yet these £44–68 million packages often distort competition, creating what critics call a “financial doping” system. As Championship clubs face existential crises, understanding this mechanism reveals why it’s both a lifeline and a threat to English football’s ecosystem.

Contents
IntroductionHow Parachute Payments Work: The Premier League’s Safety NetThe Dual Edges: Survival Tool or Competitive Weapon?Edge 1: The Lifeline (Intended Benefit)The Championship’s Survival Crisis: Collateral DamageReform Proposals: Balancing Rescue & Fair Play1.     Abolition with Compensation2.     Capped & Reduced Payments3.     Stricter Spending ControlsCase Study: Sunderland vs. Norwich CityConclusion

How Parachute Payments Work: The Premier League’s Safety Net

Governed by Premier League Rule V.7, payments follow a sliding scale:

  • Year 1: 55% of equal share revenue (£44m in 2023/24)
  • Year 2: 45% (£36m)
  • Year 3: 20% (£16m)
    Total: ~£96m over three seasons.

Purpose: Mitigate revenue drops after relegation. PL broadcast deals dwarf EFL’s—£100m+ vs. £8m/year. Without parachutes, clubs face insolvency (e.g., Derby County, 2021).

The Dual Edges: Survival Tool or Competitive Weapon?

Edge 1: The Lifeline (Intended Benefit)

  • Prevents Bankruptcy: Covers fixed costs (player wages, stadium debts).
  • Promotes Competitive Balance: Allows clubs like *Burnley (2023/24)* to retain core squads for promotion pushes.
  • Reduces Fire Sales: Avoids forced player liquidation at bargain prices.

Edge 2: The Distortion (Unintended Consequences)

Issue Impact Example
Wage Inflation Relegated clubs spend 107% of revenue on wages vs. EFL avg. 70% Stoke City paid £50m wages in Championship (2019)
Competitive Imbalance Parachute clubs outspend rivals 3:1 on transfers Norwich spent £54m post-2020 relegation vs. Luton’s £4m
“Yo-Yo Club” Advantage 70% of promoted teams (2010–2023) were recent PL sides with parachute funds Fulham, West Brom, Bournemouth

The Championship’s Survival Crisis: Collateral Damage

Non-parachute EFL clubs face unsustainable pressure:

  • Revenue Gap: Top Championship sides earn £25m annually vs. parachute recipients’ £44m+
  • FFP Loopholes: Parachute money isn’t fully counted toward Profitability & Sustainability Rules (PSR), enabling inflated spending.
  • Distorted Promotions: 85% of play-off winners (2015–2023) had parachute advantages.

Result: 21 EFL clubs entered administration since 2010.

Reform Proposals: Balancing Rescue & Fair Play

The EFL’s 2023 demand for a “75-25” redistribution split highlights growing tensions. Solutions in debate:

1.     Abolition with Compensation

  • Replace parachutes with larger solidarity payments (£88m/year to EFL).
  • Risk: Relegated clubs collapse under debt (e.g., Sheffield Wednesday).

2.     Capped & Reduced Payments

  • Reduce Year 1 payments to 40%, eliminate Year 3.
  • PL Counterargument: Weakens global appeal if relegated clubs become uncompetitive.

3.     Stricter Spending Controls

  • Align PSR calculations for parachute/non-parachute clubs.
  • Progress: 2024 talks propose squad cost limits (70% of revenue).

Case Study: Sunderland vs. Norwich City

  • Norwich (Parachute Recipient):
    • Received £42m post-2022 relegation.
    • Returned to PL in 2024 after one season.
  • Sunderland (No Parachutes):
    • Relegated in 2017 with £110m wage bill.
    • Entered League One after fire sales; took 4 years to rebuild.

Conclusion

Parachute payments epitomize football’s financial paradox: they rescue clubs from freefall while deepening inequality. As the Premier League negotiates its next EFL funding deal (due 2025), reforms must address the Championship’s “survival of the richest” reality. For relegated clubs, these payments offer oxygen—but for England’s football pyramid, they risk becoming a slow-acting poison.

 

klxnews
Share This Article
Facebook Twitter Copy Link
Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Apple Inc Stock Price

finviz dynamic chart for AAPL

Understanding EMBI (Emerging Market Bond Index)

9 Min Read

Trending

Avoid These 5 Causes That Make Your Car Interior Smell Bad

 Introduction A pleasant-smelling car interior is essential for a comfortable and enjoyable driving experience. However,…

4 Min Read

Bitcoin Price Under Pressure Amid Israel-Iran Conflict

In recent weeks, escalating tensions between Israel and Iran have created waves in global markets,…

5 Min Read

Boost Your Office Motivation: Effective Tips to Rekindle Your Work Spirit

Introduction Feeling a dip in work motivation at the office is a common experience that…

4 Min Read

Most Popular Post

Economy

Understanding the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) Negotiations

The Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA) represents a significant and…

5 Min Read
Health

Understanding the Side Effects of Frequent Use of Stomach Acid Medications

Stomach acid medications, commonly known as antacids, proton pump inhibitors (PPIs), and…

3 Min Read
Investment Bank

Top 7 Largest Banks in Europe Based on Total Assets

Banks are financial institutions that have a central role in the global…

14 Min Read
Politics

Indonesia and Thailand Strengthen Air Connectivity with Two New Flight Routes

Jakarta, May 22, 2025 — In a significant move to enhance bilateral…

5 Min Read
Health

Is Drinking Too Much Water Before Bed Harmful?

Introduction Drinking water is essential for our health, but have you ever…

4 Min Read

Recent Posts

  • Inflation in the United States Affected by Trump’s Tariffs

  • 9 Key Differences Between Progressive Web Apps (PWA) and Android Native Apps

  • Does OS Update Reduce Smartphone Performance? A Comprehensive Guide

  • The Origin of Grilled Satay: A Delicious Journey Through History

  • Basic Principles and Values ​​of Scandinavian Social Democracy

  • Discover the Enchanting Wonders of Lake Baikal: Siberia’s Majestic Natural Marvel

  • What are the Negative Impacts of Goodwill

  • Lionel Messi Makes History as the All-Time Top Scorer in FIFA Tournaments

  • Exploring the Advantages of Desktop Mode in Android 16

  • Matcha as a Healthy Alternative to Coffee: A Comprehensive Guide

Politics

Iran’s Supreme Leader Khamenei Prepares Three Senior Clerics as Successors Amid Iran-Israel Conflict

Introduction Amid escalating tensions and conflict between Iran and Israel, Supreme Leader Ayatollah Ali Khamenei has reportedly prepared three senior religious clerics as potential successors, should he perish in the…

3 Min Read

Your may also like!

TechnologyWorld

How to Install Windows 11 Without Using a Microsoft Account

3 Min Read
Technology

Unveiling the Power and Innovation Behind Xiaomi’s Latest Chip

4 Min Read
Technology

The Indispensable Practice of Regular Windows Updates: Fortifying Security and Enhancing Performance

4 Min Read
World

Discovering the Uniqueness of Dubai Chocolate: A Sweet Sensation

2 Min Read

KLXNews.com 2020 – 2025

All rights reserved

Our website stores cookies on your computer. They allow us to remember you and help personalize your experience with our site.

Read our privacy policy for more information.

Quick Links

  • Asset Growth
  • Financial Advice
  • Investment Bank
  • Loan Facilities
Advertise with us
147 Lake Louise Dr, Lake Louise, AB T0L 1E0, Canada.
 
Call : +1 403-522-3511
Welcome Back!

Sign in to your account

Lost your password?