Chairman of the EFL Rick Parry has been a vocal critic of the impact parachute payments have on the Championship
The Government has announced that parachute payments will now be included in the independent regulator’s assessment if it is called upon to impose a television cash settlement between the Premier League and the EFL. The payments, which are made to top-flight clubs when they are relegated to the Championship, were controversially excluded in the original Football Governance Bill introduced to Parliament under the Conservative Government earlier this year.
However, a strengthened Bill is being brought back before Parliament on Thursday, giving the regulator scope to consider the payments under its backstop powers which it can use to mediate a financial deal between the leagues, should they be unable to agree one themselves. The updated Bill will now require clubs to provide ‘effective engagement’ with fans on ticket prices, at a time when some Premier League club supporters’ groups are concerned their teams are trying to price out loyal season ticket holders.
Another significant change is the obligation on clubs to provide greater transparency on their work towards meeting equality, diversity and inclusion (EDI) standards as part of the regulator’s corporate governance code for clubs, something Kick It Out and the Black Footballers Partnership have both called for in the past. The consideration of parachute payments in the assessment of a fair financial deal is arguably the most significant change, however.
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Rick Parry, the chairman of the EFL, has been a vocal critic of the impact parachute payments have on the Championship. The Government has stated that excluding these payments would significantly limit the regulator’s ability to assess financial stability across football.
The Premier League argues that these payments are crucial for newly promoted clubs to invest and compete at the top level. It is understood that these payments will only be scrutinised if they pose a systemic risk to financial sustainability.
The new Bill will still require clubs to be safeguarded from the risks associated with relegation. In response to the new Bill, the Premier League expressed concerns about the regulator’s “unprecedented and untested” powers to intervene in the distribution of top-flight revenue.
They warned this could negatively affect the league’s competitiveness, investment in world-class talent, and global appeal. Talks between the Premier League and the EFL regarding a ‘New Deal’ on television revenue distribution have been paused since March.
EFL chairman Parry commented: “We believe the Bill has been framed in a way that will enable the new regulator to protect and achieve the sustainability of clubs across the entire football pyramid. It is also pleasing that the State of the Game report, which will provide the objective and independent basis for the new regulator’s work, will be delivered within 18 months. We look forward, in collaboration with our clubs, to making a significant contribution to this important piece of work.”
The Bill has been revised to remove a contentious clause that suggested club takeover approvals should consider the trade and foreign policy objectives of the Government. This clause faced heavy criticism, including from the Premier League, leading to its removal to ensure the regulator’s full independence from the Government and industry.
The initial Bill did not pass through Parliament before the General Election in July but has now been reintroduced by the Labour Government. Culture Secretary Lisa Nandy commented: “English football is one of our greatest exports and a source of national pride which this Government wants to see thrive for generations to come.
“But for too long, financial instability has meant loyal fans and whole communities have risked losing their cherished clubs as a result of mismanagement and reckless spending. This Bill seeks to properly redress the balance, putting fans back at the heart of the game, taking on rogue owners and crucially helping to put clubs up and down the country on a sound financial footing.”
The establishment of an independent football regulator was the key recommendation of the fan-led review, initiated by the previous Government in 2021 following the European Super League fiasco. The Tories had pledged a fan-led review in their 2019 General Election manifesto, coming on the heels of Bury’s financial demise.
Football reform organisation Fair Game has largely endorsed the amendments to the Bill but believes it still falls short in ensuring equitable financial distribution. Niall Couper, CEO of Fair Game, commented: “If the Bill is to deliver financial sustainability for the football pyramid then the regulator must have powers to set parameters around what any deal must deliver – and that should include closing the gaps between divisions and rewarding well-run clubs.”
Sanjay Bhandari, chair of Kick It Out, praised the inclusion of EDI criteria within the regulator’s remit, added: “Football rightly celebrates and makes promises about its ability to unite and represent communities. Now it needs to be more transparent and accountable for those promises.”
Delroy Corinaldi, executive director of the Black Footballers Partnership, remarked: “Any chosen EDI strategy should ensure it is not about picking out a token black or brown face and giving them a job title without the power. EDI needs to be lived and breathed by the clubs if this Bill is to achieve the aim of removing biases and systemic obstacles to black footballers’ progression off the pitch.”
