Parachute payments and the importance of tonight...

Pavilionaire · May 8, 2014

In 2014/15 Fulham, Norwich and Cardiff will be doing battle in the Championship armed with parachute payments of £23million apiece and a further £36million each still to come. At least two out of QPR, Wigan and Reading will have £18 million next season as well.

Financially it's getting harder and harder to compete. I know we said it last year, but this could be our last tilt at promotion for a while.

Ernest · May 8, 2014

And the relegated clubs wage bills will be horrendous unless they sell them and then they won't have the team to challenge like Reading have done this season

Blue Valkyrie · May 8, 2014

Bolton
Birmingham
Blackpool
Blackburn
Wolves

will also be getting around 8 million each as well.

beorhthelm · May 8, 2014

people keep on about the advantage of parachute payments, despite the historical evidence to the contrary. it certainly should make it easier for those clubs, but usually they have poor moral, poor backroom, poor managers, poorly run whatever, to be in the position of relegation in the first place.

Pavilionaire · May 8, 2014

A few years ago it used to be £16million and £16million over two years, now it's £59 million over 4 years. Would Burnley have gone up this season without their £8million parachute payment?

Tooting Gull · May 8, 2014

Pavilionaire said:
A few years ago it used to be £16million and £16million over two years, now it's £59 million over 4 years. Would Burnley have gone up this season without their £8million parachute payment?

Burnley's an interesting one. The answer is probably not...but then that maybe brought them into line with some others with bigger revenues (including us) and not necessarily bigger. And Derby haven't spent fortunes either.

QPR are the ones this season. I can see them going bankrupt if they don't make it. Shed very few players, huge wages, not enough relegation salary clauses...got Leeds/Wolves written all over them.

Pavilionaire · May 8, 2014

Over time you're seeing a general shift where long-standing Prem clubs that have amassed significant debts are being replaced by clubs who have spent beyond their wildest dreams because they've had the added security of enhanced parachute payments.

The likes of Leeds, Sheff Wed, Boro and Birmingham are hamstrung by the past, while Bolton and Blackburn are likely to go the same way. The same is likely of QPR and Fulham in the next couple of years. Conversely, clubs such as Swansea, Southampton, Stoke, Hull and West Brom have not been afraid to spend big, and established clubs like Villa and Sunderland have been leapfrogged.

Sooner or later the clubs coming down will be more economically stable as FFP restricts the level of debt that used to be run up - even if FFP doesn't have teeth the fact that most clubs will have stuck to it for a few seasons should mean those coming down will not be terminal cases like Pompey and, in most cases, very competitive. But for Ulloa's last-gasp winner all 3 of the 2012/13 Prem relegated sides would have finished Top 6, and I can certainly see that again in 2014/15 with the 3 that have come down this season.

martyn20 · May 8, 2014

Is there not another thread here about the possibility of Reading going into administration? How important are parachute payments?

Jim D · May 8, 2014

I did a bit of research over the last 10 seasons and of the 30 teams that were relegated....
1. Only 6 teams have gone straight back up (Sunderland, Brum twice, WBA, Newcastle and West Ham)
2. Only WBA were promoted in their second season.
3. Only Hull were promoted in their third season
4. Only Reading and Burnley were promoted in their fourth season
5. Wolves, Norwich, Soton, Palace and Leicester were all promoted after more than 4 seasons outside

This seems to suggest that the parachute money isn't as much of an advantage as people may think. It also shows that the most likely time to go back up is in the first season.

Alex Alex Dawson oo! oo! · May 8, 2014

Pavilionaire said:
A few years ago it used to be £16million and £16million over two years, now it's £59 million over 4 years. Would Burnley have gone up this season without their £8million parachute payment?

They lost £7.8m in 2012/13, exactly half of the loss BHA FC Ltd posted, which more or less equates to the parachute payment. However, the club did purchase both Turf Moor and their training ground during this period. The shortfall seems to have been covered in the same way as the Albion's, ie by loans.
This season, Burnley have spent very little on players but will have Charlie Austin's transfer fee in this year's accounts.
In answer to your question I'd respond why not?

Surrey Phil · May 15, 2014

"In April, the Premier League announced that it would be increasing its parachute payments to those relegated to the Championship, the arrival of a bumper new broadcasting deal making 'generosity' far easier to bear. The existing figure of £48million spread over four seasons would be raised to almost £60m (a 25% increase), whilst the first-year payout would increase by 44% to £23m (from £16m)".

As Cardiff, Norwich and Fulham have £23m more to spend than us next season what realistic hope have we got of promotion? No wonder Oscar walked!!

Blue Valkyrie · May 15, 2014

Surrey Phil said:
"In April, the Premier League announced that it would be increasing its parachute payments to those relegated to the Championship, the arrival of a bumper new broadcasting deal making 'generosity' far easier to bear. The existing figure of £48million spread over four seasons would be raised to almost £60m (a 25% increase), whilst the first-year payout would increase by 44% to £23m (from £16m)".

As Cardiff, Norwich and Fulham have £23m more to spend than us next season what realistic hope have we got of promotion? No wonder Oscar walked!!

Well they all have to play each other and points will be dropped.

We need to worry about getting 36 points in the bag from beating the bottom 6 home and away, and then we build on that.

Pinkie Brown · May 15, 2014

Tooting Gull said:
QPR are the ones this season. I can see them going bankrupt if they don't make it. Shed very few players, huge wages, not enough relegation salary clauses...got Leeds/Wolves written all over them.

But it won't be his fault...........

Herr Tubthumper · May 15, 2014

Jim D said:
I did a bit of research over the last 10 seasons and of the 30 teams that were relegated....
1. Only 6 teams have gone straight back up (Sunderland, Brum twice, WBA, Newcastle and West Ham)
2. Only WBA were promoted in their second season.
3. Only Hull were promoted in their third season
4. Only Reading and Burnley were promoted in their fourth season
5. Wolves, Norwich, Soton, Palace and Leicester were all promoted after more than 4 seasons outside

This seems to suggest that the parachute money isn't as much of an advantage as people may think. It also shows that the most likely time to go back up is in the first season.

Quite. I have read a lot about this. You also need to mention the teams which were further relegated to L1 with parachute payments.

Psychobilly freakout · May 15, 2014

I just do not understand why a team that gets relegated can be rewarded for failure. I get it that when it was introduced the teams in the premier league voted for it knowing that at least half the teams are under threat of relegation at some point and they are protecting themselves, but they are not protecting football at a lower level are they. wrong wrong wrong

Superphil · May 15, 2014

Psychobilly freakout said:
I just do not understand why a team that gets relegated can be rewarded for failure. I get it that when it was introduced the teams in the premier league voted for it knowing that at least half the teams are under threat of relegation at some point and they are protecting themselves, but they are not protecting football at a lower level are they. wrong wrong wrong

Quite agree, why not tell the clubs to factor in potential relegation into their wage/contract structure, someone earning £40k a week in the premier league should not expect to be paid the same if the team he plays for is relegated.

Couldn't Be Hyypia · May 15, 2014

I think the difference now is the massive size of the parachute. We'll see, but I suspect it will badly affect teams without the parachute over time.

Stato · May 15, 2014

Surrey Phil said:
"In April, the Premier League announced that it would be increasing its parachute payments to those relegated to the Championship, the arrival of a bumper new broadcasting deal making 'generosity' far easier to bear. The existing figure of £48million spread over four seasons would be raised to almost £60m (a 25% increase), whilst the first-year payout would increase by 44% to £23m (from £16m)".

As Cardiff, Norwich and Fulham have £23m more to spend than us next season what realistic hope have we got of promotion? No wonder Oscar walked!!

The BBC stated last year that average PL salaries were £25,000 to £30,000 per week.
A squad of 25 players on that kind of money would cost between £32 and £39 million a year.
If these three are paying anywhere near the average, assuming no relegation clauses to reduce salaries, they will still need to find some millions on top of parachute payments just to keep their current failed squads together.

If FFP fails to bring salaries down, it can only end the way the bank bubble did and I can't see governments coming in to bail out football clubs. (Except Real Madrid of course).

Blue Valkyrie · May 15, 2014

All they have to do is make the permitted FFP loss of non parachute teams 23million higher than the loss permitted for parachute teams.

Then the competition becomes even again.

RexCathedra · May 15, 2014

This seems to suggest that the parachute money isn't as much of an advantage as people may think. It also shows that the most likely time to go back up is in the first season

Perhaps not for promotion per se.

But the upwards pressure on salaries and transfer fees for everyone in the Championship is there whether the particular parachute-equipped teams go back up right away.

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