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OPINION: Parachute Payments Revisited - A Workable Solution?

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James Richards looks at workable solution to even out the playing field for those Championship clubs that could be left behind by parachute payments, following on from his original article a couple of weeks ago.

Is this the solution to the parachute payment conundrum?
Is this the solution to the parachute payment conundrum?
Handout/Getty Images

Parachute payments are a contentious issue at the best of times. There are some good points and clearly there are also some bad ones, the biggest of which is the unfair advantage it gives relegated sides over those already in the Championship. After considering some of the responses and listening to The Tilehurst End Podcast episode 98 I have tried to come up with a solution that will allow these payments to continue without the disparity between clubs with them and without getting any bigger.

Recap

Not to go over old ground too much but I will quickly recap the main advantage and disadvantage of parachute payments as I see it. The main benefit is that it gives promoted sides the confidence to delve into the transfer market in an attempt to be competitive in the Premier League. With the safety net of the parachute payments they will be able to offer for quality players and will hope to attract them with generous wages that, should they be relegated, would be covered by these payments. This will keep the Premier League competitive and hopefully prevent the three that come up from the Championship going straight back down each season.

The main disadvantage is that you are rewarding failure by giving a relegated club a huge financial advantage over the rest of the sides in the Championship which, understandably, many feel is outrageous.

The Solution

Well here it is, after taking a look at all the ideas in the ether I have come up with, what I believe to be, a workable plan.

  • Firstly all Premier League clubs must submit a financial plan in case of relegation to an independent auditor once every three years.  This plan will detail what the club would do to ensure their financial security if they went down to the Championship.  Any promoted side must submit a new plan within a specified time frame of promotion being confirmed.

  • At the end of the season a club relegated from the Premier League has 14 days to submit a list of 10 players whose contracts will be 75% covered by the parachute payments.

  • Should any of the 10 listed players leave then NO substitute can be made.

  • 75% of the basic wage of any player listed will be covered by the payments for up to 2 years up to and including a wage of £50,000 per week. (Essentially this means that the maximum contribution from the parachute payment is capped at £37,500.)

  • If a club submits a player who is receiving over the £50,000 cap then the club will have to fund any wage above the maximum payment of £37,500 themselves.

  • All parachute payments cease after two years or upon the club receiving them being promoted.

Ok so there it is. Within the remit of this plan a relegated club could potentially receive a maximum of £375,000 per week towards their wage bill if all the 10 players on their list are on £50,000 per week or less. However this will still require the club to fund £125,000 per week toward these ten players alone, based on the assumption that they are all on £50,000 per week. The figure could rise if they have any player paid more than this.

In reality it is likely that some of these players would chose to leave but the club would only be under any compulsion to sell them if relegation release clause values were met.

This still gives an advantage to the relegated side but it would allow those promoted to the Premier League the confidence that, if they should offer big contracts to new signings, then they will not face financial ruin should they go down. I hope this is a more balanced approach than the current model of just throwing money at club and allowing them to spend it how they like. After all this has been proven to fail on a number of occasions with clubs still managing to end up in significant financial difficulty despite receiving all this cash.

Anyway I look forward to you all picking this apart and sending me back to the proverbial drawing board!

Agree with James' suggestion? Let us know how you think parachute payments could be tweaked by leaving your thoughts in the comments below.