The Premier League and the EFL have had secret meetings to discuss the controversial parachute payments system being phased out, with alternatives to be presented to top-flight clubs for consideration.
Throughout the Covid period, there were continuing discussions about how to better organize money distributions. While the EFL has identified parachute payments as a major issue, the Premier League has stood firm in its support for the current system, citing the £1.5 billion it sends down the tiers over three years.
This stance has shifted as a variety of other alternatives have been created and discussed among executives. There is a lot of pressure to make those changes happen.
Clubs that are demoted from the Premier League are awarded parachute payments to help them cope with the financial loss of exiting the top level. The EFL claims that this creates a competitive imbalance by forcing other clubs to invest money they don’t have to.
According to one of the Crouch review’s recommendations, the Premier League and EFL should come up with a solution to the parachute payments problem by the end of the year, with outside voices brought in to advise on reform if no solution can be reached.
Although it is thought that negotiations have progressed, no suggestions have been submitted to Premier League clubs or the EFL board. The Premier League board of directors agreed on Monday to hold an extraordinary shareholders’ meeting this week to consider the Crouch investigation.
Parachute payments will be in place for another three years under the provisions of the domestic TV deal authorized by the government this year. The Premier League’s chief executive, Richard Masters, signaled on Friday that he was softening his stance on parachute payments.
“If there is a way of uniting the clubs in our league and the clubs in the Championship with a new proposal,” he told the BBC, “we should drive for that and we’re happy to work at pace on that project.”
The Premier League’s shareholders are likely to be divided on new ideas, with parachute payments serving as a safety net for clubs committed to huge investment in the top flight. Several Premier League executives have spoken out in response to the Crouch report, with West Ham vice-chairman Karren Brady supporting the parachute payout structure.
Arguing that clubs would go bankrupt without the money, she wrote in the Sun that Tracey Crouch had “fallen into a do-gooder trap” by proposing reform. “Maybe Tracey and [EFL chair Rick] Parry confuse competition with fairness,” she wrote.