Like this:

It seems to have slipped into the status quo without so much as a question, the Premier League strong-armed the Football League into approving a re-evaluation of the parachute payments system, increasing money received by each club from an already-lofty £16m over 2 seasons to a frankly unbelievable $48m over 4 seasons. This happened almost overnight and nobody batted an eyelid, and for the life of me I cannot understand why.

If you’re unfamiliar with the concept of the parachute payments, this is effectively a four-year bail-out plan handed to the three sides relegated each year from the Premier League. It’s divided into annual payments, two of £16m and two of £8m. Going into effect this past summer, West Ham, Blackpool and Birmingham City have already benefited from these new batch of payments and the former have wasted no time in using it to their advantage.

The main goal of the payments are to cushion clubs from the revenue reduction that comes with relegation from the Premier League, and on paper that’s perfectly fair enough. Teams can’t expect to be competitive in the Premier League if they have to keep their budget within touching distance of one that could survive relegation after all. That’s not up for debate, but is £16m really the price they require? Putting it into perspective, that amount on its own would cover a team’s entire annual wage bill for a squad consisting of 20 players earning over £15k per week. In short, the parachute payments in their current form don’t so much help teams recover but help them maintain Premier League spending in the Championship.

I would be far more inclined to accept it if the payments continued to be over a period of just one or two years, but four years?!? This is ridiculous. Frankly, if teams haven’t managed to get their contracts and finances sorted after 3 years and £40m then they don’t deserve further help and should be subject to sanctions, not even more hand-holding. It would also be a pill more easily swallowable if the rest of the Championship were receiving help in a similar ballpark. Sadly, the new deal only promises Championship clubs not affected by parachute payments merely £2.2m a year. I cannot imagine a justification for a team receiving £13.8m more than other teams in their league a full 12 months after being relegated, and even less for them receiving £5.8m more a full 3 years after the drop.

The latest message coming out of the football league is that new Financial Fair Play ruling are going to come into effect from the beginning of the 2012/13 season. These rules are designed to stop teams spending far beyond their means and give a more level footing for all. Your outgoings must be relative to your revenue which seems sensible, but this tends to make an annual injection of £16m all the more advantageous. Football has become a sport blighted by mediocre players with huge contracts (i’m looking at you Bullard) and FFP genuinely seems like it’s trying to see an end to those kind of deals with sensible spending. This new parachute payment deal seems to be trying to achieve quite the opposite however. If this isn’t an open invitation to throw around as much money as you like, what is? As usual, the messages sent between the various footballing bodies are painfully mixed.

The official press release at the time of the new payments claimed that they were changing to try and close the quality gap between the Premier League and the Championship. I genuinely cannot see how that is a legitimate outcome. With added income such as gate receipts, Championship television deals, inevitable player sales and the like all coming in on top of the parachute payments, this means that all but the most financially stretched clubs are going to have an awful lot of their bailout money left over when all’s said and done. Not everyone will be so lucky.

As previously mentioned, the financial benefits of the new system have been illustrated by the actions of West Ham this summer. Very little effort has been made to adapt their expenditure to a more modest level, they’ve held onto high-earners like Robert Green, Mark Noble, Carlton Cole and Julien Faubert and more. On top of this, they’ve gone out and actually added to their wage bill, spending £4m on Kevin Nolan and bringing in John Carew too. Both are undoubtedly on Premier League wages. I should note that this isn’t a criticism of West Ham at all, they’re purely taking advantage of a ludicrous system and they’re guaranteeing their own immediate future. Their squad is now of a standard that means that they are almost certainly going straight back up, and it’s all thanks to the unfair advantage of parachute payments.

…..but wasn’t this always the plan?

There seems to be only one endgame for this new set-up, and that’s a far higher percentage of relegated teams boomeranging back up to the Premier League at the first attempt and this in turn creating a collection of 25/26 teams rotating up and down like clockwork with the odd fairytale exception. As for the rest of us? We simply can’t hope to compete with the spending power that the parachute payments offer without foreign investment (severely curtailed by FFP) and therefore getting promoted becomes an even more distant dream.

A cynic would point out that this scenario fits conveniently into the desired modus operandi for Premier League chairmen like Phil Gartside, who recently proposed abolishing relegation altogether in favour of the financial security of a break-away league. He wants a closed shop similar to the NHL or NFL in America and if it’s close enough to being the same teams going up and down every year, then his extravagant suggestion suddenly holds more weight. Convenient eh?

It’s easy to hate West Ham for their spending during this window, but it’s not their fault. It’s the system that’s broken, a scheme seemingly put in place to intentionally bring about a breakaway elite tier and widen the gap even further.

That’s just a conspiracy theory though, right? Please leave me your comments with your thoughts, I always value those.

UPDATE: I’ve added a bit of an update to this post at the link below:

http://irritatingfootball.wordpress.com/2011/09/05/boomerang-bonds-update/

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