Relegated Premier League clubs set for sizeable revenue boost

Teams relegated from the Premier League will soon have the opportunity to allocate a larger percentage of their revenue to player wages compared to their Championship counterparts.

The disparity between the Premier League and the Championship has become increasingly pronounced, with wealthier clubs consolidating their positions while others struggle to keep pace.

It has always been a little farfetched to think of the Premier League as the tip of a single, unbroken pyramid that tapers out into the National League and other regional leagues. The differences across levels are becoming more noticeable, though.

‘Parachute payments’ are in place because the jump from the Championship to the Premier League is the most significant. They ease the transition for demoted teams into life with drastically reduced finances. However, this solution, although practical, presents a difficulty since demoted teams benefit so much from the funds they get.

Leicester is nearly guaranteed to win the Championship, while the other three relegation teams are all in the top four. Although the payments may help in the short run, they are a Band-Aid solution at best. The freshly demoted Premier League clubs might give the teams in the Championship a run for their money.

Championship teams worried

According to The Times, lower-tier clubs are growing nervous about the financial benefits for teams relegated from the Premier League. These teams may suffer as a result of the ‘New Deal’ agreement between the Premier League and the EFL.

On Nov. 21, the Premier League teams vote on a six-year contract. It would provide the EFL’s 72 clubs an additional $183 million each year, on average. A total of less than $1.1 billion would be paid out over six years, with the bulk of the money being paid out in the last two years.

The settlement is expected to contain sweeping new rules that would prevent English Football League clubs from spending more than 70 percent of their income on player salaries. This number would rise to 85 percent for Premier League clubs and recently relegated teams. After a year in the Championship, that percentage decreases to 80 percent. That is on par with the rest of the league.

A majority of EFL teams reportedly have no other choice than to take the offer. Relegated teams will continue to get more money than the rest of the Championship. This is despite revisions to the parachute payment system.

What do they say?

Many clubs fear the new deal may provide benefits to demoted teams.

“There is already a massive financial gap with the parachute clubs and allowing them to spend more than the rest of the Championship will only increase that gap — it’s going to be really tough to bridge it,” the unnamed chief told The Times.

“There is a danger that instead of the cliff edge between the Premier League and the Championship there is going to be a new one between those relegated teams who get more money, and can spend 85 percent on wages, and the rest.”

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