The cost of promotion

[RVclaret]

Following the recent release of Fulham's and Bournemouth's accounts, the three clubs promoted to the Premier League last season lost £174,500,000 between them despite two of them receiving parachute payments.

Fulham's wage bill decreased from 110m (Prem) to 90m (Champ). This is a new Championship record. Their owner lent 116.5m in the year which was converted to shares. Their total losses, over the years, now stands at 563m.

I find it interesting - everyone (looking at the media) was loving the likes of Mitrovic in the Champ last season, setting goal records etc. yet he was costing them 70k a week and contributing towards a 69m operating loss.

Here is Kieran Maguire's short thread on Fulham's accounts for a bit more depth:

https://twitter.com/KieranMaguire/statu ... 0541809665

A conversation I was having with a mate, who's a supporter of another Championship team and always criticises parachute payments... in terms of fair play in the Championship, is this a parachute payment problem or is it an EFL FFP problem?

Bournemouth in particular just seemed to buy loads of top Championship players last season to almost guarantee promotion, yet they record a 60m loss?

[Woodleyclaret]

Bournemouth have breached the joke fair play rules on many occasions
Eddie paid top money and wages for players bankrolled by a billionaire owner
Gates average 11,000 yet still no action re oversoending

[Spike]

Why do Ballmouth get such special treatment by the authorities?

[Claretforever]

I’d say it’s more of a Premier League v EFL problem, aside from rich owners here and there.

Fans often criticise parachute payments, yet they are part of the deal when you gain promotion. So you are successful, go up and those payments have been earned. You also get them if you go down, and/or when still in the Premier League if parachute payments come back into the pot due to a club expecting to receive them in years 2 and/or 3 being promoted again during that time.

They are designed to soften the blow of relegation so you don’t face immediate doom, which would be more than a double punishment for daring to gain promotion for a club like ours. They also helps protect the Premier League brand. Ultimately fans of other clubs want you to fail so their clubs prosper.

The real problem, I believe, is the gap between the Premier League and the EFL. £100-£150m annual broadcasting payments v what is now £9m(it was under £5m recently) is too big a gap. I really do believe the money should be shared down the leagues more. I don’t mean equally at all, just a lot better than it is. If the gap was 30-40% less than what it is now, for example, I doubt parachute payments would be needed. I haven’t done the maths though.

Why would the Premier League explain the above when it suits them to have something to bargain with, and focus is away from the main issue? Why would they agree to reduce their own payments at all? Some would argue why should they?

Perhaps I’ve gone off topic a little.

[IanMcL]

Luckily, we sold all our players and made loads to offset our debt and pay Garlick our money.

[RVclaret]

Luckily, we sold all our players and made loads to offset our debt and pay Garlick our money.

You call it luckily, but the thing is, are we an example of the way things should be done by relegated sides?

- reducing the wage bill to a sustainable Championship level, both through significant relegation clauses and shifting players on big contracts
- accepting we need to sell players to be complaint with FFP, get cash in the bank and just
- overall protecting the financial health of the club

Yes I understand we had debts to pay as well, so we are a little bit extreme in the amount of sales, but clubs like Watford have large debts yet Watford chose NOT to sell Joao Pedro and Sarr.

No rival fan can say we have overspent or cheated the system when we have a wage bill which is way lower than 100% of revenue (most Champ clubs over 100%) and we will be likely be recorded a net profit.

If you compare it with the clubs from the OP we are the complete opposite.

[Bosscat]

You call it luckily, but the thing is, are we an example of the way things should be done by relegated sides?

- reducing the wage bill to a sustainable Championship level, both through significant relegation clauses and shifting players on big contracts
- accepting we need to sell players to be complaint with FFP, get cash in the bank and just
- overall protecting the financial health of the club

Yes I understand we had debts to pay as well, so we are a little bit extreme in the amount of sales, but clubs like Watford have large debts yet Watford chose NOT to sell Joao Pedro and Sarr.

No rival fan can say we have overspent or cheated the system when we have a wage bill which is way lower than 100% of revenue (most Champ clubs over 100%) and we will be likely be recorded a net profit.

If you compare it with the clubs from the OP we are the complete opposite.

They can and they do ... but we know different

[brexit]

When do the FFP rules kick in? When we get promoted? After three years in the EPL? Or are they in force now?

[Colburn_Claret]

I’d say it’s more of a Premier League v EFL problem, aside from rich owners here and there.

Fans often criticise parachute payments, yet they are part of the deal when you gain promotion. So you are successful, go up and those payments have been earned. You also get them if you go down, and/or when still in the Premier League if parachute payments come back into the pot due to a club expecting to receive them in years 2 and/or 3 being promoted again during that time.

They are designed to soften the blow of relegation so you don’t face immediate doom, which would be more than a double punishment for daring to gain promotion for a club like ours. They also helps protect the Premier League brand. Ultimately fans of other clubs want you to fail so their clubs prosper.

The real problem, I believe, is the gap between the Premier League and the EFL. £100-£150m annual broadcasting payments v what is now £9m(it was under £5m recently) is too big a gap. I really do believe the money should be shared down the leagues more. I don’t mean equally at all, just a lot better than it is. If the gap was 30-40% less than what it is now, for example, I doubt parachute payments would be needed. I haven’t done the maths though.

Why would the Premier League explain the above when it suits them to have something to bargain with, and focus is away from the main issue? Why would they agree to reduce their own payments at all? Some would argue why should they?

Perhaps I’ve gone off topic a little.

While I agree that there needs to be a fairer distribution from the PL to the EFL, the Prem would argue from a different pov. Namely that whilst it would help those clubs struggling to stay sustainable, it would also benefit the many teams, who abuse the EFLs own FFP rules. Why should the PL prop up badly run businesses and support bad practices.
I honestly think that the EFL has to do more to sort it's own house out before asking for more money.
They have 2 options imo, enforce the FFP properly, or exclude those clubs breaking FFP from receiving money from the PL. They can't have it both ways.
Before promotion I always hated parachute payments, it is unfair on the rest of the EFL. I've also grown to realise that it is a necessary evil, not because its fair, but because of the gap between the PL and the EFL, relegation could cause a massive problem in the short term finances for every team going down, its inevitable. Those like Everton are a different matter though.

[Chester Perry]

I’d say it’s more of a Premier League v EFL problem, aside from rich owners here and there.

Fans often criticise parachute payments, yet they are part of the deal when you gain promotion. So you are successful, go up and those payments have been earned. You also get them if you go down, and/or when still in the Premier League if parachute payments come back into the pot due to a club expecting to receive them in years 2 and/or 3 being promoted again during that time.

They are designed to soften the blow of relegation so you don’t face immediate doom, which would be more than a double punishment for daring to gain promotion for a club like ours. They also helps protect the Premier League brand. Ultimately fans of other clubs want you to fail so their clubs prosper.

The real problem, I believe, is the gap between the Premier League and the EFL. £100-£150m annual broadcasting payments v what is now £9m(it was under £5m recently) is too big a gap. I really do believe the money should be shared down the leagues more. I don’t mean equally at all, just a lot better than it is. If the gap was 30-40% less than what it is now, for example, I doubt parachute payments would be needed. I haven’t done the maths though.

Why would the Premier League explain the above when it suits them to have something to bargain with, and focus is away from the main issue? Why would they agree to reduce their own payments at all? Some would argue why should they?

Perhaps I’ve gone off topic a little.

We have been through this a number of times now

What everyone forgets and that includes the fan led review and subsequent government White Paper, is that the real problem is the payments from UEFA club competitions (which is about to be added to by FIFA's expanded club World cup) - English participants in the Champions League, who tend to get to the final 8 earn around £150m - £200m extra per season through prize money, additional match day and commercial revenues. The expanded format due in 2025 will only increase those earnings. Some clubs are getting in excess of £25m simply for qualifying for the Champions League by way of Coefficient payments. To fit the expanded FIFA and UEFA competitions in the Premier League is likely to be forced to reduce to 18 teams, the process to try and get to that point has already begun at FIFA and UEFA. All of this is why I believe that the Independent Regulator of Football will ultimately fail to protect the game.

What the Premier League has, bizarrely, not mentioned is that Parachute Payments are about making the Premier League a stronger competition by increasing the ability of promoted teams to enhance and deepen their squads, a necessary perhaps more important side effect is that relegated teams can come back up in a stronger position to compete for longer. It is this depth of competition that makes the Premier League the commercial behemoth it now is, the stories that emerge of fallen teams returning adds to the narrative while remaining familiar to established global audiences. It still allows new participants who go about their business with clear strategic methods and enrich the tale.

Of course EFL Chairman Rick Parry knows all about this he just won't speak of it - he would rather the big six just dominate the English game forever (hence his collusion in Project Big Picture, particularly with the owners of the club he used to be Chief Exec at). Parry thinks that the Premier League Magic Money Tree will grow forever, but what he is actually doing is putting it under threat by weakening the competition and the nature of English football. I find it interesting that he wants the Premier League to reiterate the offer he made, when he was Chief Exec of the Premier League, to the then Football League of a guaranteed share of Premier League revenues, the Football League refused that offer of 20% and now he is demanding 25% of a much bigger pot. Parry is not concerned that the current monetary gap in the Premier League between top and bottom is in excess of £450m a season (and growing not just in value but the number of clubs participating at the top end of revenues), but is concerned of a £55m or so gap in the Championship that has been relatively stable for the last 3 cycles.

Now we see that Parry is prepared to drop the TV blackout, to try and get a extra revenues for his members, sacrificing possibly the last of the old custodian values in the game - Interestingly the Premier League and Championship clubs are not in favour of this, they believe it devalues their product domestically. The Premier League being acutely aware of it during the Covid Lockdowns. Currently the Premier League provide the largest collective source of revenue to the EFL, there are ways in which the distribution of those monies could be improved, even the Premier League acknowledge that.

What we haven't seen is the EFL propose a satisfactory means of distributing the monies the current 80:12:8 split across the EFL leagues is as much an 'abomination' (to use a Parry term) as the one Parry protests of the Premier League to Championship. Equally so, is the inconsistent approach to Profit and Sustainability in those Leagues. The suggested merit payment approach will only work within the EFL ladder if the gaps between Leagues 1 and the Championship are also closed.

Parry has repeatedly failed the game and has failed the EFL a number of times in his actions. The Fan Led Review was ultimately flawed because the whole thing was steered with a declared upfront solution in mind. It will be popular because supporters of more clubs feel they may gain, but ultimately it and the IReF are unlikely to deliver what many believe it promises, Why? because the IRef has no role of influence over FIFA/UEFA or even the European Clubs Association and it they who will have the biggest influence at the top of and consequently, given proposed funding channels, the whole of the English game.

[Claretforever]

A really enjoyable reply to read that, Chester.

“Parachute Payments are about making the Premier League a stronger competition by increasing the ability of promoted teams to enhance and deepen their squads“

That’s what I meant by protecting the Premier League brand. They need clubs to spend and compete when promoted, and clubs relegated and going to the wall aren’t a good look either.

Strangely though, fans of EFL clubs not receiving PP’s and complaining about those that get them, if a club went up and didn’t spent much, kept the same squad, then they’d likely return to the EFL if relegated with around the same amount of money as 3 years of parachute payments, so they’d have an advantage anyway.

[ClaretPete001]

Personally, I think it is hard to draw any conclusions from a situation where most clubs most of the time find it hard to uncover quality players at a decent price and find it equally hard to appoint managers that are going to be successful as opposed to one club that hasn't over a period of 9 months.

We got relegated in the first year of ALK precisely because we didn't invest enough in an ageing squad, lost the one potent striker we had at Xmas albeit he wasn't that potent anymore and because the manager couldn't get us over the line. So, half the ALK story is a bit similar to everyone else.

The other half, I would be inclined to think is more of an outlier than a way forward for other club because it has been so brilliant but whether that is because of ALK, Vincent Kompany or that rare beast a combination of the two is hard to say. And not relIable because VK is a variable in all this not an identifiable constant.

[equinox]

I think that more of the Premier League money should be distributed down League's when we're not in it but as soon as we're back at the top table the teams in that top tier should keep it all.