Interference From Above For The Football League Over Money

By on May 18, 2013 in Finance, Latest | 0 comments

The irony of any rows between the Premier League and the Football League concerning the way in which money be paid in parachute payments should be paid out of the vast reserves of cash that the Premier League now accumulates from the sale of television rights is that the very reason for the formation of the Premier League in the first place is was to avoid a great deal of “solidarity” in the first place. Times, however, have changed a considerable amount over the course of the last two decades, and the financial gap has grown to such an extent that parachute payments to the clubs that were relegated from the Premier League became a necessity in order to save them from themselves.

The level of these payments, however, has become a cause for concern. In March, a letter from the chairman of the Football League, Greg Clarke, revealed that from next season, clubs relegated from the Premier League will receive £23m in the first year after the drop (a £7m increase on the current levels), £18m in the second year(a £5m increase) and £9m in the third. By way of comparison, clubs in the Championship who do not get parachute payments currently receive £2.3m a season, League One sides £325,000 and League Two sides £250,000 in what are known as “solidarity” payments. It has been proposed that those payments are increased by just five per cent under the new offer, meaning that clubs relegated from the Premier League would be receiving ten times as much as those that hadn’t been fortunate enough to have as little as one season in the sun.

That the Football League should be jittery about this sort of increase in funding at this particular time is understandable. All three divisions of their competition had a degree of competition running through them that the Premier League, which finishes its season this weekend with practically all of its matches meaning little to nothing, cannot offer. Indeed, the more cynical amongst us might even pause to consider whether there might be some sort of deep-rooted – quite possibly subconscious – desire to make the League as uncompetitive as theirs is. The evidence, over the last few years in the Premier League at least, has been that there is a clear correlation between the amount of money that a football club has to spend on wages and transfer fees. The Football League has, in comparison, been less predictable and more egalitarian.

The result of this has been acres of good publicity for the Football League in recent weeks, and this hasn’t reflected particularly positively on the Premier League. Recent events off the pitch – the retirement of Alex Fergsuon, the sacking of Roberto Mancini and the apparently interminable stories concerning the future of Wayne Rooney – may have papered over a few cracks, but the truth of the matter is that the Premier League has been a stultifying place this season. It is highly likely that the four clubs that will assume the Champions League places for next season will be the four that most would have predicted for most of the season, whilst the three clubs relegated don’t contain any names that would have caused anybody to raise their eyebrows either. As a business, the Premier League is ruthlessly efficient. It seldom resembles a sporting event these days, though, and if people start seriously start asking the question of whether it is still offering the level of entertainment that they might reasonably be entitled to expect from a product that is now priced very much in the “premium” bracket, then that mask of ruthless efficiency might just start to slip a little.

None of this, however, has prevented Richard Scudamore, the Premier League’s all seeing I, from getting involved in the small matter of how the Football League manages its own financial affairs. The League proposed two ways in which the financial gap between those clubs relegated from the Premier League and the rest in the Championship might be narrowed. They have suggested that clubs relegated from the Premier League could no longer receive the £2m a year that these clubs would currently receive from the League’s own comparatively meagre revenue from television companies, and that could instead perhaps be redistributed amongst the other clubs in the Championship that are not the beneficiaries of parachute payments. The second was a proposed salary cap, limiting spending on wages to £16m for relegated clubs in the first year, an amount which would then reduce to £10m the next season, and again £8m for the one after that. Scudamore’s response to that was to email Clarke and state that if either of these proposals were to see the light of day, the current offer of “solidarity money” would be withdrawn to be further reviewed.

Therein lays the nature of the relationship between the Premier League and the Football League. The Premier League holds the financial whip hand, whilst the clubs of the Football League have had to come to terms with an increasing gap financial between the top division and the rest. The Football League does, however, have one nuclear option that it could apply if the Premier League continues its intransigence. Momentum is not with the Premier League at present, for perhaps the first time in two decades. MPs from both sides of the House of Commons have expressed their disquiet over the extra money from its new television contract being frittered away through a “culture of greed” at the top of the game, and they have also called for a proportion of this money to be shared more widely on investment in the game at its grassroots level, as well as on increased funding for supporters’ organisations. It has been suggested before that there are now some Football League clubs who are so exasperated by the Premier League’s attitude over the redistribution of money that their only option might be to pull up the drawbridge and let the Premier League sail off into the distance alone.

Where such a scenario might end up, however, would be anybody’s guess. It seems unlikely that, in the even more unlikely event of this happening, that the Premier League would just continue as a single, twenty club division with all clubs below about sixth or seventh place in the table being little more than cannon fodder for the elite. Might the Premier League seek to encourage the clubs of the Championship to set up a Premier League Division Two? Might it split into two divisions of ten, moving towards the sort of league system that we have seen for the last four decades in Scotland? Nobody can say for certain, and it remains likely that eventually realpolitik will prevail and that some sort of agreement will be thrashed out, but the very fact that there are now clubs who would even consider such extreme action demonstrates that tensions exist which may well be further exacerbated should the Premier League continue to force its will onto the leagues below it. For now, perhaps, it should merely suffice to suggest that perhaps Scudamore should be looking at the amazingly tight season that the three divisions of the Football League and trying to work out how he might bring some of that excitement back to the Premier League, rather than giving the impression of trying to force the same sort of financial disparity that blights his organisation and stifles competition therein onto the Football League against their will. We might hope that common sense will prevail. In the vainglorious world of professional football, however, such a quality frequently seems to be thin on the ground.

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