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"Complete reset" of football finances


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I think it's interesting that both Rick Parry and Mark Palios are now openly advocating the abolition of the parachute payments.

I personally think this is a great and long overdue move... It may finally mean you don't have to engage in stupid spending to get into the PL but footballing merit and managerial expertise will come back to the fore again...

Ricky Parry:  Parry also said they could not just rely on going from "one bailout to another bailout", suggesting a "complete reset" was now needed in terms of the redistribution of revenue within the game. "Parachute payments are an evil that needs to be eradicated," he said.

https://www.bbc.co.uk/sport/football/52543735

Mark Palios: If the football pyramid is to survive we need a root-and-branch rethinking of the game’s structure. Above all, there is a need to renegotiate the collectively bargained standard EFL player contracts. It also requires other elements to be considered: the abolition of parachute payments; rethink of the Elite Player Performance Plan system; complete overhaul of the approach to ownership and monitoring of the health of clubs; and removal of the morally repugnant football creditors rule, for instance.

https://www.theguardian.com/football/2020/may/05/player-wages-and-contracts-will-bankrupt-efl-clubs-its-time-for-the-pfa-to-act

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I think it's interesting that both Rick Parry and Mark Palios are now openly advocating the abolition of the parachute payments.
I personally think this is a great and long overdue move... It may finally mean you don't have to engage in stupid spending to get into the PL but footballing merit and managerial expertise will come back to the fore again...
Ricky Parry:  Parry also said they could not just rely on going from "one bailout to another bailout", suggesting a "complete reset" was now needed in terms of the redistribution of revenue within the game. "Parachute payments are an evil that needs to be eradicated," he said.
https://www.bbc.co.uk/sport/football/52543735
Mark Palios: If the football pyramid is to survive we need a root-and-branch rethinking of the game’s structure. Above all, there is a need to renegotiate the collectively bargained standard EFL player contracts. It also requires other elements to be considered: the abolition of parachute payments; rethink of the Elite Player Performance Plan system; complete overhaul of the approach to ownership and monitoring of the health of clubs; and removal of the morally repugnant football creditors rule, for instance.
https://www.theguardian.com/football/2020/may/05/player-wages-and-contracts-will-bankrupt-efl-clubs-its-time-for-the-pfa-to-act
The Coates family don't agree

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Looks like we finally have competence in the EFL offices.

Problem being, that Parry also alludes to the Premier League being desperate for a conclusion to the 19/20 season to ensure retention of the Sky/BT broadcasting revenues. Until this is decided, they won't discuss an EFL rescue package.

On the other hand, the EFL needs to conclude (having finished the season or not) by the 31st July, as 1,400 players are to be out of contract and having had their final severance pay by the date. To try and continue the season after this, as clubs release players and are unable to sign any more due to lost revenues, is farcical.

Its trying to square the circle and some genuine tough, unpopular decision making is needed pronto. This prevarication and farcical 'suggestions' about 30 minute halfs in some form of super tournament at St George's Park is ludicrous.

The FA's complete abandonment of English domestic football to two competing administrators in the EFL and Premier League is coming home to roost; we should have an independent body making these decisions with no financial motivations, not member clubs/competing organisers with disparate aims and motivations attempting to unite two completely different targets.

In an ideal world, some form of board of key individuals, with little ulterior motives, would be drafted and would impose, draconian style, measures for conclusion. Yes, clubs would kick off, and maybe some petty ones would start legal challenges, but there isn't going to be a solution where everyone is satisfied. Someone is getting shafted; we probably will. If it means long-term solutions for football, then fine by me.

Edited by Joe B
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If there is no relegation from the Premier ,this season, the parachute cash should be given to the lower leagues as a gesture of goodwill.And then I woke up.Parry and Palios talking a lot of sense.

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Nice article on parachute payments here too. Makes a mockery of the fallacy that the PL riches benefit all clubs.

The Crystal Palace chairman, Steve Parish, wrote in the Sunday Times that a return to play is “partly about the money” and that “it is the Premier League that largely funds the whole football pyramid”. The culture secretary, Oliver Dowden, had previously told parliament he wanted to get the Premier League “up and running as soon as possible in order to support the whole football community”. This interpretation is disputed by the EFL, however. The Premier League transfers £400m a year to the EFL but £260m of that goes to just nine clubs.

https://www.theguardian.com/football/2020/may/04/row-brewing-between-efl-and-premier-league-over-parachute-payments

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http://www.financialfairplay.co.uk/scmp.php

According to the current rules League One clubs are only allowed to spend 60% of their turnover on wages. I'm currently watching the Sunderland Till I Die documentary and they chairman said their income barely coveted the costs of their non-playing staff wage bill. Then they had a huge playing budget as well.

Does this mean they were hiring non-playing staff Willy nilly so they can spend more money on player wages? Or are the rules just not enforced? The whole structure was implemented by the old ownership anyway so would it be even fair to punish new owners trying to run a less spendthrift club for the mistakes of previous owners? Wouldn't that just mean one bad owner would completely doom a club as new owners wouldn't want to take over a badly run club and then also be hit with sanctions on top of that?

Such a mess football finances and there are no easy answers. Whatever happens now I think many clubs will hit the wall.

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  • 2 months later...

The Digital, Culture, Media and Sport (DCMS) committee report states most of the things we already feared or knew about.

https://www.bbc.co.uk/sport/53496696

Obviously football is not going to be the only sport to suffer, however it still seems that Richard Masters will fight until the end to protect the PL.

https://committees.parliament.uk/oralevidence/611/html/

I do feel that these issues will be with us for a long time and some clubs/organisations will not be with us after the fallout.

 

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I totally agree that the monies are not distributed for the benefit of the football pyramid but would a redistribution of monies just push the wage inflation issue further down the leagues?  I am not convinced that some owners will not continue to chase the dream and if more money flowed down the pyramid then clubs would just spend more and live within their new financial structure. 

I applaud Carol for her approach to the outcome of League Two fixtures this season but are the majority of owners going to see the bigger picture as she did?  I doubt it.

 

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I have to agree with the demand to abolish parachute payments.  They are an absolute scandal.  If Premier League clubs want to pay inflated wages then then they must do so in the knowledge that they must plan for the consequences of relegation.  Rewarding failure is ridiculous.  Each season the Premier League hands over £45 million each to the three relegated clubs, another £34 million each to the teams who had been relegated the year before and £15 million each to the ones the season before that.  In total that amounts to £282 million pounds to clubs who have failed.  Since their relegation, Stoke have received nearly £80 million for being crap.  Meanwhile, clubs in League Two get a solidarity payment of £470,000 a year. 

Why not get rid of the solidarity payments and distribute the cash to lower league and non league clubs, not for wages but as hypothecated funding for ground devolpment, spectator facilies, undersoil heating etc.  I'm sure it's not beyond the wit of man to devise a system whereby clubs could apply for grants from a central fund for work of this nature?

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  • 4 weeks later...

Sadly I don’t believe it will be the reset we’d like. The big clubs in the top two tiers have pulled up the drawbridge and left everyone else to starve. 
 

The gap will get bigger. Prize money cut, no fans, means increased reliance on TV money and non matchday revenue. 

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  • 2 months later...

Are the same strings attached? Is it a sign of increased desperation and panic among lower league clubs? I believe over 10 are struggling badly.

I don't blame them agreeing to this if they're in grave danger of folding. But let's hope it's a fair deal with no nasty surprising strings attached.

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