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Wednesday, February 17, 2010

Parachute Payments

With Newcastle and West Brom - two sides relegated from the top flight last season - clear at the top of the Championship, the lads discuss the importance of parachute payments.

Is it an unfair system or a necessary evil to stop relegated clubs going bust? And how influential are they in the race for a place at football's top table?

Parachute payments are in no way fair. Isn't it enough that the club who were in the Premier League already get a lot more than those in the Championship so why should they continue to receive extra resources?

It gives the clubs who have been relegated an unfair advantage in the Championship. They failed so they shouldn't still get a slice of the pie.

Nobes: It does seem to reward failure, yes, which is a strange concept. Why should clubs be compensated for not being good enough? Does it happen at any other level?

Do relegated Championship clubs get compensation? If so, then it's certainly not on a relative scale. It just seems to be a big boys' gravy train concept.

Turls: Exactly, if I get sacked from a job, do I still get paid a small amount of my wage just to keep me ticking over and make sure that I don't turn to intravenous drugs? No, I don't. So why should this be the same?

It's encouraging Premier League clubs to spend money that they don't have just in order to stay in the top-flight, safe in the knowledge that if they do get relegated, they will still get more money than clubs in the Championship.

Parachute payments are the bane of modern football.

They breed a culture of financial irresponsibility which encourages failure with the reward of cash. Cash to buy more players and cheat your way back to the top flight with money you didn't deserve.

Turls: I'd agree. Parachute payments are one of the many reasons that the modern game is in the state that it is.

Clubs don't seem to understand that the payments aren't permanent and if they do get relegated, they splurge this extra money on mediocre players just to try and reach the promised land again.

Whatever happened to the good old days of simply not being good enough? It doesn't apply anymore and simply serves to create a two-tier Championship: the haves and have-nots.

Burnley's play-off final win guaranteed them millions - even if they come straight back down

Nobes: What is it a side gets for making the top flight? £60 million, and that's even if they get relegated after just one season.

It almost seems to be a way of setting up a 'closed-shop' of 25 teams or so who the Premier League would prefer to be in there.

After all, if they're aiming for a 39th game played abroad in Asia, they'd rather Leeds be in the top flight than Burnley.

You can end up with a ridiculous situation where a team is relegated to the Championship and then League One, but still be earning parachute money.

Is it fair to imbalance a league such as League One by giving someone such a massive advantage - to the tune of £8 million or so - in a division where money is super-tight? No.

And what of teams who live off the fat of parachute payments and then find they haven't been promoted when they dry up? They can't cope.

It does happen, but you can't blame the Premier League for this. It isn't their fault that clubs spend beyond their means just to get the chance to play at the fabled Old Trafford.

I'm always ready to give the Premier League chiefs a good telling off but this isn't their fault.

Suppose the question now is whether or not they are beginning to take their toll and have a real influence on the Championship. Is it becoming more predictable?

Although it isn't too bad these days, parachute payments really ruined the Championship a few years back. It was the same teams involved in the promotion push over and over again.

We had all these yo-yo clubs like Sunderland and West Brom and it ruined the division.

Newcastle and West Brom are leading the chase for promotion from the Championship

Take this season. To even be within contention, Forest had to spend over £5 million and this still won't be enough to get automatic promotion.

West Brom and Newcastle had the money received in the Premier League - fair enough - but then they have received extra money for dropping out of the league!

It means that Championship clubs are having to spend more just to draw level with relegated clubs.

Nobes: I think it's definitely had a big part to play this season. Newcastle were a club in disarray, up for sale, and financially screwed. Yet they've managed to hold on to the majority of their key players and big wage earners.

Not only that, but they've added to that squad and are now odds-on to get promoted at the first attempt. Would they have been able to do all that without parachute payments? I doubt it.

There is a real danger of the Championship becoming a lot like the top-flight in that only a handful of clubs will stand the chance to go up.

Clubs who get relegated will stand alongside the clubs who have been relegated in recent years.

Teams like Forest are having to spend a fair wadge of cash to be given the opportunity to battle for promotion. Money rules and Forest's lack of squad depth will cost them this year.

It has to be said though that the vast majority of relegated top flight sides don't bounce back at the first attempt. Indeed, some of them have actually gone on to drop down to League One.

If ex-Premier League sides are leaving the division by both ends, then perhaps we're overstating the importance of parachute payments?

I think that's more down to the fact that some of the relegated clubs have players who don't seem up for a fight at Glanford Park and so they find it tough to go straight back up - see Forest, Leeds, Sheffield Wednesday, and Leicester - but this isn't the case all the time.

Leeds dropped down from the top flight to League One amid financial problems

Nobes: I don't know, if the Premier League stopped the payments than perhaps clubs wouldn't go for broke to get into the Premier League. Surely prevention is better than cure in this instance?

The only worry is, if they stopped them suddenly, a lot of clubs could actually end up going to the wall. They have probably saved clubs with big wage budgets from going under.

If clubs go bust, they do so under their own steam. They do it because they've spent so much money.

I would argue that having parachute payments actually makes it more likely that clubs will go bust.

Firstly, because clubs losing their payments struggle, and secondly because all the other teams in the division need to spend more in order to compete - sometimes living beyond their means.

I agree that the payments stop a lot of the clubs going to the wall but do you not see that if these payments weren't in place then the clubs would stop spending beyond their means.

This would result in less debt and my A-Level in Economics And Business Studies tells me that less debt is good.

I definitely think they should end, but I think it has to be phased out slowly and gradually as suddenly removing it could provoke havoc for some clubs.

Yes it's their own fault for over-spending, but you can't just suddenly move the goalposts.

Take the £16 million per relegated team, or whatever it is, and divide it amongst the other clubs. Then you'll see a good use of that money.

So all in all, parachute payments are like poison - get rid of them before they kill football for good.

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