Independent Regulator to Review Parachute Payments in English Football
The Independent Football Regulator (IFR) for English football has announced that it will review 'parachute payments' given to relegated clubs as part of a comprehensive analysis of the men's professional game.
The regulator has outlined the proposed scope of its upcoming State of the Game report, which aims to illuminate the financial pressures, governance deficiencies, and structural risks facing the industry.
Set to be released in draft form later this year, the report will investigate the flow of funds within the sport's top five tiers and assess the financial health of clubs.
The IFR claims this will be the most thorough evaluation of the industry ever undertaken.
Additional topics to be covered include the financial disparities between leagues, club debt and liquidity, ownership models, the broadcasting landscape, and the effects of player salaries and academy development on the game's financial sustainability.
The report will specifically address the Premier League's contentious multi-million pound parachute payments, which are distributed to relegated clubs over a three-year period.
The English Football League (EFL) argues that these payments, which amount to tens of millions for relegated clubs, create an uneven playing field and has called for their elimination to secure a larger share of the wealth generated by the Premier League.
Conversely, the Premier League maintains that these payments are vital for instilling confidence in club owners to invest in their teams.
This disagreement is one of the factors contributing to the ongoing inability of the two leagues to finalize a new financial arrangement that would allow more funds to flow down the football pyramid, despite years of discussions and pressure from lawmakers.
The regulator will possess 'backstop powers' to mediate a financial settlement if the Premier League and EFL continue to be at an impasse, using the findings from the State of the Game report to guide its recommendations on Premier League revenue redistribution.
David Kogan, chair of the independent football regulator, stated, "The game has never been examined like this before. The State of the Game report will provide football with the clarity it deserves, enabling the IFR to make informed, long-term decisions."
The regulator will have the authority to utilize statutory powers to obtain information from clubs and competition organizers.
The terms of reference for the State of the Game will undergo a four-week consultation, with the final report expected to be published in 2027.
It will also assess issues related to Equality, Diversity, and Inclusion (EDI), fan engagement, and heritage, including a review of existing protections for club stadiums, crests, and colors.
However, the report will not address ticket prices or the video assistant referee (VAR) system.