(WFI) The Football League has failed to reach agreement on a proposed new financial settlement from the English Premier League (EPL) that would see solidarity and parachute payments to its clubs dramatically increase.
It is understood that up to £48 million ($73.4m) spread over four years would be assigned for each club relegated from the EPL to ease the burden of dropping out of the cash-rich top flight.
But WFI also understands that under the terms offered by the EPL, solidarity payments to the Football League would increase more than 500 per cent to £60 million per year.
At a meeting of Football League chairmen in Leicester yesterday, lower league clubs blocked the proposals apparently fearing that the financial gap between the Championship and Leagues One and Two may become insurmountable.
“The Football League are not in a position to accept that,” Football League chairman Greg Clarke said in an interview with the BBC.
“We wish to clarify certain issues. There is certain unhappiness about a four-year parachute payment which some of the clubs think could distort competition. We’ve got to engineer a consensus.”
Under the proposals, around 9 per cent of the EPL’s overall turnover would find its way into the Football League’s coffers under a formula it has devised.
Increased parachute payments have been the headline figure, but there will be a dramatic increase in solidarity payments made to clubs throughout the league structure.
It would see Championship clubs handed £2.2 million per year, with League One and League Two clubs assigned £325,000 and £250,000 respectively.
By comparison, this current season £11.2million was handed over by the EPL to Football League clubs in solidarity payments.
The oldest league in the world and the richest share an unusual relationship.
Each year the Premier League assigns a significant amount of its turnover to the Football League’s 72 member clubs. A sizable portion of this goes to those teams relegated from the top flight, but significant amounts filter down as far as League Two.
The EPL is under no obligation to share this money, although pressure from its smaller clubs – dubbed “shareholders” – and historical factors mean that it spreads its wealth in this way.
The situation is virtually unprecedented in world football, with only France having a comparable system.
The Football League will re-confer on the issue, with the EPL needing a definitive answer by June.
Report highlights Premier League’s financial value
The split among Football League clubs comes as new research published by Deloitte highlights the vast rewards on offer in the EPL.
According to its Sports Business Group, the Football League Championship Play-off
Final at Wembley on May 22 will again represent the biggest financial prize in world football, worth around £90 million to the winners.
Because of the new TV deal that comes into play at the start of next season, it represents a 50 per cent increase on the value of last year’s promotion prize.
“The Championship Play-off Final winners will benefit from at least £40m of additional revenue in 2010/11, the vast majority of this coming from television income and the rest from higher gate receipts and increased commercial income,” said Paul Rawnsley, director of Deloitte’s Sports Business Group.
“In addition, even if a club is relegated after one year in the Premier League, parachute payments may be received over the following four seasons of up to £48m.
“In financial terms, this match offers the winning club the most substantial prize in world football.”
Five Championship clubs enter this Sunday’s final round of games still in contention for promotion through the play-offs. Nottingham Forest, Cardiff City and Leicester City are all guaranteed a play-off spot, while Blackpool and Swansea City go into the last day still trying to gain their place.
Newcastle won the Championship title and are automatically promoted along with West Bromwich Albion who finished second in the division.
reporting from James Corbett ([email protected])
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