Parachute Payments

[Greavsy 2,412]

Whilst I agree in general - havent we all been in a situation at work were someone has been promoted and you just dont see why or they are higher up the chain than you think they deserve, Where as others sing their praises. 

Isn't that the same here.  

Unfortunately there will always be the have and the have nots, its just the footballing equivalent of the have nots is still a very lucrative place to be, compared to Joe public (be that a have or have not). 

[nutty nigel 7,506]

8 minutes ago, essex canary said:

The very top performers in all popular sports get exceedingly well paid and fully deserve it because they are truly exceptional. I would have thought that the TV contracts in football lead to some very modest performers getting extremely well paid relative to their true abilities? It is also that some of them don't play very often even when fit and because some of them get very good contracts early on in their career, they perhaps don't develop but the contract structure of the game rewards them above their ability level. Then again there are many honest and committed performers such as Grant Holt etc who deserve to be well rewarded.

This is why so many clubs fail to get back despite parachute payments.

I took heart 18 months ago when the pandemic struck and there was an outpouring on here from posters who claimed this had all gone too far and a reset would happen after we got through it.

However the thirst for other people's money to feed more and more footballers and their agents is now if anything even worse.

[1902 1,167]

4 hours ago, komakino said:

Parachute payments should be banned as they reward failure. I've never liked them. 

 

Parachute payments are nothing to do with rewarding individual clubs for failure, instead they fulfil two basic functions.

1. They are a policy instituted by the league itself to mean that the promoted sides remain vaguely competitive by allowing them to try to build squads. Thus protecting the premier league product which is based on competitiveness throughout the league.

 2. They are hedge for the bottom 14 of the league against relegation. Given that essentially every premier League club is paying for them by sacrificing their own short term interests, they are more akin to an insurance contract than a subsidy. Again protecting their competitiveness by allowing them to invest, basically like every time a business buys a hedge against potential losses.

 

 

 

 

[TheGunnShow 5,904]

3 hours ago, essex canary said:

The very top performers in all popular sports get exceedingly well paid and fully deserve it because they are truly exceptional. I would have thought that the TV contracts in football lead to some very modest performers getting extremely well paid relative to their true abilities? It is also that some of them don't play very often even when fit and because some of them get very good contracts early on in their career, they perhaps don't develop but the contract structure of the game rewards them above their ability level. Then again there are many honest and committed performers such as Grant Holt etc who deserve to be well rewarded.

Let's put it this way, in the top four divisions of pro footy here we've got 92 clubs. Let's assume, on average, that they've got 50 players per squad (probably some way too high). 92 * 50 = 4600 players. And, as many a Home Nations manager has realised, a considerable proportion of them aren't from the Home Countries, so it's even harder to get there.

Garry Nelson wrote in Left Foot In The Grave that around 1% (I think) of all promising kids even get to a contract, they are weeded out before then. On top of that, the average length of pro career when he wrote that book (1998 IIRC) was eight years. By definition, focusing on the top tiers skews the perceptions.

[RobJames 880]

7 hours ago, komakino said:

Not really. It would make teams that do get promoted make more of an effort and not be there just to take the money, as we did two years ago. Risk and Reward. 

I would have thought that even someone like you could see the blindingly obvious flaw in that. What happens to those who do 'make more of an effort' ? Unless they come back up straight away they join the long list of former PL clubs who sink without a trace. Where then the difference between WBA, Fulham, AFCB and Sheff Utd who all 'made a go of it', bar they are over £100m in debt and not in the PL. NCFC are not hideously in debt, but are in the PL. I suspect your gripe is with NCFC for getting it right, and not spending what they don't have.

[Jim Smith 2,314]

Our current issues in the glare of the media coupled with the three teams at the top of the championship not doing wonders for the cause of those who argue for the retention of parachute payments.

it will be ironic if our pathetic performance in part results in the withdrawal of payments that essentially prop up our owners. 

[hogesar 9,606]

8 minutes ago, Jim Smith said:

Our current issues in the glare of the media coupled with the three teams at the top of the championship not doing wonders for the cause of those who argue for the retention of parachute payments.

it will be ironic if our pathetic performance in part results in the withdrawal of payments that essentially prop up our owners. 

I wonder if Newcastle's pathetic performance of one point more than us will result in the withdrawal of rich Saudi Governments buying football clubs

[komakino 272]

10 minutes ago, Jim Smith said:

Our current issues in the glare of the media coupled with the three teams at the top of the championship not doing wonders for the cause of those who argue for the retention of parachute payments.

it will be ironic if our pathetic performance in part results in the withdrawal of payments that essentially prop up our owners. 

I've been concerned about this for a couple of seasons.The knives were out after our last 'effort' in the EPL and this season has added lots of fuel to the fire. I'm not just talking about the OTT reaction from Talksport, but the widespread criticism may place pressure on the EPL to do something. If that happens, Delia's goose will be well and truly cooked. 

 

[komakino 272]

12 minutes ago, hogesar said:

I wonder if Newcastle's pathetic performance of one point more than us will result in the withdrawal of rich Saudi Governments buying football clubs

I think it's safe to say that Newcastle will be more than one point ahead of us by the end of the season, but it will take time. 

They're showing intent on a grand scale. The Premier League like that kind of thing. 

[essex canary 490]

10 hours ago, TheGunnShow said:

Let's put it this way, in the top four divisions of pro footy here we've got 92 clubs. Let's assume, on average, that they've got 50 players per squad (probably some way too high). 92 * 50 = 4600 players. And, as many a Home Nations manager has realised, a considerable proportion of them aren't from the Home Countries, so it's even harder to get there.

Garry Nelson wrote in Left Foot In The Grave that around 1% (I think) of all promising kids even get to a contract, they are weeded out before then. On top of that, the average length of pro career when he wrote that book (1998 IIRC) was eight years. By definition, focusing on the top tiers skews the perceptions.

Doesn’t of itself solve the issue of parachute payments or the wider issues for which there needs to be a better solution. Take Alex Pritchard as an example. He swapped the Championship for 14 games in the Premier League and a move that seemed to deteriorate over 3 years. Perhaps he is now getting it together with a top Club in League One. In the overall scheme of things doubtless a very talented player but would probably have benefitted from more continuity in his career. This financial disjoint between the Divisions ultimately favours neither players, clubs or fans at least not when making genuine decisions.

[TheGunnShow 5,904]

49 minutes ago, essex canary said:

Doesn’t of itself solve the issue of parachute payments or the wider issues for which there needs to be a better solution. Take Alex Pritchard as an example. He swapped the Championship for 14 games in the Premier League and a move that seemed to deteriorate over 3 years. Perhaps he is now getting it together with a top Club in League One. In the overall scheme of things doubtless a very talented player but would probably have benefitted from more continuity in his career. This financial disjoint between the Divisions ultimately favours neither players, clubs or fans at least not when making genuine decisions.

As @king canary said, probably a salary cap is the best option. That would probably do away with the need for parachute payments as then teams wouldn't feel the need to basically throw the overdraft at attempting to stay up.

[Christoph Stiepermann 1,131]

If we got rid of parachute payments that would spell the end of any club outside of those with billionaire owners ever being able to compete in the PL, It would finally become a closed shop. Hell, even billionaire owners would be reticent to spend money because relegation would be catastrophic. We would be particularly screwed. Also you think lower pl teams are "pragmatic" now? Imagine how they would play if relegation was even more of a disaster?

 I find it completely unbelievable and baffling that people are okay with clubs being able to spend one man's wealth that was earned outside of football to gain an advantage but parachute payments which are earned through sporting success are somehow unfair, you're all just buying into the rhetoric that rich owners spew out whose agenda is that they want to be able to go back to being able to buy promotion through the leagues again. 

Edited October 21, 2021 by Christoph Stiepermann

[sgncfc 1,221]

1 hour ago, essex canary said:

Take Alex Pritchard as an example.

He's a very, very good example of what we certainly must not do. That was desperation in the extreme. He moved solely for money - reputedly almost £100k a week for a 3 year deal at Huddersfield. After a few games, he then pretty much stopped trying once he realised he was surrounded by journeymen. They ended the season bottom on 16 points. Pritchard is Huddersfield's Naismith x 2. 

I wonder if Talksport consider that they "tried"?

 

 

[essex canary 490]

33 minutes ago, sgncfc said:

He's a very, very good example of what we certainly must not do. That was desperation in the extreme. He moved solely for money - reputedly almost £100k a week for a 3 year deal at Huddersfield. After a few games, he then pretty much stopped trying once he realised he was surrounded by journeymen. They ended the season bottom on 16 points. Pritchard is Huddersfield's Naismith x 2. 

I wonder if Talksport consider that they "tried"?

 

 

A poor decision but should it be put entirely on the shoulders of a then 25 year old still inexperienced in life? Perhaps we need to build a system that encourages players in this position to take more responsible decisions in the interests both of their own career and wider interests?

There could be some fans of similar age to Pritchard who have been working 12 hour shifts in Care Homes during a pandemic and would like to watch a Premier League game in the flesh at Carrow Road but find out that for a casual seat they need to pay up to 60% more than they did before the pandemic. At least they will be able to watch a couple of away games on the TV for free.

[Robert N. LiM 4,218]

14 hours ago, RobJames said:

I would have thought that even someone like you could see the blindingly obvious flaw in that. What happens to those who do 'make more of an effort' ? Unless they come back up straight away they join the long list of former PL clubs who sink without a trace. Where then the difference between WBA, Fulham, AFCB and Sheff Utd who all 'made a go of it', bar they are over £100m in debt and not in the PL. NCFC are not hideously in debt, but are in the PL. I suspect your gripe is with NCFC for getting it right, and not spending what they don't have.

Precisely. Villa spent £150M the year they came up with us. They stayed up because the goal-line technology wasn't working on the last day of the season. They are billionaire-owned so could take that risk. Had NCFC done it and got relegated anyway, as three out of 14 teams must do every season, the club would have gone bankrupt. And that's with parachute payments. Without them, the risk would be even greater.

Parachute payments are a symptom of the problem, not the problem

[Badger 2,404]

22 hours ago, komakino said:

Not really. It would make teams that do get promoted make more of an effort and not be there just to take the money, as we did two years ago. Risk and Reward. 

It would do exactly the reverse. Without parachute payments to underwrite some of the costs of buying new players and their wages clubs simply wouldn't be able to afford the risk of buying new players.

[Badger 2,404]

4 hours ago, TheGunnShow said:

As @king canary said, probably a salary cap is the best option. That would probably do away with the need for parachute payments as then teams wouldn't feel the need to basically throw the overdraft at attempting to stay up.

I'd be interested in how you think that the salary cap would work. Flat rate or based on turnover?

[Robert N. LiM 4,218]

6 hours ago, komakino said:

They're showing intent on a grand scale

Ah, intent. Another Premier League word, like 'ambition' and 'investment' that just means 'money'

[king canary 7,558]

37 minutes ago, Badger said:

I'd be interested in how you think that the salary cap would work. Flat rate or based on turnover?

I know you're not asking me but I would want it to be flat rate. 

Turnover just locks in pre existing advantages. For the sport to be a true competition it should be about who can assemble the best squad within equal parameters, not one team getting to spend more because they've got 'Official Noodle Partners' in the far East who give them sizable chunks of money to stick one of their players in their adverts.

[komakino 272]

No way the the EPL would introduce a wage cap as it is not in their interest. It would be totally self defeating. Plus there is always a way round things anyway. 

As much as all players are massively overpaid, I'm against a wage cap in principle as anyone is only worth as much as somebody is prepared to pay them, which in football, is a hell of a lot. 

[king canary 7,558]

1 minute ago, komakino said:

No way the the EPL would introduce a wage cap as it is not in their interest. It would be totally self defeating. Plus there is always a way round things anyway. 

As much as all players are massively overpaid, I'm against a wage cap in principle as anyone is only worth as much as somebody is prepared to pay them, which in football, is a hell of a lot. 

You're right they probably won't and top level football will remain fundamentally broken. 

[TheGunnShow 5,904]

50 minutes ago, king canary said:

I know you're not asking me but I would want it to be flat rate. 

Turnover just locks in pre existing advantages. For the sport to be a true competition it should be about who can assemble the best squad within equal parameters, not one team getting to spend more because they've got 'Official Noodle Partners' in the far East who give them sizable chunks of money to stick one of their players in their adverts.

Made more sense that you answered Badger's question as it was ultimately your point. And FWIW, I completely agree with what you just wrote.

[Baracouda 47]

Parachute payments make perfect sense in the context of business and dates back to the inception of PL, sky wants the promoted teams to spend the cash and they want the mid-table sides who will always be threatened by relegation to spend the cash. The parachute payments are the 'insurance' policy to allow the PL teams to keep out spending clubs in other leagues and to afford wages that sides competing in Europe cant. 

When the PL was formed, the English league wasn't anything special compared to Italy and if all the 10-12 clubs threatened by relegation each season had to balance the books with no chance of parachute payments. Then the PL would be similar to Bundesliga and la liga with half the league not spending. 

 

[nutty nigel 7,506]

I didn't think parachute payments came in until the mid 2000s?

[Greavsy 2,412]

In the 2006-07 season "parachute" payments were introduced which meant for two seasons following relegation a club would receive half of the per club Premier League basic TV money, this would lower the risk of a club going into administration due to the high cost base (mainly player wages) they incurred in the Premier League. In addition "solidarity" payments from the Premier League worth £1m were paid to each EFL Championship club to help mitigate concerns about the impact the parachute payments might have to the competitive balance of the league.^[4] The structure and value of the "parachute" and "solidarity" payments have continually evolved since then.

[Badger 2,404]

3 hours ago, king canary said:

I know you're not asking me but I would want it to be flat rate. 

Turnover just locks in pre existing advantages. For the sport to be a true competition it should be about who can assemble the best squad within equal parameters, not one team getting to spend more because they've got 'Official Noodle Partners' in the far East who give them sizable chunks of money to stick one of their players in their adverts.

I don't really disagree with you in principle but  there is absolutely no chance that it would be approved. A flat rate kills off any chance of a salary cap.

[Jim Smith 2,314]

3 hours ago, komakino said:

No way the the EPL would introduce a wage cap as it is not in their interest. It would be totally self defeating. Plus there is always a way round things anyway. 

As much as all players are massively overpaid, I'm against a wage cap in principle as anyone is only worth as much as somebody is prepared to pay them, which in football, is a hell of a lot. 

The thing is though that most are being paid well more than they are worth. If these businesses were being run as normal businesses then they would be paid nothing like the amount they are. 

[essex canary 490]

4 hours ago, komakino said:

No way the the EPL would introduce a wage cap as it is not in their interest. It would be totally self defeating. Plus there is always a way round things anyway. 

As much as all players are massively overpaid, I'm against a wage cap in principle as anyone is only worth as much as somebody is prepared to pay them, which in football, is a hell of a lot. 

I guess Alex Pritchard is now on radically poorer wages now having joined Sunderland than he managed to acquire at Huddersfield. He may well be the same player. The only reason Huddersfield made their offer was desperation in the face of a warped market supported by contract culture. Even the most avid free marker economist would recognise the flaws.

[king canary 7,558]

13 hours ago, Badger said:

I don't really disagree with you in principle but  there is absolutely no chance that it would be approved. A flat rate kills off any chance of a salary cap.

Oh yeah I agree it wouldn't be approved but we can dream.

The biggest problem football (not just in England) faces longer term is that clubs are purely businesse8 s now and have very little interest in protecting the wider competition. There is no sense that the owners of clubs have any duty to the wider concept of 'football' as a competitive sport, just that their duty is to making sure their own clubs make as much money as possible. It is a shame but unlikely to change and, longer term, will be the death of smaller clubs. 

Top level football is woefully uncompetitive at this point. Since 2000 we've had 6 different Premier League Champions, 4 La Liga, 5 Bundesliga and 4 Serie A. In comparison there has been 14 different Superbowl Champions, 15 different World Series winners, 9 different County Championship winners, 8 Premier League Rugby Champions etc etc. Heck, the Rugby League Super League has as many different Champions as La Liga and Serie A in that time frame and only 12 teams play in that!

The financial gaps that exist in football kill it as a competition. At some point the big clubs either need to start caring or be forced to care or football as we know it will die off.