Parachute payment concerns

[Bill 1,788]

There has been, and still is in some places, a view that all will be ok if we get relegated as we will receive many millions in parachute payments over the subsequent years. The concern is that it doesn''t really seemed to have helped those recently coming out of the Premiership.

 

Given the amounts handed out it should be a massive advantage, yet Wolves are struggling at the bottom and Blackburn and Bolton are both way off the playoffs. Blackpool and Burnley are not in the top six either.

 

Certainly there are individual causes, as with Portsmouth, and I''m sure that for some clubs relegation was only part of a longer term demise that money alone woukd sort out. But it does mean we cannot simply presume that if we do go down we will be favourites to bounce back because we have an extra £16m.

 

 

[Rolf Harris 31]

Hasn''t Blackburn spent more than they did in the prem and Wolves just pocketed the money, problem was due to recent expansion and the decrease in ticket sale.

[chicken 0]

Bah, relegation, smellagation!

If you wan''t to know how much the parachute payments don''t work next season, just watch QPR.

[Bill 1,788]

It''s maybe not so much a case of they don''t work - more an automatic assumption that they will work come what may

 

ie if we do get relegated at some point we will be ok

 

 

[The Walking Man 13]

The idea of parachute payments is to (supposedly) ensure that relegated clubs do not get into financial difficulties because of the added costs of running a premier league club compared to a football league club. I don''t think there''s much of an advantage these days and it''s certainly not a guarantee of promotion. Many Championship clubs either have wealthy owner and/or momentum of winning games the previous season. Norwich (and Wolves this season) perfectly demonstrated what it''s like to get relegated and have no momentum what so ever. The championship is easy to get in to but incredibly difficult to get out of.

[Bill 1,788]

"Norwich (and Wolves this season) perfectly demonstrated what it''s like to get relegated and have no momentum what so ever"

 

err, ooops

 

Theoretically it should be more of an advantage these days as the money has increased dramatically. However as you say you are competing with money from other sources.

 

"do not get into financial difficulties because of the added costs of running a premier league club compared to a football league club"

 

I''m not too sure what is meant by that as those receiving parachute payments are by definition football league clubs not PL clubs. Even then the running costs are not that much different and can soon be adjusted. The real cost is the wage bill, and that was the reason for the parachute payments as clubs coming down will retain an awful lot of players with them on PL contracts without the club receiving PL football money.

 

I suspect what has happened with a lot of the clubs is they have been left with players who have not been offered better or similar wages with another PL club and so have chose to see out their contract at the club they were with (and caused to be) relegated.

 

I would suggest this will not be the case with us. Virtually every single player we have has ''stepped up'' to join us meaning we would be in the driving seat with regard to contracts - and I have no doubt McNally and the board would ensure that were we to go down, so would their contract accordingly. Which would mean we could shift out those that didn''t fit and rebuild far quicker.

 

So it is perhaps more a case of what state the club is in and how it is ran rather than simply the money.

 

 

 

 

 

 

 

[nu_matik 167]

Put simply City 1st, the million of pounds are not meant to be for teams to bolster playing squad, its meant to be a safety net as alot of the clubs will suffer financial loss through sales, TV rights and general income, so the fact you have 16 million doesnt mean much to those clubs still not making alot. Most clubs that go down will inevitably lose top players anyway, so dont always offer the same threat as they do in the prem.

[Bill 1,788]

I''m not too sure if I follow your line thought.

 

I did state that the money was to cover any Premiership contracts still remaining, not as some form of extra spending money. However that still means that some relegated clubs will have their squads ''bolstered'' by these players - paid for by the £16m parachute.

 

Any club being relegated this season will see the loss of ''TV money'' ie around £45m. That is not "alot of these clubs" that is all of them. which means a loss of around £30m or so plus loss of some gate money/sponsorship etc. However take out of that equation the lose of ''top players'' and factor in incoming transfer fees and that should look to cover that loss.

 

Which should still leave the club with around £16m being spent more than the other clubs, barring those with external assistance ie Cardiff, Leicester, Watford etc

 

The reason that fairly basic equation doesn''t always equal a top six place is that there are usally far deeper problems which have caused the club to be relegated ie Aston Villa this season. So my point is that we cannot simply presume that we will have a massive advantage and so be guaranteed to be a ''yo yo'' club, if we don''t recognise what caused us to be relegated in the first place - as with 2009.

 

 

[pablofarmer 0]

Surely we proved, that money has nothing to do with it.

I think the biggest problem for a lot of clubs has been they had a longish history in the PL and so in some way they under estimate how tough the championship is, assuming that as having just dropped from the PL we deserve to be beat everyone!

I love life in the PL but would say that the championship h regularly been the most competitive and tight league in the country. Apart from Cardiff it is hard to know who is going to fill those top 6 places.

[flying high up in the sky! 1]

We have never been in danger on going down this season so I wouldn''t worry about it.

[pete_norw 0]

Couldn''t have put it better myself. just think of the Extra TV money

[ellis206 0]

Difference is, clubs like Portsmouth would never have had anything in players contracts which makes them take a paycut if they went down. I can guarantee almost every Norwich player has a relegation wage cut thing written in their contract.

We have some very astute businessmen run our club now and are starting to get widely recognised as a well run club

[shefcanary 2,383]

The key to how the parachute payments are used is the contracts with players, management and staff.  You would hope that in a well run club, that contracts are written such that on relegation, salaries revert to championship level and thus should in theory be covered by the lower income.  The parachute payments can then be used to cover the contracted marginal costs of being a Premier League rather than championship club (although again you would hope there would be break clauses to ensure levels of remuneration fall back on relegation).  Thus parachute payments should be relatively free for subsequent "transfer activity" expenditure in the Championship on clearing out "unmotivated"players and bringing in players who can do a job in getting promotion. 

 

For a recently promoted club to the Premier League, you would expect no real problem for this, but where an "established" Premier League club gets relegated (like Blackburn / Bolton) they may well have taken the eye off this contractual nicety as they chased star players from overseas and are thus left like Portsmouth with loads of highly paid players with long contractual periods to run.  The club that is the Premier League has really set up the parachute payment system to cover these clubs in the first couple of years, in the hope they return quickly.  I believe the sooner they get back, the quicker the payments stop and thus there''s more cash swilling around in Premier League coffers.  However you can''t bargain on people like the Venky''s and Morgan''s though who can soon cock that theory up! 

[Jersey Canary 143]

I thought the new TV deal next season means 4 years of parachute payments rather than the 3 seasons they get now, so that''s where the advantage will be for us should the worst happen. However with McNasty at the helm I don''t see us leaving the PL for the foreseeable.

[Yellowfuture 71]

Money is only an advantage if it is spent wisely.

[crabbycanary 2]

[quote user="thefutureisyellow"]Money is only an advantage if it is spent wisely.[/quote]

 

TBH, this line says it all, and with David McNally in charge of the pursestrings, I would not fear for the future of the Club, IF we got relegated, it might take a season or two to bounceback, but we would be solid

[nutty nigel 7,509]

I think people look at this the wrong way. The way I see it parachute payments are more to allow clubs to honour payments they are already commited to rather than a warchest to get out of the championship.

 

 

[Felixfan 53]

I think Nutty is right the payments are more to rebalance the books. All the more important that we are debt free if the worst does happen.

[The ghost of Michael Theoklitos 0]

[quote user="thefutureisyellow"]Money is only an advantage if it is spent wisely.[/quote]Agreed.I think the 3 examples of last years relegated teams the OP mentioned are examples that, while money can help, the most important thing is club leadership and astute managerial appointments.Take 2 of those 3 clubs as an example;Wolves - Sack Mick McCarthy, 12 months ago when they were in trouble in the Premiership. They obviously didn''t do their homework, or got their wires crosses as no one ended up wanted the job on offer, and they settled with Conner, who didn''t win a single game. They have since sacked him and one other. Hypothetical - If they went down under McCarthy but kept him as manager, would they be in the position they are now?Blackburn - Absolute train wreck of an operation at the moment with Venkeys. Steve Kean, IMO not a great manager, but tried his best to keep them up, and had them travelling OK in the Championship, starting the season with a great string of results. Since he resigned, they had Berg last about 2 months and take them backwards. They have money to spend, but absolutly no leadership right at the top to use it correctly. Hypothetical - Had Steve Kean not resigned, would they be in the position they still be looking at play-offs / promotion?Money is just one (pretty important) resource available to a club. It''s up to the board room, and the management to use it correctly, just like all resources.Perhaps a lesson for the vocal minority we had around here last week asking questions about our management too.

[Icecream Snow 761]

Depends on the wage bill and their contracts. Often relegated clubs are left with over-paid donkeys who they can''t get rid of. Not much point having a ton of money if it just goes into a donkey''s back pocket.

[Bill 1,788]

"We have never been in danger on going down this season so I wouldn''t worry about it"

 

eh ?

 

I don''t think anybody has said anywhere here that we are in any danger of being relegated, in fact the nearest comment was ''were it to happen at some point''. Neither do I think anyone is ''worrying about it'' either.

 

It is merely one factor in the club''s being in the Premier  League and has, in my opinion, led to some fans mistakenly seeing it as an automatic get out of jail card (get out of the Championship), hence the pointing out of how it hasn''t worked for other clubs recently, and some suggestions as to why.

 

So not really ''worrying about it'' in any shape or form at all.