Back in August, when Leeds United fans still had hope about the upcoming season, Andrea Radrizzani gave a couple of interviews with the BBC and The Telegraph, describing the process of purchasing Leeds from Massimo Cellino, buying back Elland Road, and his hopes for the season.
He spoke about the challenges to get a club promoted out of the Championship, and one area he highlighted was the issue of parachute payments. He stated that it was difficult to operate under a sustainable budget when teams relegated from the Premier League were coming down with large chunks of money, saying that the parachute payments were “to pay the contracts signed in the Premier League, not to pay new players in the Championship.” Turns out that Radrizzani wasn’t the only person to find fault with the current parachute payment system.
A new research study was released in the Journal Of Global Sport Management that says that the parachute payments have had a distorting effect on the levels of competition in the Championship. The researchers come to the conclusion that the parachute payments are worth five points over the course of a season, and that as the payments start getting larger, that they will have an even greater impact on the division.
The Independent quotes the study as saying: “Championship clubs with parachute payments are twice as likely to be promoted to the EPL compared to clubs without and considerably less likely to suffer further relegation to League One compared with other clubs in the League.”
Rob Wilson, one of the authors of the study, had this to say in regards to the the impact on Championship clubs and how the EFL should deal with it, “The fact that you get this five point head-start on everyone else suggests that clubs in the EFL should be petitioning against parachute payments coming through because the competition gets more unbalanced.”
Those sentiments sound pretty much exactly what Radrizzani had to say back in August. The increased money going into the Premier League, and by extension the Championship via parachute payments, means that more and more clubs are rolling the dice and refusing to maintain a fiscally sustainable model.
Rescued to an extent by #ParachutePayments, but it looks as if #Championship wages to income control could be below 100% for only the second time in five years. Still bonkers though at 93%. pic.twitter.com/GYediJh15F— PriceOfFootball (@KieranMaguire) March 1, 2018
Wages in the Championship are nearly equal, or above, the amount of income that is brought into the division by the clubs and have been for years as teams try to load up on quality players to go for promotion. But only three teams go up every season, and with only a few teams trying to be fiscally prudent, it means that over a dozen teams are left staring into the abyss if their ownership group suddenly walks away of if they are found to be in breach of FFP.
So it looks like Radrizzani was right about the effects that parachute payments are having on the Championship. The payments have been allowing teams that have been relegated to gamble with even more money in order to try and go back up, not use the payments to prevent a fire sale of players.
Radrizzani said he wanted to build a club that was sustainable and yet could still achieve promotion. With his outbursts about the model being used at Wolverhampton, perhaps he’s changed his tune and will seek to find a loophole in order to get Leeds into the Premier League and the millions of pounds of revenue that come with a promotion.