The

Premier League The Premier League (legal name: The Football Association Premier League Limited) is the highest level of the men's English football league system. Contested by 20 clubs, it operates on a system of promotion and relegation with the English Fo ...

distributes a formulaically derived financial payment to each

English Football League The English Football League (EFL) is a league of professional football clubs from England and Wales. Founded in 1888 as the Football League, the league is the oldest such competition in the world. It was the top-level football league in Engl ...

(EFL) club every season. There are two mechanisms with which funds are calculated and distributed; these are known as "Parachute Payments" and "Solidarity Payments". The payments are linked to the value of the

’s broadcasting rights. In the 2017–18 season the

paid £243m in Parachute Payments split amongst 8 clubs, and £100m in Solidarity Payments split amongst the remaining 64 clubs. This compares to £88m of UK TV revenue the EFL distributed to its 72 clubs for the 2017–18 season.

History

Before the

Foundation of the Premier League The foundation of the Premier League in English football occurred in the early 1990s. A proposal for the establishment of a new league was tabled at the end of the 1990–91 in English football, 1990–91 season. It received the support of represe ...

in 1992, monetary distribution of television revenue was split between the top four divisions, with half paid to First Division clubs (equivalent to the

); 25 percent to Second Division clubs (equivalent to the EFL Championship), and 12.5 percent paid to each of the bottom two divisions (equivalent to EFL League One and EFL League Two). Until the 2006-07 season the Premier League did not share any of their broadcasting revenue with the

other than £4m a year for youth development, and participating in the EFL Cup which added value to the

television deal. 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

basic TV money, this would lower the risk of a club going into

administration Administration may refer to: Management of organizations * Management, the act of directing people towards accomplishing a goal ** Administrative Assistant, traditionally known as a Secretary, or also known as an administrative officer, admini ...

due to the high cost base (mainly player wages) they incurred in the

. 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. The structure and value of the "parachute" and "solidarity" payments have continually evolved since then.

Premier League broadcasting rights

The

splits the UK broadcasting income into 3 categories. 50 per cent equally shared between

clubs; 25 per cent shared based on how often a club’s matches are broadcast in the UK (known as "Facility Fees"); and 25 per cent shared based on where a club finish in the league table (known as "Merit Payments"). Overseas broadcasting income is currently split equally between

clubs. Payments to EFL clubs are linked only to the equally shared element of the broadcasting income (i.e. 50% of UK income, and 100% of Overseas income).

Parachute payments

Parachute payments are unique to the English game and currently see clubs relegated from the

receive a percentage of the equally shared element of broadcasting rights each

club receives. This percentage drops progressively over a three-year period – 55% in the first year, 45% in year two and, if the club was in the

for more than one season before relegation, 20% in the third year. This system was introduced for clubs relegated in 2015/16 onwards, with the previous system having a similar structure but with payments spread over 4 years. If a club is promoted back to the

during the parachute payment period, then it no longer receives parachute payments. The EFL also operates a Parachute Payment system within the EFL Leagues and the

National League The National League of Professional Baseball Clubs, known simply as the National League (NL), is the older of two leagues constituting Major League Baseball (MLB) in the United States and Canada, and the world's oldest extant professional team ...

. From 2016-17 season onwards payments are: * Clubs relegated from the EFL Championship receive 11.1% of the Basic Award payment to Championship clubs for one season. * Clubs relegated from EFL League One receive 12.6% of the Basic Award payment to League One clubs for one season. * Clubs relegated from EFL League Two receive 100% of the equivalent Basic Award payment made to League Two clubs in the first year following relegation, and 50% of the equivalent Basic Award payment made to League Two clubs in the second year following relegation.

Solidarity payments

Clubs within the EFL who are not eligible for Parachute Payments receive Solidarity Payments. These are calculated as a percentage of the third year Parachute Payment amount a club relegated from the

would receive (currently 20% of the equally shared element of

broadcasting rights). This percentage drops progressively for each EFL league – 30% in the EFL Championship, 4.5% in EFL League One, and 3% in EFL League Two.

Changes to distribution of overseas TV rights

From 2019-20, the current level of revenue from international TV rights sales will still be shared equally between all 20

clubs. Any increase on that level, will then be distributed according to where a team finish in the league. As the Parachute and Solidarity Payments are linked only to the equally shared element of TV rights, any increase of international TV rights is likely to have little benefit to EFL clubs.

Debate and criticism

There are several concerns often raised around the structure and amount of the payments. These generally relate to the perceived level of fairness, and the impact on the competitive balance of the second tier ( EFL Championship). Concerns often raised include: *Parachute payments give an unfair advantage to relegated clubs and damage the competitive balance of the EFL Championship. *Solidarity Payments are not anywhere near as high, in percentage terms, as the pre

distribution method. Some believe that the

has a greater responsibility to support the leagues below. *Some Premier League club owners question the merit of the

"subsidising" the EFL, with

John W. Henry John William Henry II (born September 13, 1949) is an American businessman and investor and the founder of John W. Henry & Company, an investment management firm. He is the principal owner of Liverpool Football Club, the Boston Red Sox, ''The B ...

quoted as saying “it’s much more difficult to ask independent clubs to subsidise their competitors beyond a certain point". *Parachute Payments reduce the need for

clubs, either collectively or individually, to insert relegation clauses into player contracts that would lead to an automatic salary decrease in the event of relegation. Relegation clauses might mean players fight harder to avoid relegation, but might also make it more difficult for clubs at risk from relegation to sign players.

References

{{Football League Two Premier League English Football League Payments