Parachute payments: Government clarifies stance after regulator move

The government insists it does not want parachute payments to be abolished, despite giving the incoming football regulator new powers to look at the controversial mechanism.

The Premier League and English Football League remain at loggerheads over the issue, which has contributed to an impasse over the so-called New Deal of financial redistribution.

More than half of the £1.6bn over three years that the Premier League shares with clubs in the Championship, League One and League Two are in the form of parachute payments. 

EFL boss Rick Parry has said they should be called “trampoline payments” because of the advantage they give to relegated teams in returning to the top division, while Premier League chiefs say they are an important safety net which incentivises ambition.

Sport minister Stephanie Peacock said: “The previous government took the decision to exclude parachute payments from [the regulator’s remit]. We’ve decided that they should be there. 

“We’re not in the business of making an opinion on that. We can see both sides. We absolutely don’t want them to be abolished. We recognise they have an important part to play. 

“We also recognise that they can place inflationary pressure, but it will be for the regulator, through the work they do, to decide if they are an issue and if they should be looked at through that mechanism.”

Peacock emphasised that the football regulator would be focused on financial sustainability and it is understood that parachute payments will only be looked at if there is deemed to be a “direct causal link” between them and threats to clubs’ solvency.

It comes as the government today publishes its revised Football Governance Bill. It is expected to have its second reading before Christmas, after which all stakeholders will have the chance to ask MPs to submit amendments.

Although the football regulator will now also have regard to ticket pricing and equality, diversity and inclusion standards, it is not anticipated that the watchdog will receiev a bigger budget – despite concerns that its resources were already too meagre.

The other headline change to the initial bill is the dropping of the requirement for the football regulator to consider UK foreign policy when assessing the suitability of prospective club owners – effectively giving it veto over takeovers by, for instance, state-backed groups.

It follows pressure from European governing body Uefa to show there would be no government interference in the sport, which ultimately had the potential to jeopardise England’s eligibility for international football.

“We’re taking out the laws that said the regulator should have regard for the government’s foreign policy,” Peacock added.

“We think this is a welcome step to make it very clear that the regulator is fully independent of government. We weren’t clear why that was in previously. And again, it’s another consistent position with [when Labour was] in opposition.”