Dom Howson’s Sheffield Wednesday column: How parachute payments have skewed the transfer market

Former Owls loanee Benik Afobe has joined Stoke City this summer.
Former Owls loanee Benik Afobe has joined Stoke City this summer.
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They are a complete farce.

Yet more and more clubs are reaping the benefits of parachute payments.

Kyle Bartley during his loan at Leeds United.

Kyle Bartley during his loan at Leeds United.

I get the purpose of why they were first brought in.

The aim was to soften the blow of relegation from the Premier League where prize money rarely tops £8 million.

So Stoke City, Swansea City and West Bromwich Albion, who finished in the bottom three of the top division last season, will receive around £40m during their first season back in the English Football League. And, unless they fail to return within three years, a further £35m before a final instalment of £15m.

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Yes, clubs do have a large shortfall to make up but that’s not a bad handout, heh?

There is, of course, a significant difference between the broadcasting rights, matchday income and commercial revenue clubs receive in the Premier League compared to the Championship.

But do the payments create an unlevel playing field? Football finance expert Rob Wilson, of Sheffield Hallam University, thinks so.

“They are ridiculous,” he told me.

“It is difficult in the Championship as there are eight or nine teams in there with parachute payments which is distorting the competitive balance in the league.

“It is almost damn near impossible for a team who come down from the Premier League to get relegated. Sunderland, of course, are the exception but it is very rare that will happen.

“Relegated clubs are essentially starting the season on plus five points. That’s what it works out in terms of if you were to add what points they get as a consequence of their ability to invest heavily in players.”

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Few second-tier teams have flexed their muscles in the transfer market this summer. In fact, several clubs, including Aston Villa, Norwich City and Wednesday, have been forced into making cut backs after failing to win promotion.

But Stoke and WBA, armed with the parachute payments, have already spent £5m-plus on bolstering their first-team squads. The Potters moved quickly to bring in Feirense midfielder Oghenekaro Etebo for £6.35m and Benik Afobe from Wolverhampton Wanderers while the Baggies have added Kyle Bartley and Jonathan Bond to their ranks.

The payments are giving these teams an unfair advantage in the market place, allowing them to bring in a better quality of player and continue shelling out large transfer fees and high wages. Clubs are collecting the payments and using them as a transfer war chest to rebuild their squad. It is encouraging more reckless spending.

Shouldn’t they feel the financial hit of relegation? Only in football would you have a system which rewards failure.

Wilson argues teams should take greater financial responsibility when they are in the Premier League and insert relegation release clauses in players’ contract. There have also been calls in some quarters for the introduction of a points handicap.

Something needs to be done by the sport’s governing bodies to ensure the payments serve the purpose they were originally designed to do.

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