Parachute Payments

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I started to watch the Netflix series "Sunderland Til I Die" and lost interest very quickly. I must have watched about 20 minutes of it and turned it off. Sunderland was a football team in the English Premiership until they got relegated. I thought I would have a look where they are now and they have dropped down into the next league so they need to win two league promotions to come back up to the Premiership which is not likely. They have squandered two payments already and only have a 20% parachute payment left.

There are many teams that have been relegated from the Premiership never to be seen or heard of again. Just off the top of my head the bigger teams from the past would be Leeds United, Blackburn Rovers and Nottingham Forest. They were big clubs in their time and have big stadiums to maintain so the only thing they don't have to pay is the exorbitant salaries of the players in the Premiership. The parachute payment would have helped them clear some of their wage bills though. A catch 22 as you need the players to help you get back up.

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Hull City went down and came straight back up. Burnley also achieved this, but this is really rare.

When a club is relegated they receive a parachute payment which is there to help assist them with lost finances and a possible chance of returning back into the Premiership. It is easier said than done and very few teams have been able to bounce straight back up.

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The Playoff winner in theory is playing for a minimum of 200 Million Pounds in revenue over 3 years even if they are relegated immediately after one season. Aston Villa beat Derby and Derby have to fight it out again this season to try and come up.

In 1992 the payments from television revenue was dished out with 50 percent going to the First Division(Premiership now)25 % to the 1st Division and then 12.5 % each to the next two leagues. There are 72 teams/clubs that receive some sort of payment.

The parachute payment for a relegated club lasts for 3 years so if we take Huddersfield as an example who were relegated last season. Huddersfield would receive 55 % of the television rights a Premiership team would receive and then the following year 45% and then year 3 only 20%. If the team succeeds like Burnley and Hull did in the first year then that payment falls away.

The way I see it you have 2 seasons to get back otherwise you are toast as everyone is after the Premiership nest egg. The difference with what the teams are earning in the Premiership is huge compared to the ones below it in the Championship and first and second Divisions.

There is a parachute system in place for Championship sides dropping to the First division and also for First dropping to the Second Division. When things go wrong and you don't fix things then you are heading for disaster. Players want to leave as playing in the Premiership is where they want to be and anything below that is less appealing.

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Huddersfield are currently in 23rd position out of 24 teams.

Huddersfield were relegated last season and at the start of this season had odds of 12/1 to bounce back up. They haven't won a single game yet and it isn't looking good. It is still early days and a run of 3 or 4 wins can see them into safety but like Sunderland they could be on the slippery slope and dropping out of sight.