It’s Business Time

The English football season is drawing to a close, as are those in most European nations, and things are getting interesting. The usual numbers are being banded around as to what relegation means exactly, financially. Portsmouth, surprise surprise, have already bitten the dust (although they made the FA Cup Final last weekend, against all odds!), while Hull and Burnley are odds on to join them.

This time a year ago, Hull benefitted from Newcastle United’s malaise to remain in the Premiership, but that stay of execution was just one year, while Newcastle United have already completed a rapid return to the Premiership, winning promotion at a canter from the Championship (the division below the Premiership). West Brom, relegated with Newcastle, have also secured promotion. That the two promoted clubs this season were relegated last season leads into another story: Parachute Payments.

These parachute payments are handed out by the Premiership to clubs relegated from the Premiership for two years after the relegation happens, as a means to help such clubs deal with the financial consequences of relegation. It seems a remarkably big-hearted expression by the Premiership, and one not inkeeping with their otherwise inward looking and short-term thinking (the Premiership is run by its clubs). But of course, it’s the Premiership protecting its own. And hence, it’s recently been announced that parachute payments will be extended from 2 to 4 years.

I suspect the only consequence of this is that the Championship, the division below the Premiership, will start to become more and more divided over the years, between those clubs at the top still being paid by the Premiership (assuming they don’t immediately spend all the four years of payments, borrowing against them and waste them), and the rest. My suspicion is that the decision is driven by the number of “smaller” clubs in the Premiership at the moment: Hull, Burnley, Wigan, Bolton, Wolves, Birmingham – and also by the fate of Newcastle last season and Leeds a few years back, seeming giants relegated.

Of course, lower down things are happening also. In League One, many of the clubs that have spectacularly fallen from grace are remedying things: Norwich City have been promoted back to the Championship (even despite losing their first game of the season 7-1 at home), and Leeds United, although stuttering, have a great chance to join them. Southampton are putting on an incredible fight to make the play-offs despite a 15 point deduction for financial problems.

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