The

Premier League The Premier League is a professional association football league in England and the highest level of the English football league system. Contested by 20 clubs, it operates on a system of promotion and relegation with the English Football Lea ...

distributes a formulaically derived financial payment to each

English Football League The English Football League (EFL) is a league of professional association football, football clubs from England and Wales. Founded in 1888 as the Football League, it is the oldest football league in Association football around the world, the w ...

(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 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 The English Football League Championship, known simply as the Championship and for sponsorship purposes as Sky Bet Championship, is a professional association football league in England and Wales. Contested by 24 clubs, it is the highest divi ...

), and 12.5 percent paid to each of the bottom two divisions (equivalent to

EFL League One The English Football League One, known as Sky Bet League One for sponsorship reasons, or simply League One, is a professional association football league in England. EFL League One is the second-highest division of the English Football League an ...

and

EFL League Two The English Football League Two, simply known as League Two and for sponsorship purposes as Sky Betting & Gaming, Sky Bet League Two, is a professional association football league in England. EFL League Two is the fourth division of the English ...

). 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 The English Football League Cup, often referred to as the League Cup and currently known as the Carabao Cup for sponsorship reasons, is an annual Single-elimination tournament, knockout competition in men's domestic football in England. Orga ...

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: the process of dealing with or controlling things or people. ** Administrative assistant, traditionally known as a se ...

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

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 Premier League 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 Premier League 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 Premier League during the parachute payment period, then no more parachute payments will be made. The EFL also operates a Parachute Payment system within the EFL Leagues and the

National League National League often refers to: *National League (baseball), one of the two baseball leagues constituting Major League Baseball in the United States and Canada *National League (division), the fifth division of the English football (soccer) system ...

. From the 2016-17 season onwards payments are: * Clubs relegated from the

receive 11.1% of the Basic Award payment to Championship clubs for one season. * Clubs relegated from

receive 12.6% of the Basic Award payment to League One clubs for one season. * Clubs relegated from

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

, 4.5% in

, and 3% in

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 (

). Concerns often raised include: *Parachute payments give an unfair advantage to relegated clubs and damage the competitive balance of the

. *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 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