Separate names with a comma.
Discussion in 'Fulham FC News and Notes' started by dcheather, Jul 31, 2014.
http://www.examiner.co.uk/sport/footbal ... ---7543268?
The crux of the writer's complaint isn't that Fulham is spending money; it's with the system of parachute payments in general, which he sees as "rewarding teams for failure." He's a Huddersfield Town beat writer, so he's clearly coming at this from a particular point of view. From where I'm sitting, parachute payments are absolutely necessary, but as this is my first experience in such a situation, it's hard for me to speak to the flaws in the details and execution of the system.
Yeah I have to wonder if the real problem isn't the financial disparity between the Championship and the Premier League. I assume with the Premier League TV revenue, clubs can afford to pay all their players and personnel more than the Championship clubs so without parachute payments you have wage decreases, layoffs, and wholesale roster changes that go beyond losing your few pricey premier league stars. Plus no parachute payments may discourage clubs below mid table from investing in their grounds and other programs. But I understand why the Championship clubs complain. The championship has financial fair play rules and the relegated clubs will start off with around £16 million more to spend before they suffer loses that would be punishable. I don't know what kind of TV revenue the Championship teams receive but I hope they don't share it with the teams receiving parachute payments. I know relegation and promotion adds significant excitement but it certainly complicates the financial side of things, especially when you are trying to encourage responsible club ownership and management. The parachute payment issues and FFP rules in England make me doubt we will ever see relegation/promotion in MLS. Maybe we can do it at the lower leagues but I see MLS staying a closed shop where only the rich get to play.
I think his point of not wanting the parachute payments to switch from spread over 4 years, as it stands, to spread over 2 years is a fair concern. The rest of his points are largely baseless. The entire point of parachute payments is to prevent relegated teams from smashing into the rocks financially, weighted down by higher salaries (and other related overhead) they may not be able to offload right away. We were able to exercise a large clear out immediately following relegation but other teams haven't been able to do that. It may take a year or two or three to get the wage bill in line with the earnings of the Championship. At present, the average Premier League team earns 55M gbp in tv revenue while the average Championship side earns 2M gbp. Suffering that drop without any sort of cushion could put clubs out of business.
Some teams have attempted to use that money to splash on players and try and win promotion back up straight away, but historically, the odds are against that strategy working. In the last 10 years, only 7 out of 30 relegated teams have won promotion back to the Prem the next season. Two teams managed it in 06/07 and again in 09/10. Only one managed it in 08/09, 11/12 & 13/14. Two of those teams, Newcastle and Sunderland, are sufficiently large enough that they would have had a financial advantage over the Championship sides with or without parachute payments. Birmingham managed to bounce back straight away twice, only to be relegated again both times. Their longest stay in the Prem in that time was 2 seasons. The other 3 teams to pull it off were West Ham, WBA and QPR (this past season).
In 5 of those 10 years, none of the relegated teams won promotion. Going further, of those 30 relegated teams, 11 have yet to make it back to the Prem. Obviously some are more recent, such as Wigan who were relegated in 12/13 and failed to get back straight away. They are among the favorites to contend for promotion this season. Bolton and Blackburn have failed to win promotion in 2 seasons in the Championship. Blackpool has now failed in 3 attempts. That leaves 7 others though who all ran out of parachute payments w/o gaining promotion. Looking further, Leicester just won promotion after being relegated in 03/04. Palace went up in 12/13, 8 years after being relegated. Southampton took 7 years to get back. It took 5 years for Wolves & 6 years for Norwich and both have been relegated again since.
Conversely, of those same 30 relegated teams, 8 were relegated to League 1 and Pompey fell all the way to League 2. At present, Portsmouth are in League 2, Wolves are in League 1 and the others have recovered and made it back to the Championship.
It's pretty clear that parachute payments do not destabilize the league and are no guarantee of getting back to the Premier League. They do however serve their purpose. Only two teams really fell into financial peril, Leeds and Portsmouth and the latter was unraveling financially while they were still in the Prem. None of the clubs have gone out of business although Portsmouth may still be in limbo.
I do agree with Mo, that the teams on parachute payments shouldn't receive a cut of Championship tv revenue until their parachute payments run out. I don't know if that is or isn't the case.
Good info Ag and interesting. However, the only problem I see with using the last ten years to demonstrate the author's concerns are baseless is that the Championship just started using Financial Fair Play regulations with a real penalty for over spending. So the teams with parachute payments have £16 million more to spend before they pay a penalty, the others will have serious penalties at only £3 million in debt - that's 1/5 the amount of the parachute payment alone (£8 million if you have a rich owner willing to donate £5million). I don't know what kind of debt Championship teams have typically taken on in the past for player fees and wages to gain promotion so maybe it is not that big of a deal, especially if you have a rich owner. However, I think QPR overspent this past season in the region of £24 million to get promoted so that is what the Championship owners can point to. And I believe QPR will get away with their overspending free of penalty because they are now a part of a Premier League that is unwilling to collect the penalties for the Championship.
None of this matters until clubs start getting the death penalty, a la SMU football in 1987 via the NCAA. And that just ain't gonna happen.
Think the death of the yo-yo teams sort of makes this meandering piece moot...
As I said, they have a less than 25% chance of gaining promotion by doing that. And QPR just scraped promotion by the hair of their chinny chin chin. Starting this season, they'd have been staring down a 13.6M gbp tax hit if that strategy had failed. But, given the transition phase, the risk/reward was much more favorable.
This is why QPR won't be asked to pay anything to the Championship, not some collusion with the Premier League.
I'd rather see a 3 year window for evaluation of losses like the Prem adopted as opposed to going on a year by year basis. Say you sell on your best player for a big profit but aren't able to replace him until the following season for whatever reason. Should you really be restricted to a 5M gbp loss, even if you made more than that from the sale the previous season? We'll see how it plays out, but I suspect this system will be tinkered with again several times.
Jump, the whole point of all of this is to prevent teams going out of business due to reckless and irresponsible ownership. A death penalty would be counter productive.
I just don't agree that 25% number will be relevant now that the Championship clubs with less money cannot take on much debt. In the past you could've had half the league or more overspending and taking on debt so it was perhaps a much tougher fight for those top three places. Will that be the case now?
I'm going on what I read in the past so perhaps they have relatively recently decided to exclude the 2013/2014 season from the tax. But there were quotes from QPR's owner saying he wouldn't pay the fines. Convenient for QPR I guess if they have made a change in plans.
And the reason I implicated the Premier League is that they wouldn't approve the Championship and Football League's plan for the FFP tax as it was originally set up and voted on. The collected fines were going to be redistributed to the clubs that were in compliance with the FFP limits, but the Premier League would not agree with that and said they should be given to charity. The Premier League had to approve it since it will apply to teams that gain promotion to their league by over spending. The Premier League could just collect the fines from promoted clubs by subtracting it from their TV deal payments but they said they won't do that; its none of their business. If they can give teams in a different league parachute payments, I don't understand why they can't withhold TV revenue from teams IN their league who have broken the rules. Doesn't send a good message, if you ask me.
How hard will the Championship try to collect the fines if they are just going to charity?