English Football League (EFL) chairman Rick Parry has told clubs not to be too disappointed about the delay in the arrival of an independent football regulator, as a Labour government is likely to introduce one that will address the contentious issue of parachute payments.
It was confirmed on Thursday that prime minister Rishi Sunak’s decision to call a general election on July 4 meant there was not enough time to get the Football Governance Bill, of which the creation of new regulatory body for the game is the centrepiece, into law.
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In a letter to the bosses of the 72 EFL clubs, which The Athletic has seen, Parry admitted this was “something of a disappointment” but was always a “very real possibility given the tight timescale” of the bill’s introduction in March and the fact that Sunak had to call an election by January 2025 at the latest.
“It is certainly not the end of the process, however — far from it,” continued Parry.
“The EFL, and others who support the bill, will be actively pushing for it to be reintroduced in the first session of the new parliament given the level of cross-party support for its introduction.”
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This goal would appear to be highly achievable, as Sunak’s Conservative Party has been promising a review of English football’s governance for five years, and the opposition Labour Party, which has a significant lead in the polls, has been an enthusiastic supporter of the policy.
In fact, Tracey Crouch, the former Conservative sports minister whose Fan-Led Review in 2021 recommended the creation of an independent football regulator, has already described the bill as “ready made” for the next government to pick up.
Parry’s letter picked up on this sentiment, describing the bill’s progress through parliament as “relatively untroubled”, and pointed out that it had reached the committee stage of the process, where members of parliament forensically examine the bill, while assessing evidence from relevant stakeholders, such as the EFL, the Football Association and the Premier League.
And it was this step of the process that Parry wanted to highlight in his message to the clubs, as Labour’s representatives on the 17-strong committee have been arguing for the regulator to have the right to assess whether the parachute payments the Premier League gives to relegated clubs have a negative impact on the financial sustainability of the other EFL clubs.
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Parachute payments, which are meant to encourage clubs promoted to the Premier League to invest in their squads on the way up, by providing a safety-net on the way down, have become a source of bitter dispute between the leagues, with the Premier League saying they are crucial to its global success and the EFL claiming they skew competition in the Championship and create an environment for irrational spending.
The proposed regulator’s primary objective is to ensure the financial sustainability of clubs in England’s top five divisions, including the National League, and the strongest weapon in its arsenal will be the so-called “backstop” power it would have to impose a financial distribution deal. In other words, it would be able to decide how much of the Premier League’s central broadcast and sponsorship income should be shared with rest of the professional pyramid.
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However, as the bill is currently drafted, parachute payments are not considered “relevant revenue” for the regulator to consider as part of the “backstop” process. The EFL has argued that this makes no sense, as the Premier League currently gives five recently relegated clubs £233million, while the EFL’s 67 other clubs share just £79m in solidarity payments.
Clubs relegated to the Championship this season, received a year-one payment of £47.6m, with further potential payments of £38.9m next season and £17.3m the season after. Solidarity payments for Championship clubs are £5.2m, 11 per cent of a first parachute payment.
Parachute payments are now more than eight times bigger than they were in 2010, while average wage bills in the EFL have only doubled since then, giving relegated clubs a growing competitive advantage. For the last six seasons, two of the three clubs promoted to the Premier League have been helped by parachute payments.
It is for these reasons, and others, that the EFL’s written submission to the committee vetting the bill described the failure to include parachute payments in the overall financial distribution as “like fiddling while Rome burns”.
And the EFL’s arguments have been heard by Labour.
In his letter, Parry explained that just before the committee’s work was halted this week, it had begun to focus on the regulator’s backstop powers.
“We were much heartened to see an amendment tabled by Shadow Minister for Sport Stephanie Peacock, on behalf of the Labour front bench, which called for the regulator to be able to determine whether parachute payments could be included in the backstop,” he wrote.
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With the Conservatives holding a 10-7 majority on the commission, the amendment, which the Premier League had lobbied for, was voted down.
But Parry noted that it laid down a “useful marker for the future”.
He concluded his letter by asking all of the clubs to continue to make the case for the regulator, so that whichever party is elected in July quickly picks up the bill and gets it into law, as soon as possible.
That call has been echoed by the Football Supporters Association, which has written an open letter to party leaders, co-signed by Crouch and more than 170 supporters’ groups, asking them to include the bill in their election manifestos.
(Mike Hewitt/Getty Images)