Parachutes – a good thing?

Fans of Coldplay’s debut album would say ‘yes’, their detractors would disagree, and if you are in a plane with faulty engines they certainly could be a good thing. However, in a football context parachutes, or more correctly parachute payments, have more questionable value.
The effect of parachute payments was brought to my mind this week, when a tweet started to circulate on Twitter of what purported to be the Wrexham FC budget figures for 2015/16 and 2016/17. The line that people’s attention was drawn to was ‘First Team Costs’; in 2015/16 they stood at £937,767, representing 53% of their variable costs, and in 2016/17, despite now only representing 43% of the total, they stood at £961,026.
The tweet gained more prominence in the light of comments from Wrexham boss Gary Mills, who bemoaned lack of funds to sign a replacement striker for those lost in the summer. He also drew a comparison between his team’s budget and that of Tranmere Rovers, suggesting that “when you are talking budgets… (they have) probably double the one I’ve got”.
Now that is mere conjecture, but even so a club operating in non-league football with a first-team budget of close to £2 million illustrates precisely how money is trickling down from the English Football League, but perhaps not always in a good way.
Last November the EFL clubs voted to increase parachute payments to clubs relegated to the National League. In their first season after relegation clubs used to receive from the EFL a ‘basic award’ equivalent to 50% of that which they’d receive if still in League Two. However, the change they voted through means that from this season onwards they receive 100% of the basic award in their first year after relegation and 50% of the award in their second year, assuming that they haven’t been promoted back into the EFL.
EFL chairman Shaun Harvey justified the move thus: “In recent seasons we’ve seen a number of clubs suffer severe financial trauma following relegation from The Football League and in some cases fold altogether. As a result, it became increasingly clear that we needed to review existing arrangements and address our approach to managing the financial transition for clubs in these circumstances.”
The problem is that the ‘transition’ he refers to is less likely to be necessary as a result of said payments. Cheltenham Town bounced straight back into the EFL when only receiving 50% of the basic award, and would doubtless have been even better placed to do so had they received 100%. Tranmere Rovers may now be in their second season in the National League, but there’s no doubt that the additional funding they receive for ‘failing’ gives them a big advantage over many of the clubs they will be facing.
Whilst there are a few upwardly mobile clubs such as Forest Green Rovers, Eastleigh and even, in our own division, AFC Fylde, that have the financial wherewithal to still challenge. However, for the most part the presence of parachute payments, although perhaps not their stated purpose, seem more likely to help preserve the status quo, by helping relegated clubs to bounce straight back and choke off the chances of all but the bankrolled few ever making it into the EFL.
So, are parachutes a good thing? I guess it depends whether you are looking up, or looking down.


One thought on “Parachutes – a good thing?

  1. I should point out that this article was written in October 2016, for the AFC Telford United match programme to which I am one of the chief contributors.


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