Parachute payments have a distorting effect on the Championship according to a football finance expert - with Leeds United one of the beneficiaries next season. The difference between revenues in the Premier League and the EFL is huge, with TV revenues in the top flight estimated to be worth a minimum of £100m per season compared to less than £10m in the Championship.
That means it is bonanza time for clubs winning promotion to the Premier League, but those that are relegated must slash their budgets. The financial blow is softened somewhat by parachute payments which see teams receive money from the Premier League for three years following relegation, with a first-year payment of around £50m and - if they are not promoted at the first attempt - lower payments for years two and three.
And those parachute payments mean that sides such as Leeds coming into the Championship from the Premier League start with a massive advantage over those competing in the second tier without any such windfall. "There is this big drop off in the Championship in terms of revenue, while the regulations are different I'd hasten to add that, in terms of living within their means, the EFL is more successful than the Premier League," said football finance expert Professor Rob Wilson of Sheffield Hallam University, in an interview with Saxo.
"The gap is big because of the prize money on offer in respective competitions, which leads to spending what you earn that is relative to the division you are in. I don't have much of an issue with the gap, but I do have an issue with parachute payments and making clubs dropping out of the Premier League and into the Championship much bigger than their rivals, which causes a big issue.
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"It's all about how you invest and the infrastructure you have, and not being held to ransom by agents, looking at the long game rather than short term focus."
The rewards on offer in the Premier League tempt Championship clubs to overspend in a bid to win promotion, with a number of sides running into financial difficulties as a result. That led to the adoption of Financial Fair Play rules which limit the losses clubs are allowed to make.
But clubs have also sought to push the boundaries of FFP, spending ever larger sums while staying within the letter of the law but stretching the spirit of the regulations. Wilson adds: "I think functionally FFP is working, but what we're also seeing is allegedly teams trying to work their magic around what the regulations are and what they are intending to do.
"Looking at core principals, if you have to regulate something then it tells you people are perhaps operating in a way that is not completely responsible or fair. Regardless of whether teams are using technicalities, I think what we really need to question is, are they operating in the spirit of what the regulations are?
"And a lot of the time we are seeing that's where it breaks down. When the amount of money on offer is so high, there is a tendency for people to want to bend the rules and that's natural in sport.
"If we go back to Lance Armstrong [the multiple Tour de France winning cyclist who was later found to have used performance enhancing drugs] as an example, people are always trying to find an advantage. But what we find in football is that it seems to be more focused on financial doping than actual drug cheating."
