Parachute payments will now be included in the independent regulator’s assessment if it is called upon to impose a television cash settlement between the Premier League and the EFL, the Government has said.
The payments, which are made to top-flight clubs when they are relegated to the Championship, were controversially excluded in the original Football Governance Bill when it was introduced to Parliament under the Conservative Government earlier this year.
However, a strengthened Bill is being brought back before Parliament on Thursday, giving the regulator scope to consider the payments under its backstop powers which it can use to mediate a financial deal between the leagues, should they be unable to agree one themselves.
The updated Bill will now require clubs to provide ‘effective engagement’ with fans on ticket prices, at a time when some Premier League club supporters’ groups are concerned their teams are trying to price out loyal season ticket holders.
Another significant change is the obligation on clubs to provide greater transparency on their work towards meeting equality, diversity and inclusion (EDI) standards as part of the regulator’s corporate governance code for clubs, something Kick It Out and the Black Footballers Partnership have both called for in the past.
The consideration of parachute payments in the assessment of a fair financial deal is arguably the most significant change, however.
The EFL’s chairman Rick Parry has long criticised the distorting impact the payments have on the Championship in particular, and the Government says excluding the payments from consideration “would have significantly reduced the ability of the regulator to take a full view of financial stability and resilience across the football pyramid”.
The Premier League says the payments are essential to give newly promoted clubs the confidence to invest in order to compete in the top flight.
It is understood parachute payments will be assessed only if the regulator considers them to be of systemic risk to financial sustainability. The Bill will also still require clubs to continue to be protected from the risks that come with relegation.
Responding to the new Bill, the Premier League expressed concern at the regulator’s “unprecedented and untested” powers to intervene in the distribution of top-flight revenue and said this “could have a negative impact on the league’s continued competitiveness, clubs’ investment in world-class talent and, above all, the aspiration that drives our global appeal and growth”.
Discussions between the Premier League and the EFL over a ‘New Deal’ on splitting television revenue have been on hold since March.
EFL chairman Parry said: “We believe the Bill has been framed in a way that will enable the new regulator to protect and achieve the sustainability of clubs across the entire football pyramid.
“It is also pleasing that the State of the Game report, which will provide the objective and independent basis for the new regulator’s work, will be delivered within 18 months. We look forward, in collaboration with our clubs, to making a significant contribution to this important piece of work.”
The new Bill also strikes out a controversial clause which said approval of club takeover deals should have regard to the trade and foreign policy objectives of the Government.
That clause was heavily criticised, including by the Premier League, and the Government has removed it to ensure the regulator is “fully independent of Government and industry”.
The original Bill failed to progress through Parliament before July’s General Election, but has now been brought back by the Labour Government.
Culture Secretary Lisa Nandy said: “English football is one of our greatest exports and a source of national pride which this Government wants to see thrive for generations to come.
“But for too long, financial instability has meant loyal fans and whole communities have risked losing their cherished clubs as a result of mismanagement and reckless spending.
“This Bill seeks to properly redress the balance, putting fans back at the heart of the game, taking on rogue owners and crucially helping to put clubs up and down the country on a sound financial footing.”
The creation of an independent regulator for football was the central recommendation of the fan-led review, which was commissioned by the last Government in 2021 in the wake of the European Super League scandal.
The Conservatives made a fan-led review part of its 2019 General Election manifesto, in the months after the financial collapse of Bury.
Football reform group Fair Game largely welcomed the changes to the Bill but felt it still did not go far enough to address fair financial flow.
Its chief executive Niall Couper said: “If the Bill is to deliver financial sustainability for the football pyramid then the regulator must have powers to set parameters around what any deal must deliver – and that should include closing the gaps between divisions and rewarding well-run clubs.”
Kick It Out chair Sanjay Bhandari welcomed the inclusion of EDI criteria within the regulator’s scope, and said: “”Football rightly celebrates and makes promises about its ability to unite and represent communities. Now it needs to be more transparent and accountable for those promises.”
Delroy Corinaldi, the executive director of the Black Footballers Partnership. said: “Any chosen EDI strategy should ensure it is not about picking out a token black or brown face and giving them a job title without the power.
“EDI needs to be lived and breathed by the clubs if this Bill is to achieve the aim of removing biases and systemic obstacles to black footballers’ progression off the pitch.”
