Finance Insider Column: Newcastle, Man United and EFL reaction revealed after £750m talks breakthrough

Since the formation of the Premier League in 1992, the EFL has been eating the crumbs from a five-star meal.

The top flight currently reserves 16 per cent of its eye-watering £3.5billion-a-year TV deal to give to the EFL, with around 70 per cent of that figure going to a handful of clubs in the form of parachute payments.

But a possible settlement between the two organisations – which has effectively been sparked by the threat of intervention by an independent regulator – means dramatic change may now be afoot.

It is understood that the Premier League has submitted a formal offer to the EFL regarding a shake-up to English football’s financial distribution system after months of FA-mediated negotiations.

Sources told Football Insider that there had been a breakthrough in the talks before the EFL sent a communiqué to its members on Friday, sparking genuine optimism in club boardrooms around the country.

It is believed that the proposal would see the Premier League strip back parachute payments and agree to give at least 20 per cent – and possibly more – of its broadcast cash to the lower leagues.

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That figure is lower than the 25 per cent for which EFL chairman Rick Parry has been lobbying for years, which would see an extra £750m go to the Championship, League One and League Two over the course of a three-year rights cycle.

But even 20 per cent seemed like the remotest of possibilities only a year ago, before Tracey Crouch MP’s fan-led review proposed the idea of an independent football regulator with the power to impose its own financial model.

The mood of cautious optimism was reflected at Friday’s Fair Game conference, an annual event hosted by the organisation who have long pushed for a more equitable distribution system.

At the summit, which was attended by Football Insider as well as representatives of several EFL clubs, the phrase ‘we’re winning the battle’ was uttered more than once.

Change can’t come soon enough. Sheffield United and, as revealed by this site last week, Huddersfield Town are the latest Championship clubs who are flirting with administration.

There are strings attached, of course. And it remains to be seen whether the EFL will think this is the best deal it can get, with the finer points of the proposal still to be ironed out.

For instance, it is understood that the top flight wants the extra cash to go towards infrastructure projects – as was proposed by the owners of Liverpool in Man United in Project Big Picture in 2021 – rather than lining players’ pockets.

Changes to the League Cup and FA Cup are also on the cards, and the Premier League wants the EFL to commit to housing more loan talent – although some experts have told Football Insider that this would be unworkable.

Exactly what will happen with parachute payments is also yet to be confirmed. It is unlikely that they will be scrapped altogether, although they will almost certainly be significantly scaled back.

Newcastle United are among the clubs who have previously voted against cuts to parachute payments, siding against the so-called ‘Big Six’ in doing so.

That stance has surprised many industry experts, as the Magpies have typically voted with the Premier League’s leading clubs since their takeover by the Saudi Public Investment Fund in October 2021.

The division’s biggest – and richest – clubs are less concerned by the removal of parachute payments as their wealth insulates them from ever receiving them.

That in itself raises questions. Financial redistribution is complex and could lead to a whack-a-mole situation where reducing the cliff edge in one area leads to greater inequities in another.

But the Premier League’s offer represents progress and it may be that the EFL feels that they can’t turn it down again.

Sources have told this site that there is great regret within the EFL that they rejected the top-flight’s offer of a quarter of its broadcast cash in the competition’s formative years. That’s the type of mistake you only make once.

In other news, Newcastle United blocked from signing Solly March as new deal agreed.