Kieran Maguire issues ‘evil’ verdict as Leeds United face £100m loss
Parachute payments between the Premier League and the EFL are a ‘necessary evil’ to ensure clubs such as Leeds United don’t lose £100million when relegated.
That is the view of finance expert Kieran Maguire, who spoke exclusively to Football Insider about the ongoing debate around parachute payments.
As reported by The Athletic, talks over financial distribution in English football are currently being held up because of disputes over parachute payments.
Football Insider sources revealed on Thursday (30 March) that 14 Premier League clubs remain wholly opposed to the abolition of parachute payments.
Parachute payments are paid out to the three relegated clubs from the Premier League over a three-year period, with clubs receiving 55 per cent of the equal share of broadcast revenue paid to Premier League clubs in the first year after relegation, 45 per cent the following year and 20 per cent in year three.
Maguire states that clubs are already facing income losses of up to £100million if relegated and that inflicting further losses would be ‘harsh’.
“We will likely see a last-minute resolution between the Premier League and the EFL when it comes to financial distribution,” Maguire told Football Insider.
“Parachute payments were set up to stop clubs from going into administration following relegation, but part of the problem is that the Premier League has been too successful in comparison to the EFL.
“The EFL were offered the opportunity to receive 25 per cent of the combined TV income in 1992 but they chose to go alone.
“With that in mind, I take the position of the EFL with a pinch of salt.
“Parachute payments probably should have more conditions attached and should potentially only last for two years instead of three.
“But if you take a look at a club such as Leeds United and what would happen if they were relegated, even with parachute payments they would be looking at a drop of income between £80-100m.
“Further losses on top of that would be far too harsh for any club – some may see parachute payments as evil, but they are a necessary evil.“
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