Regulator report to review parachute payments

The independent regulator of English football (IFR) has confirmed that a “ground-breaking” analysis will be conducted in the area of “parachute payments” to relegated clubs.

The watchdog’s proposed scope of its State of the Game report, which it claims will “light up the industry’s financial pressures, governance gaps, and structural risks” has been made public.

It will look at the balance sheets of clubs and how money flows between the top five tiers of the sport. It will also be published in draft later this year.

According to the watchdog, it will be “the most thorough examination of the industry ever conducted.”

The report will take into account the controversy surrounding the Premier League’s multi-million dollar parachute payments, which are made to relegated clubs over a three-year period.

The English Football League (EFL) wants to get rid of the payments, which are worth tens of millions of pounds, so it can get a bigger share of the wealth that the top flight generates. It believes they distort competition and wants them to be done so.

However, the Premier League claims that making the payments is necessary to give club owners confidence to make investments.

The two leagues have been unable to reach a new financial agreement that would allow more money to flow down the football pyramid despite years of negotiations and political pressure.

If the Premier League and EFL continue to disagree on a financial settlement, the regulator will have “backstop powers” to help shape that decision. The findings of the State of the Game report will also help to determine how much money the Premier League should redistribute.

The independent football regulator’s chair, David Kogan, said: “The game has never been examined this before. The State of the Game report will give football the clarity it deserves, allowing the IFR to make decisions with confidence and for the long-term.

The regulator will be able to access information from clubs and competition organizers using statutory authority.

A four-week consultation will be conducted regarding the State of the Game’s terms of reference, and a 2027 final report is anticipated to be released.

Additionally, it will examine existing protections for club stadiums, crests, and colors in terms of Equality, Diversity, and Inclusion (EDI), fan engagement, and heritage.