Parachute payments and FFP

[nwgull]

The only way I can see relegated teams being less reliant on parachute payments, is all players in the premiership must have a relegation clause in their contracts. If their team is relegated, then their wages must come down by a certain percentage. I can't see it happening though.

It's a chicken and egg situation. If you're a player (or a player's agent), you're not going to sign a contract with a relegation clause in it when you know that the team you're signing for will get parachute payments. Especially as there's likely to be a number of mid-lower prem teams who'd also be interested in you.

 

[Herr Tubthumper]

The problem is not parachute payments as such, but the imperfect storm of the combined effect of FFP and parachute payments.

One or the other has to go ( or be watered down ), and go soon.

Does any other industry have to have this nonsense in place to protect itself from itself?

 

[pipkin112]

That would be sensible, but I don't think you can rely on every chairman being sensible until the punishment for defaulting on a debt is more than 10 points.

I was thinking that the football authorities should make clubs have the clause in the players contracts, which is why I don't think it will happen.

 

[Creaky]

I may be classed as cynical but I cannot see why the parachute payments are made or rather justified. All clubs are a business and as such decisions to pay players a huge wage should be taken with the full outcome of the business future considered. If a club is relegated whose fault is it that a club has stretched their finance to the limit to try to avoid it. Taking Palace just a an example they have gone out and signed 15 or so players at presumably high wages to face the Premiership and if they fail to stay up it is their own fault based on the decisions made by their board. So why should they receive money to help pay for those decisions. I do not see it for any club not because it is possibly Palace.

The big difference between football clubs and most other businesses is the wage structure.

In a normal business most employees receive a continuing contract of employment with a relatively short notice of termination. In contrast players, managerial and coaching staff are employed on relatively long fixed term contracts - this makes it very expensive for a club to reduce its running costs at short notice.

 

[pipkin112]

It's a chicken and egg situation. If you're a player (or a player's agent), you're not going to sign a contract with a relegation clause in it when you know that the team you're signing for will get parachute payments. Especially as there's likely to be a number of mid-lower prem teams who'd also be interested in you.

Which is why I think all clubs should be made to have the clause.

 

[Postman Pat]

I was thinking that the football authorities should make clubs have the clause in the players contracts, which is why I don't think it will happen.

Agree entirely, the FA/Premier league should enforce a standard 50% relegation clause, per division relegated, in every players contract. Then halve the parachute payments and increase the prize money across the lower leagues, and more money to grass roots football.

If that means that some foreign players no longer want to come to the premier league then all the better, more British players get an opportunity.

 

[pipkin112]

Agree entirely, the FA/Premier league should enforce a standard 50% relegation clause, per division relegated, in every players contract. Then halve the parachute payments and increase the prize money across the lower leagues, and more money to grass roots football.

If that means that some foreign players no longer want to come to the premier league then all the better, more British players get an opportunity.

You have explained it a lot better better than I did. It would be no good 1 or 2 clubs doing this, it would need to be all clubs.

 

[Chicken Runner61]

Teams getting relegated have a huge financial burden on them in that they have to honour to 3-4 year contracts given to players on Premier League deals. When was the last time a team bounced back because of parachute payments? West Ham went straight back up 2 seasons ago, but even that was by the play-offs and weren't they bank-rolled to a large extent? If QPR go straight back up, it'll be because of their rich owners being prepared to throw money at the team, not parachute payments - they're predicted to make a 45 million loss this year! Parachute payments haven't helped Portsmouth, Wolves, Bolton or Blackburn, and it remains to be seen how Reading and Wigan do.

As for disparity with commercial deals. That's all down to the exposure and number of fans that each team get. Do you believe that it's unfair that Amex probably pay significantly more to BHA than Yeovil Town get from their sponsor?

I agree with you but on the commercial deals surely rich owners with links to rich businesses will feed their clubs with finance to get round FFP - when you are any of the the big six thats going to be easy and even we can get better deals than say...................Yeovil - so whats going to change ? at least with the parachutes that money seems to filter down ward , with ffp it seems to me that its going to stop smaller clubs but bigger ones will deal their way round it

 

[nwgull]

I agree with you but on the commercial deals surely rich owners with links to rich businesses will feed their clubs with finance to get round FFP - when you are any of the the big six thats going to be easy and even we can get better deals than say...................Yeovil - so whats going to change ? at least with the parachutes that money seems to filter down ward , with ffp it seems to me that its going to stop smaller clubs but bigger ones will deal their way round it

This is explicitly not allowed under FFP rules.

 

[Bwian]

I agree with you but on the commercial deals surely rich owners with links to rich businesses will feed their clubs with finance to get round FFP - when you are any of the the big six thats going to be easy and even we can get better deals than say...................Yeovil - so whats going to change ? at least with the parachutes that money seems to filter down ward , with ffp it seems to me that its going to stop smaller clubs but bigger ones will deal their way round it

The parachute payment money doesn't really filter down though does it? It stays within the relegated club-I don't recall us or other non recipients of PPs getting a chunk of the monies. If anything it makes things even harder for clubs like ours. For us to be competitive we have to match or beat crazy wages being paid out by the likes of Reading and without Parachute Payments but with with FFP for us, we simply can't do it. Palace fluked their promotion and they are a rarity in that. Their timing was perfect-get promoted before FFP kicks in otherwise they would unlikely get promoted again.

The people in charge of football have created a financially desirable product that works for now. What they have also done is screw up the lower leagues finances and almost certainly guaranteed England will never be close to winning a World Cup ever again. The greedier football becomes the less I'm enjoying it.

 

[nwgull]

I agree with you but on the commercial deals surely rich owners with links to rich businesses will feed their clubs with finance to get round FFP - when you are any of the the big six thats going to be easy and even we can get better deals than say...................Yeovil - so whats going to change ? at least with the parachutes that money seems to filter down ward , with ffp it seems to me that its going to stop smaller clubs but bigger ones will deal their way round it

Double post.

 

[gazingdown]

It's a chicken and egg situation. If you're a player (or a player's agent), you're not going to sign a contract with a relegation clause in it when you know that the team you're signing for will get parachute payments. Especially as there's likely to be a number of mid-lower prem teams who'd also be interested in you.

If parachute payments were scrapped (and I think they should be) then all the other "mid/lower" clubs will also be putting relegation clauses in so they'd have no choice in the matter.

All these players can't go to the few that don't have (or need) the clause.

 

[drew]

Remove FFP and invoke a rule that states that if you go into administration, you are automatically relegated at the end of the season (and if at the end of the season you are relegated anyway, you then drop down another division.

 

[sparkie]

The problem is not FFP.

It's the combined effect of FFP, and parachute payments.

Need to get rid of one or the other.

 

[KZNSeagull]

Parachute payments should not be used as income in the FFP calculations - that would stop the likes of Reading using them to fund players on stupid wages, and make a lot of Prem teams from paying stupid wages in the first place. The clubs would never agree to that though.

 

[nwgull]

Parachute payments should not be used as income in the FFP calculations - that would stop the likes of Reading using them to fund players on stupid wages, and make a lot of Prem teams from paying stupid wages in the first place. The clubs would never agree to that though.

In that case, the wages to pay the ongoing contracts of the failed premier league players should also not count against FFP.

 

[happypig]

Change Parachute Payments so that they are only claimable only to help pay existing players for the duration of thier existing contract. Teams aren't allowed to sign a new player while they are claiming, except for emergeny cover.

 

[KZNSeagull]

In that case, the wages to pay the ongoing contracts of the failed premier league players should also not count against FFP.

Why? The point of FFP is to get salaries down - salaries would soon be slashed at all clubs outside the top 6 if clubs could not rely on parachute payments to bail them out when relegated.