Parachute payments – the financial impact of relegation

Relegation is a bitter pill to swallow for all football fans, but for fans of those teams relegated from the Premier League, it can be particularly hard, given the financial implications of no longer playing in England’s top flight.

In order to reduce the financial difficulties that can arise from relegation, the Premier League gives the three relegated sides parachute payments, which equate to £90 million, spread over three years.

The Premiership relegation odds from Betfair expect to see Cardiff City, who won promotion back to the Premier League by finishing in second place this past season, as one of the most likely candidates to go drop down to the Championship.

Swansea City, Stoke City and West Bromwich Albion were all relegated from the Premier League at the end of the 2017/18 season and will be faced with the prospect of having to sell some of their star players as they look to cut back on the wage bill as well as raising vital funds which can be used to freshen up the squad.

All three clubs will be receiving three years’ worth of parachute payments because they managed to survive at least one season in the Premier League. New rules will see teams who win promotion and are relegated the next season given only two years’ worth of parachute payments. The parachute payments help clubs to re-adjust their finances after relegation and for those teams that spend only one season in the top flight, their finances shouldn’t be too inflated and therefore do not need quite so much assistance following relegation.


West Brom

The Baggies have often been considered as the traditional ‘yo-yo’ club of English football, often being promoted to the Premier League, before being instantly relegated and then being immediately promoted again. This time though, West Brom had played in seven consecutive Premier League seasons, a period that began to remove that ‘yo-yo’ tag.

This season they finished as the bottom club in the league, despite a late charge to try and avoid relegation.

In finishing 20th, the club earned £1.9 million in prize money, although that was the lowest income from the Premier League this season.

Their facility fees amounted to £12.3 million as the club had nine of their league matches televised. This was the lowest amount paid in the league, with seventh placed Burnley earning the same amount despite appearing in two fewer live televised matches.

By playing in the Premier League, the club were entitled to £80.4 million as part of the Equal Share, a figure that all twenty clubs receive. This means that in their final Premier League season, they have earned around £94.7 million.

The club may look to sell some of their star players in a bid to reduce their wage bill, although with Liverpool’s Daniel Sturridge and Paris Saint-Germain’s Grzegorz Krychowiak returning to their parent clubs following their loan spells, the club may not need to be too panicked about the wage bill. The £40 million they’ll receive in parachute payment should be enough to keep the club stable following relegation, although they may look to free up some more money by selling their star players.

Should they fail to make an instant return to the Premier League, then West Brom will be entitled to another £35 million in parachute payments. If they were to fail to achieve promotion in the 2019/20 season, then West Brom would receive their third and final parachute payment of £15 million, which would take the total amount of income from the Premier League from their final season in the top flight to the final season of parachute payments to a whopping £184.7 million.

Stoke City

The Potters finished in 19th place come the end of the season which signalled the end to their ten season run in England’s top division. Their place in the table earned them £3.8 million in prize money and they earned more than West Brom in facility fees, having received £14.6 million for featuring in twelve live televised Premier League matches this season.

On top of this is the £80.4 million that Stoke received as the equal share, meaning that their final season income from the Premier League amounted to £98.9 million. Should they remain in the Championship for at least three seasons, then, including their parachute payments, they will have received £188.9 million from the Premier League, an amount which should help the club stabilise its finances.

Their finances will be initially helped following the departures of Kurt Zouma and Jese Rodriguez, back to their respective clubs, Chelsea and Paris Saint-Germain, as their loan spells have ended. The Potters may look to move on Jack Butland, Saido Berahino and Xerdan Shaqiri, who are some of the club’s highest earners and will be the most valuable assets for the club to cash in on. The wages appear to be mostly sensible from the club, meaning that they will not feel the need to cash in on their stars unless they receive tempting offers.

 Swansea City

After seven seasons in the Premier League Swansea City were relegated following a 2-1 defeat at home to Stoke City on the final day. This result meant that Swansea finished in 18th place, earning them £5.8 million in prize money.

The club earned £12.3 million in facility fees for featuring on live TV on ten occasions and also its £80.4 million as its equal share. This means that in their final season in the Premier League, the Swans earned a staggering £98.5 million, although this is slightly lower than Stoke City’s income. Although the Championship will see Swansea endure a less lucrative season, the £40 million parachute payment from the Premier League should soften the blow.

This £40 million payment should be enough to help Swansea rebuild their squad and give them enough time to sell the players who are on the highest wages. Players like Wilfried Bony and Andre Ayew will either have to take serious pay cuts or face the possibility of being placed on the transfer list. The latter will be their preferred option if they wish to play in the Premier League next season, although any interested parties may want negotiate a more reasonable wage.

Should Swansea fail to earn promotion back to the Premier League in their first two attempts, then they will receive all three parachute payments, amounting to £90 million. This amount, combined with their earnings from their final Premier League season, would see the Swans rake in £188.5 million in four seasons.

Parachute payments – the financial impact of relegation

Comments 0 Comments

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.