Championship clubs have been put in a “horrendous position” as a result of new cost-control measures that have been proposed, according to EFL chairman Rick Parry.
In order to negotiate the specifics of the proposed “New Deal” with the Premier League, which encompasses a new financial settlement, cost controls, and the domestic schedule, EFL clubs—including Leicester City—met on Thursday.
The PA news agency has learned that the EFL is troubled by a plan to let Premier League clubs that have been demoted—who are also expected to continue receiving parachute payments—spend 85% of their income on squad spending.
In order to encourage sustainability and aid clubs in preparing for the arrival of the independent regulator, the EFL is rumored to favor a considerably lower percentage for their clubs, one that is closer to the 70% ratio that will be implemented at UEFA level.
At the ‘Power of Football’ event at the Conservative Party Conference, Parry stated: “It’s not an exaggeration to say that the challenge facing Championships clubs is that they pretty much have to decide if they want to be sustainable or competitive.
The two are essentially mutually exclusive, which is an awful situation to be in.
The increased ratio percentage is seen as crucial by Premier League clubs outside of the traditional “big six” to assist them compete with those receiving regular Champions League funding while in the top division and to ensure the league remains competitive and so appealing to broadcasters.
According to sources, the main goal of maintaining the 85% ratio upon relegation is to support clubs in their efforts to lower their cost base.
It will be challenging to convince the 14 Premier League clubs to back those at the bottom and vote for significant reform, Parry continued.
The nature of the game causes them to occasionally forget where they’ve been and, more simply, where they’re likely to return to shortly.
“No one wants excessive interference. Nobody wants to undermine the Premier League; the goal is to make clubs financially viable, not to drive them out of business.
Prior to picking up the ‘New Deal’ negotiations with the Premier League, the EFL is now conducting targeted engagement with its clubs.
PA is aware that there won’t likely be any opposition to the deal’s financial compensation clause.
Over a six-year period, EFL teams will share 14.75 percent of domestic and foreign broadcast earnings with the Premier League, which is expected to result in an increase in funding of greater than £900 million. The transfer levy, which supports club academies, and parachute payments to demoted clubs are not included in this percentage.
The FA Cup replays and the second leg of the EFL Cup semi-finals may no longer be played as part of the “New Deal,” but there may be more EFL Trophy games because Premier League clubs want to give their under-21 teams more competitive playing time.
