The report analyzes how money moves in the top five men’s professional football and examines the financial health of clubs. The IFR claims this will be the biggest ever look at English football and has been given the legal power to require clubs to release financial and operational data.
Parachute payments provide clubs relegated from the Premier League with benefits for three years. These payments give relegated clubs a major advantage as they start at 55% of the “equal share” of Premier League broadcast revenue, decreasing to 45% and 30% in subsequent years. The first year payment is currently around £50 million.
The English Football League (EFL) says these payments distort competition. They also limit how much money from the top league is shared with the rest of the football pyramid. But the Premier League says parachute payments are needed to protect investment and solve the money problems associated with relegation.
This debate has been going on for years and has caused problems in English football. It has halted negotiations on a new financial support deal between the Premier League and the EFL.
The IFR is now in the middle of this problem. It has the power to force a way to share money if the leagues can’t agree. The State of the Game report will help the IFR decide how much money the Premier League should share.
The review will look at other issues besides parachute payments. These issues include inter-league issues, club debt, how much money clubs have, ownership styles, TV money, how wages are structured and how paying for youth football affects clubs. The new regulator wants to do more than just respond to problems, but also manage the risks in the system before they become problems.
David Kogan (pictured), who is in charge of the IFR, said football has never been looked at this way. He believes the State of the Game report will give football the clarity it needs and the intelligence the IFR needs to make confident decisions for the future.
This process is changing the balance of power in English football. The Premier League is still the most important economic force in sport, but the IFR’s growing role makes it a key decision-maker that can force change when people can’t agree on their own.
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