Financial Fair Play was introduced into the Championship during the 2013/14 season with the intention of making the league ‘fair’ for the teams involved. The idea is that all clubs in the Championship must submit their accounts on December 1st of that year. (Newly promoted teams in the premier league must also submit their accounts as they were in the Championship the year before.) After this the Football League will take one of three courses of action.
- If the club made losses less than 3 million then no sanctions are imposed.
- If the club made losses between 3 and 5 million then the clubs owner is required to inject equities into the club to cover the 3 million pounds of losses. ( Note that if the owner is unable to do this then the football league will impose a transfer embargo until the club can demonstrate a record of ‘acceptable’ losses)
- If the club made losses over 9 million then the club will be placed under a transfer embargo until they can demonstrate a record of ‘acceptable losses’.
Some clubs such as Nottingham Forest, Leeds United and Blackburn Rovers have already felt the weight of transfer embargos. The three clubs currently sat in what would be considered mid-table have all been under full transfer embargo since December 2014 although they are allowed emergency loans if the wages are below £10,000 a week. Despite this all three clubs (Particularly Forest) have made loan signings which has led to some questioning behind the strength and enforcement of the regulations.
Alternatively clubs promoted to the Premier League that break Financial Fair Play avoid the threat of transfer embargos and are instead forced to pay a ‘Fair Play tax’ (which is somewhat ironic as they are punished for excessive losses by a tax which will incur more losses). This therefore gives clubs such as Queens Park Rangers who have consistently been big spenders in the championship and premiership an opt out of the punishment that other teams have been faced with. Additionally if they do get relegated to the championship again this season then parachute payments will help to reduces losses somewhat before the accounts have to be sent to the football league in December.
Parachute payments therefore could be seen as a source of a lot of the disparity between top end Championship Clubs such as Norwich and lower teams such as Blackpool and Milwall. There is a noticeable difference in the quality of the teams of newly relegated teams and other teams in the championship. However it isn’t often these teams that gain promotion the following season as shown in recent seasons. West Ham and QPR are the only two teams in the last 4 seasons to gain automatic promotion the year after being relegated and both were through the playoffs. If anything, a lot of clubs supported by parachute payments end up falling low down the league into mid-table or lower such as Bolton Wanderers and Fulham. Some may see that it may be worth removing parachute payments all together due to the ineffectiveness to get relegated teams promoted again but that isn’t the point; they are supposed to help cope with the losses of getting relegated to the second tier of English football.
This therefore links back to Financial Fair Play as based on this, Parachute payments make it unfair on every other team in the championship as the newly relegated teams get financial support to deal with losses whereas other clubs do not putting them at greater risk of being faced with FFP regulations. Conversely if parachute payments were cut to make it ‘fair’ then newly relegated clubs will not be able to cope with losses from high wages and the loss of television deals and sponsorships putting them at risk of FFP making it unfair. This puts the situation into a precarious position as either cutting or keeping parachute payments will have winners and losers.
The truth of the matter isn’t so much disparity between the clubs in the championship as FFP is quite fair for all teams involved, but is instead the disparity between the Premier League and the Championship. Consider it this way. The maximum a championship club is allowed to spend on the whole team before an embargo is placed is 9 million. Manchester United bought Angel Di Maria in the summer from Real Madrid for 59.7 million pound without punishment. Hence why financial fair play is unfair based principally on a tier level; how can teams such as Wolves, Ipswich and Brentford possibly compete with the financial might of the likes of Arsenal, United and Manchester City if they succeed in achieving promotion? There should be a spending cap for all teams enforced by identical punishments for all teams so as to really create a ‘level playing field’ for all teams in Professional English Football.
