The announcement with potentially big consequences for Sunderland and the Championship you may have missed
The introduction of an independent regulator in football has taken a significant step forward
While Sunderland were consolidating their place at the top of the Championship table on Wednesday night, an announcement with potentially significant consequences both for the Black Cats and the footballing pyramid more generally was made.
The introduction of an independent regulator football took a significant step forward, with the Department for Culture, Media and Sport introducing its Football Governance Bill.
The bill aims to better protect football clubs by mandating increased engagement with supporters and significantly increased monitoring of club finances. The new draft of the bill, which follows the election of a Labour government earlier in the summer, also appears on face value to represent a significant win for the EFL.
Under Chairman Rick Parry the EFL has long lobbied for the regulator to have powers to intervene in matters of financial distribution. Talks between the Premier League and the EFL over a new financial deal have been at an impasse for many months, with the top tier determined to protect the place of parachute payments. The Premier League believe parachute payments are essential for maintaining a competitive division, but the EFL believe they distorting the Championship and encouraging clubs no tin receipt of them to spend dangerously beyond their means. The EFL favour a more equitable approach, in which payments are to a large extent based on performance.
The new version of the governance bill gives the regulator the power to assess the role of parachute payments, which were previously excluded from its remit under the previous draft. The EFL will hope that this helps force the Premier League to reconsider its position, though Labour have since played down suggestions that they will look to abolish them entirely and that is not thought to be considered a realistic proposition. The bill could lead to reform over a longer period, however, and reduce the significance of future parachute payments. Parachute payments would only be up for review if the regulator’s own State of the Game Review – due to be completed within 18 months – finds there is evidence the payments affect the financial sustainability of clubs.
Even then, both leagues must set out in mediation how they would protect relegated clubs from financial difficulties. So while
“We absolutely don’t want [parachute payments] to be abolished,” sports minister Stephanie Peacock told the Press Association.
“We recognise they have an important part to play. We also recognise they can place inflationary pressure (on clubs) but it will be for the regulator, through the work they do, to decide if they are an issue and if they should be looked at through that (backstop) mechanism. But we don’t think it makes sense for them to be excluded.”
Sunderland will be keeping a close eye on developments as they bid to win promotion to the Premier League over the next few seasons. Whichever way the talks develop or the regulator eventually rules, it will have a significant impact on how Sunderland and their rivals operate.