Independent Football Regulator Set to Review Parachute Payments and Financial Structures

David Kogan, chair of the Independent Football Regulator (IFR), has announced that the organization will undertake a comprehensive analysis of financial practices within English football, particularly focusing on the controversial ‘parachute payments’ provided to relegated clubs.

The IFR’s upcoming ‘State of the Game’ report aims to illuminate the financial challenges, governance deficiencies, and structural risks facing the sport. Scheduled for a draft release later this year, the report will investigate financial flows across the top five tiers of football and assess the balance sheets of various clubs.

This assessment is touted as the most thorough evaluation of the industry to date. Key areas of focus will include the significant financial disparities between leagues, club debts, liquidity issues, ownership models, the broadcasting landscape, and how player wages and academy development contribute to the long-term sustainability of the game.

The report will specifically scrutinize the Premier League’s multi-million-pound parachute payments, which have become a point of contention. These payments, which amount to tens of millions for relegated clubs, are criticized by the English Football League (EFL) for distorting competition. The EFL has advocated for their elimination to secure a more equitable distribution of wealth within the football pyramid. Conversely, the Premier League argues that these payments are vital for encouraging investment from club owners.

The ongoing disagreement between the two leagues has hindered the establishment of a new financial settlement that could facilitate greater revenue sharing, despite extensive negotiations and political pressure. Should the Premier League and EFL fail to reach an agreement, the regulator will possess ‘backstop powers’ to mediate a financial settlement, guided by the findings of the ‘State of the Game’ report.

Kogan emphasized the significance of this evaluation, stating, ‘The game has never been examined like this before. The State of the Game report will provide the clarity football needs, enabling the IFR to make informed decisions for the long-term.’

The regulator will have statutory authority to access information from clubs and sporting organizations as part of its investigation. The terms of reference for the ‘State of the Game’ will undergo a four-week consultation, with a conclusive report anticipated for publication in 2027.

Additionally, the report will address Equality, Diversity, and Inclusion (EDI), fan engagement, and heritage, which includes a review of protections for club stadiums, crests, and colors. However, topics such as ticket pricing and the video assistant referee (VAR) system will not be included in this review.