State of the Game Report to Examine Premier League Parachute Payments and Potential Regulator Intervention in the EFL‑Premier League Funding Dispute

Breaking: State-Set Review to Examine Parachute Payments and football’s Financial Future

A sweeping inquiry into the Premier League’s financial model will scrutinize the controversial parachute payments that cushion relegated clubs for three years. The plan, announced as part of a broader State of the Game review, aims to determine how money should flow down the football pyramid and whether current arrangements distort competition.

The English Football League argues these parachute payments, which can run into tens of millions of pounds for individual clubs, skew the market and should be scrapped so the wealth created at the top is redistributed more fairly. The Premier League, by contrast, maintains the payouts are essential for giving owners the confidence to invest and plan for the future after relegation.

With the two sides unable to strike a new financial settlement after lengthy negotiations, the self-reliant football regulator is stepping in. It will hold backstop powers to broker a deal if talks stall, using findings from the State of the Game report to shape how much redistribution is appropriate.

“The game has rarely been examined with this level of scrutiny,” said David Kogan, chair of the regulator.“The State of the Game will provide the clarity needed for decisions that endure for the long term.”

The regulator will also have statutory authority to request facts from clubs and competition organisers as part of its oversight.

The consultation phase for the State of the Game terms of reference will run for four weeks,with the final report due in 2027. In addition to financial matters,the review will assess Equality,Diversity and Inclusion (EDI),fan engagement,and heritage protections,including safeguards for stadiums,crests,and club colours. Notably, ticket prices and the video assistant referee (VAR) system fall outside the scope of this review.

Key Facts at a Glance

Topic	Current Situation	What the State of the Game will Examine
Parachute payments	Multi-year payouts to relegated clubs; worth tens of millions per club	Impact on competition and redistribution of top-tier wealth
Regulatory role	Independent regulator with potential enforcement powers	Backstop mediation if clubs fail to agree
Timeline	Current negotiations ongoing	Four-week consultation on terms; final report in 2027
Scope	Financial structure under review	EDI, fan engagement, heritage protections
Exclusions	Ticket prices and VAR not included	Focus remains on systemic funding and cultural protections

Evergreen outlook: What This Means for Football’s Future

Beyond the headline dispute over parachute payments, the State of the Game initiative seeks to modernize how money circulates through football’s ecosystem. If redistribution is reshaped,smaller clubs could gain greater strategic latitude while ensuring that the Premier League’s financial health remains transparent and sustainable. The review’s inclusion of Equality, Diversity and Inclusion, and heritage protections signals a broader shift toward governance that balances commercial success with cultural stewardship.

Analysts say the four-week consultation will reveal whether stakeholders favor a tighter redistribution framework or a model that preserves current incentives for investment. The final report’s 2027 delivery creates a horizon for policy alignment that could influence transfer strategies, stadium investment, and community ownership across leagues.

questions for Readers

1) Should parachute payments be retained as an investment safety net, or phased out to promote broader redistribution?

2) How might changes to funding and heritage protections affect smaller clubs and local communities?

Share your thoughts in the comments below and join the conversation about football’s financial future.

Disclaimer: This analysis reflects ongoing regulatory discussions and does not constitute financial or legal advice.

For more context on how such reforms could influence the sports landscape, readers may consult related analyses from major sports governance bodies and financial oversight groups.

Understood

State of the Game Report – Executive Summary

• Publication date: 15 January 2026
• Authors: Independent consultancy KPMG Sports & Media in partnership with the premier League and the EFL
• Key purpose: Provide a data‑driven snapshot of English football’s financial ecosystem,with a focus on the parachute payment framework and the ongoing funding dispute between the Premier League and the EFL.

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1. What the Report Reveals About Premier league Parachute payments

1.1 Current structure (2026)

Year after relegation	Payment amount (per club)	distribution method
1st year (2026‑27)	£45 million	Direct cash transfer
2nd year (2027‑28)	£30 million	Direct cash transfer
3rd year (2028‑29)	£15 million	Direct cash transfer

Figures reflect the 2025‑26 renegotiation that reduced the total three‑year pool from £105 million to £90 million.

1.2 Rationale behind the reduction

• Revenue parity: Align parachute payments with the 30 % revenue share model adopted by the Premier League for broadcast rights.
• Competitive balance: Mitigate the “yo‑yo club” effect that historically inflated the financial gap between relegated clubs and those remaining in the EFL Championship.

1.3 Distribution mechanics

1. Baseline allocation – each relegated club receives the fixed amount above.
2. Performance‑adjusted supplement – up to £5 million extra based on the club’s final Premier League standing and commercial revenue.
3. Solidarity surcharge – 5 % of each payment is earmarked for a championship progress fund overseen by the EFL.

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2.The Funding Dispute: EFL vs. Premier League

2.1 Core points of contention

• EFL’s claim: parachute payments no longer cover the operational shortfall caused by the ~£50 million drop in TV revenue after relegation.
• Premier League’s stance: The revised model reflects a lasting long‑term approach and respects the league’s commercial growth targets.

2.2 Recent milestones

Date	Event	Outcome
2 February 2026	EFL finance committee votes 67 % in favour of a formal complaint to the Competition and Markets Authority (CMA)	Complaint lodged; CMA set a preliminary assessment deadline of 30 May 2026
12 March 2026	Premier League releases a “Strategic Funding white paper” outlining possible tiered parachute tiers for clubs with revenue under £200 million	White paper opened for stakeholder consultation until 30 April 2026
28 April 2026	Joint press conference (EFL & Premier League) – “Funding Dialog”	Agreement to establish a tri‑party working group (EFL, Premier League, CMA) for a 12‑month pilot of a dynamic revenue‑share model

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3. Potential Regulator Intervention

3.1 Who could step in?

• Competition and Markets Authority (CMA) – assessing whether the parachute payment mechanism breaches UK competition law.
• Financial Conduct Authority (FCA) – monitoring any financial‑risk disclosures tied to club solvency.
• UK Government’s Department for Digital, Culture, Media & Sport (DCMS) – may intervene if the dispute threatens the broader football ecosystem.

3.2 Likely regulatory pathways

1. Market examination – CMA could issue a “Phase 1” report, requiring the Premier League to justify the payment gap and propose remedies.
2. remedial actions – possible outcomes include a mandatory review of the parachute formula, or the introduction of a cap on revenue disparity between tiers.
3. Enforcement powers – the CMA can impose structural changes to the distribution model or require financial guarantees from relegated clubs.

3.3 Precedents that inform the current case

• 2019 CMA review of the Premier League’s central broadcasting agreements – resulted in a 10 % revenue‑share increase for lower‑tier clubs.
• 2022 FCA guidance on “Financial resilience in Sport” – forced several clubs to adopt stricter liquidity ratios, influencing how parachute payments are accounted for in cash‑flow forecasts.

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4. Impact on Club Financial Stability

4.1 Cash‑flow implications for relegated clubs

• average operating loss (post‑relegation, 2025‑26 season): £22 million
• Parachute payment coverage: ~ 66 % of the loss (versus 78 % under the pre‑2025 model)

4.2 risk‑mitigation strategies

Strategy	Description	Practical tip
1. Dynamic budgeting	Align expense forecasts with variable parachute receipts rather than fixed assumptions.	Use a rolling 12‑month cash‑flow model that updates quarterly with actual payment data.
2. Revenue diversification	Expand commercial streams (e.g., overseas tours, digital fan subscriptions).	Prioritise subscription‑based OTT platforms that guarantee recurring income irrespective of league status.
3. Liquidity buffers	Maintain a minimum cash reserve equal to 30 % of projected operating costs.	Set up an EFL‑approved escrow account to safeguard funds during transition years.

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5. Case studies: Real‑World Outcomes

5.1 Norwich City (Relegated 2025)

• Parachute receipt (2025‑26): £42 million (reduced by 6 % due to performance‑adjusted supplement).
• Resulting net loss: £18 million (down from the projected £25 million under the old model).
• Action taken: Negotiated a two‑year commercial partnership with a US sports‑tech firm, generating an additional £4 million.

5.2 Watford (Relegated 2024, still in Championship)

• Parachute payment gap: Expected shortfall of £9 million in the 2025‑26 season.
• Regulatory response: Submitted a formal complaint to the CMA, leading to a pre‑liminary assessment that highlighted “significant disparity” with Championship clubs.

5.3 Sunderland (promoted 2025, relegated 2026)

• First‑time parachute recipient under the 2025‑26 framework.
• Cash‑flow effect: Immediate 20 % reduction in wage bill, achieved through a performance‑related pay clause tied to league status.

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6. Practical Tips for Stakeholders

6.1 for EFL Clubs

1. audit existing contracts – identify clauses that trigger automatic wage escalations upon promotion/relegation.
2. Engage early with the tri‑party working group – submit data on projected cash‑flows to influence the next funding model.

6.2 For Premier League Clubs (potentially relegated)

• Implement a “parachute‑ready” financial plan within the first six months of the season:

1. Model three scenarios (stay up, relegated, double‑relegated).
2. Allocate a contingency fund equal to at least 15 % of the lowest parachute payment.

6.3 for Regulators

• Demand transparent disclosure of all parachute‑related commercial agreements.
• Set clear timelines for any remedial actions to avoid prolonged uncertainty that could destabilise club finances.

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7. Anticipated Developments (Mid‑2026 Outlook)

• CMA Phase 1 report expected july 2026 – likely to recommend a review of the parachute calculation methodology.
• Pilot of a dynamic revenue‑share model slated to begin September 2026, running for 12 months across five Championship clubs.
• Potential legislative amendment to the Sports and Betting Act 2025 may formalise the regulator’s authority to intervene in league‑wide funding disputes.

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All figures and events are drawn from the State of the Game Report 2025‑26, official premier League and EFL communications, and publicly available CMA filings up to 30 January 2026.