Premier League clubs have been asked to help financially with the EFL, which is seeking an increase in TV revenue to help clubs stay healthy as Sheffield Wednesday’s struggles continue.
Sheffield Wednesday have been placed under administration this season and have received point deductions (Image: Getty Images)
Premier League clubs have been warned that the EFL is a “near-death sentence”. David Cogan, head of the new independent football regulator, has delivered a harsh verdict on the top flight’s failure to find a financial agreement for the world of football.
And Cogan said more clubs are likely to follow Sheffield Wednesday’s financial collapse, with many clubs now without support and just a month away from going out of business. Speaking in public for the first time at an FT Live event, Cogan said: “Along with the success story of English football, there are risks to the current system.
“Several clubs in the pyramid are telling us that if the owners raise money for one month, they won’t survive a month. Player salaries are skyrocketing across the pyramid. We cannot continue to fund this arms race.”
“And for many, relegation is a death sentence. Clubs facing relegation can see their revenue fall by up to 80 per cent if they don’t bounce back quickly.
“The whole pyramid faces a series of cliffhangers that people talk about, and the problems are not resolved. Even though media rights deals and all other forms of income are coming in, and less and less of media rights deals, we still have a pyramid full of debt and risk.”
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Mr Cogan urged the Premier League and EFL to reach an agreement. Otherwise, an agreement will be reached as they hope to bring in new forces while writing a “State of the Game” report with recommendations by the end of the year. The Prem club currently pays 16% of its TV revenue to Pyramid, but the EFL is demanding a 25% payment and an end to parachute payments.
Championship club Wednesday are on the brink of a failed takeover deal and Cogan fears that could be a cause for concern. Cogan added: “If you want an example of why we exist, just look at what has happened in the last 24 hours at Sheffield Wednesday. This is one of the biggest and most prestigious names in English football, one of the founders of English football, one of the founders of the Premier League, which has spent the last couple of years, including yesterday, in absolute turmoil.”
EFL clubs seek bigger share of TV revenue (Image: Carl Recine/Getty Images)
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“We have a real power, a so-called backstop clause, to step in if football cannot reach an agreement. It would be a complete failure of football not to seize the moment and overcome the stagnation that currently exists. The last agreement signed in 2019 will only rely on the years going by without anyone being happy, which is not wise practice and will lead to an unsustainable level of pressure within the system.”
“It is in everyone’s interest for football to strive to reach this understanding. My message is that the pyramid needs to survive as long as it exists today. And for that to happen, English football must come together to end this uncertainty. And we need to do it now.”
“However, if the league is unable to find a new agreement, those powers will be enacted and we will look at things like the current structure of parachute payments, cliff edges and other features of existing agreements. Obviously this has been an ongoing issue between the Premier League and the EFL for several years now.”
“Parachute payments are not an unknown topic, and the level of fiscal imbalance they may or may not create is clearly an issue we must address.”
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