Championship financial model under strain as parachute gap widens
A new report has warned that the Championship’s financial model is increasingly unsustainable, with parachute payments widening the gap between clubs and driving rivals into heavy spending just to remain competitive.
Championship clubs are being pushed towards unsustainable spending by the financial advantage enjoyed by teams receiving Premier League parachute payments, according to a new report examining a decade of second-tier finances.The study, commissioned by restructuring firm Leonard Curtis and produced by Rob Wilson and Dan Plumley, found parachute clubs generated average annual revenue of £59.7m between 2015-16 and 2024-25, compared with £21.3m for clubs without those payments.That revenue advantage has translated directly into promotion prospects.Parachute clubs were more than four times as likely to win promotion during the period, with a 31.4% success rate compared with 7% for non-parachute clubs.Leonard Curtis director Alex Cadwallader said: “The Championship is a near £1bn league that cannot control its wage bill. It is a financial paradox, with record revenue across the league, unsustainable spending and yet a promotion race increasingly tilted towards the richest clubs.”Total Championship revenue rose from £547m to £920m across the decade studied, but the division’s wage-to-turnover ratio never fell below 91%.In 2024-25, 13 of the 23 clubs that filed accounts spent more on wages than their total revenue.The report argues that this creates an arms race, with clubs without parachute payments increasing spending in an attempt to keep pace with recently relegated rivals.The new Squad Cost Rules introduced this season are designed to address that problem by limiting player and coaching-related expenditure to 85% of turnover.However, when the researchers applied that threshold retrospectively to 2024-25, 18 of the 23 reporting clubs would have breached it, with 11 above 100%.Wilson said: “While SCR should encourage clubs to live more closely within their means, because permitted spending is linked to revenue, higher-revenue clubs retain the ability to sustain much larger playing budgets.“The rules may therefore improve sustainability without addressing the league’s competitive balance, with the Championship’s promotion race increasingly won in the balance sheet.”The findings come as the Premier League and EFL remain divided over a new financial settlement.Premier League clubs have approved an offer that would increase annual solidarity payments by around £150m, but parachute payments would remain in place and only be reduced slightly.That leaves the Independent Football Regulator with an increasingly important role.If the two leagues fail to agree a settlement, the regulator has powers to impose one, with its forthcoming financial assessment of the game likely to become a major reference point in the debate over how revenue should be distributed across English football.