16 May ~ What a difference three years can make. Wind back to July 2007 and Lord Mawhinney, then chairman of the Football League, welcomed an agreement for the Premier League to make "solidarity payments" to his League's 72 members with the words: "This is a generous gesture from the Premier League, and I offer my thanks." Jump forward to May 2010, a representative of one of the Football League clubs described the Premier League's behaviour in this year's discussions as "bullying beyond belief".

The agreement in 2007 involved Football League clubs receiving £90 million over three years. For a League One club the payment was worth £103,000 with £69,000 going to clubs at the next level. The deal under discussion this year involves payments of £328,000 and £250,000 respectively. At face value it sounds like a good arrangement and yet when the Football League clubs met in Leicester ten days ago it was rejected.

There were several reasons for the rejection. Under the proposals, Championship clubs' solidarity payments would increase from around £830,000 to £2.2m annually. But alongside this, the Premier League announced changes to the parachute payments for clubs relegated from the top division, from £23.4m over two years to a four-year deal worth £48m. The aim was to meet concerns from middle-ranked Premier League clubs who feared the financial consequences of relegation. But as one Championship chairman speculated it would create a "Premier League 2 in all but name" with, over four years, ten or 12 clubs who had parachute payments likely to be fighting for promotion.

The bigger objections, however, came from Leagues One and Two. The new amount they receive is roughly equal to the amount that comes from the Football League (around £2.4m) giving them a guaranteed income of £4.6m. The equivalent for a League One club is around £1m. The concern is that the gap makes it more difficult for third-tier clubs to succeed when promoted or to cope when relegated. Another concern was the way in which the Premier League planned to pay for the increases. Around £4m was to be transferred from the Premier League's community funding – a pot of money for which clubs can bid. At a time when the Premier League's TV income is set to increase dramatically it planned to fund increases in the solidarity payments, at least in part, by raiding its community funding.

Equally worrying was the suggestion that the increased payments would form part of a package that included regulatory changes. Some of these changes, such as a requirement for Championship clubs to adopt the Premier League's approach to greater transparency in club ownership, including a revised "fit and proper person test," would be beneficial. Newly-promoted Leeds, for example, might finally have to come clean on the identity of its ultimate owners. But other changes would potentially reduce the cost of Premier League clubs recruiting youth players from the Football League. Curiously, the free market Premier League wants compensation in these cases to be formula-based rather than left to negotiations between the clubs involved. For many clubs in the lower leagues, these fees are an important source of income.

And this is where the bullying comes in. Although the Football League clubs had reservations, the Premier League stance was that the deal came as a take-it-or-leave-it package. In the end, 45 of the Football League clubs voted to take it. The regulatory changes will now be subject to further negotiation "in good faith" over the next 12 months and the solidarity payments will be contractual, rather than the "gift" the Premier League originally proposed. This is what happens when the world's oldest league tangles with the world's richest league – there is only ever one winner. Brian Simpson

Comments (2)
Comment by madmickyf 2010-05-17 05:38:46

Of course this deal is nothing but naked self-interest and manipulation of a weaker party on the part of the Premier League. But then what else would you expect from one of the great bastions of Thatcherism? She might be long gone but her legacy lives on!

Comment by Lincoln 2010-05-17 11:01:42

Burnley are a good example of why the change to parachute payments aren't all bad. Too scared of financial issues to risk having a pop at doing well in the Premiership, they made up the usual top level fodder. Hull have suffered for trying, Norwich before them.
Scunthorpe, Peterborough, Doncaster, are always going to struggle against Forest and Leicester, but this is more to do with fan base. Blackpool have shown that success is not all about money and can still be achieved.

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