MPs encourage the Premier League to reach an agreement on EFL funding or risk being forced to settle.
According to a report by the Culture, Media, and Sport Select Committee, if no funding agreement is achieved soon, the government should propose the establishment of an independent football regulator “to impose a deal.”
The MPs demand “an increased, strategic redistribution from all leagues down to the grassroots” to “protect the game’s long-term stability.”
“Unless the football authorities get their act together soon on agreeing a fairer share of revenue, we risk more clubs collapsing, with the devastating impact that can have on local communities,” chair Dame Caroline Dinenage MP warned.
“It’s in everyone’s best interests to get this resolved as soon as possible.”
The committee heard testimony from football officials in February, when the Premier League and EFL were negotiating a new finance agreement.
The government has approved the plan for a regulator, which was advocated by a fan-led inquiry.
One of its goals is to ensure that money from the Premier League is distributed fairly, as well as to prevent clubs from falling out of business, to give fans more say, and to introduce a stricter owners’ and directors’ test.
One possibility being examined is pooling both leagues’ broadcast money, while parachute payments to clubs demoted from the Premier League have been a sticking point between the two organizations.
If an agreement cannot be reached, the regulator will have ‘backstop’ powers to impose a fresh financial settlement, thereby forcing the Premier League to split more money down the pyramid.
Rick Parry, head of the English Football League, seeks a 25% share of pooled television money with the Premier League, merit-based payments across all four divisions, and the elimination of parachute payments to teams relegated from the top flight.
He called the Premier League’s attitude on the payments “disappointing” in April.
Parachute payments are contributions provided in solidarity to help relegated sides adjust to diminished revenues. The Premier League believes they assist clubs be competitive once promoted, citing the fact that eight clubs were promoted without parachute payments last season.
The payments have been chastised for generating ‘yo-yo’ clubs and financial disparities between Championship sides.
The Premier League has stated that it already gives away 15% of its earnings and has agreed to a £250 million rescue package in 2020 to help relieve the financial challenges faced by EFL clubs as a result of the Covid-19 outbreak.
This month, Sports Minister Stuart Andrew MP stated that he is “optimistic that discussions between the Premier League and the EFL will find a solution on this urgent issue,” and that he is “hopeful that a resolution will be found soon.”
“I would urge both sides to reach an agreement as soon as possible,” he continued. It is in the game’s best interests to avoid further financial instability.”
The Premier League and the English Football League both declined to comment.