Roughly £56 million. That is what a club relegated from the Premier League at the end of the 2025-26 season can expect to receive in its first year back in the Championship, against the roughly £109 million a club finishing bottom of the Premier League table earns that same season. The gap between those two figures is the entire point of parachute payments, a mechanism the Premier League itself describes as money paid to relegated clubs to cushion the financial shock of leaving England’s top flight.
The scheme dates back to 2006, designed to help relegated clubs absorb the loss of television income over as many as three seasons rather than all at once. It has barely changed in structure since, even as the sums involved have grown far larger than the League anticipated when it was introduced.
The Sliding Scale
The payments taper down year by year, tied to the equal-share broadcast revenue a club would have collected had it stayed in the Premier League.
- Year one: 55% of that equal broadcast share
- Year two: 45% of the same share
- Year three: an additional 20%, but only for clubs that had spent more than a single season in the Premier League before going down
Clubs relegated after just one season in the top flight never qualify for that third-year payment. And whatever stage a club is at, the payments stop immediately the moment it wins promotion back to the Premier League, according to the Premier League’s own explanation of the scheme.
The Championship Gap
In 2020-21, relegated clubs collected £233 million in parachute payments between them, an average of £33 million per club. A typical Championship club that receives no parachute money at all operates with total revenue of around £20 million a year, a fraction of what a newly relegated rival banks from the payment alone.
“The impact of these payments on the competitive balance of the Championship, and on the sustainability of all other clubs, is a major concern for the EFL,” Rick Parry, the EFL’s chairman, told the DCMS committee. Critics argue the scheme hands relegated clubs a competitive edge in the Championship, since they routinely operate with budgets well above those of rivals who never had a Premier League spell to fall back on.
Three Times More Likely
Parry backed that argument with numbers in his letter to the parliamentary committee, citing data showing that clubs receiving parachute payments were three times more likely to return to the Premier League within five seasons, over the period ending in 2020-21, than clubs without the benefit. He went further in his testimony, describing the payments as an evil that needs to be eradicated from the English game.
Richard Masters, the Premier League’s chief executive, told the same parliamentary hearing that the League was working to narrow the revenue gap between clubs that receive parachute payments and those that do not.
Cautionary Tales
The payments do not guarantee stability. Bolton, Blackpool and Portsmouth are all cited as clubs that suffered financial collapse and successive relegations despite receiving parachute money, evidence that the scheme cushions clubs financially without shielding them from mismanagement or repeated drops down the pyramid.
A Regulator Steps In
The Independent Football Regulator announced on 20 January 2026 that it would review parachute payments as part of a “State of the Game” report into English football’s finances. The regulator holds backstop powers that would let it impose a financial settlement between the Premier League and the EFL if the two bodies cannot agree on the issue themselves.
The scale of the money at stake explains why neither side treats the fight lightly. Premier League broadcast revenue reached $3.5 billion in the 2021-22 season, more than the combined broadcast income of Germany’s Bundesliga, at €1.46 billion, and Spain’s La Liga, at €2.04 billion, in the same period.
