Relegation clauses may mean West Bromwich Albion struggle to sign players next summer if they get promoted, football finance expert Kieran Maguire has warned.
The Baggies are second in the Championship and on course for automatic promotion at the moment, though there is still a long, long way to go in 2021/22.
If EFL chairman Rick Parry gets his way and 25% percent of the Premier League’s income – the equivalent of £750 million – is pumped into the three lower tiers in place of parachute payments, then the West Midlands club may have to approach things differently next summer.
That’s according to Maguire, who has told Football Insider it would lead to an increase in relegation clauses in contracts and suggested that could cause problems for Albion moving forward.
He said: “The problem is the gap between the Premier League and the Championship.
“If we take away that cliff face, there is no need for parachute payments.
“Rick Parry’s argument is that if you abolish parachute payments, clubs will be forced to rethink how they negotiate contracts.
“He wants relegation clauses. But it’s a bit like saying if you get rid of airbags and seatbelts in cars, it will make people think twice about speeding.
“And it probably will, but there will be deaths along the way.”
He added: “Parachute payments were introduced to reduce the risk of clubs going into administration following relegation.
“The data proves that the wage bills of clubs relegated from the Premier League fall on average by 40 per cent in the first season.
“If you abolish that, you’re going to need to cut wages by double that figure. You’re going to have a lot of unhappy players.
“If West Brom get promoted, they will struggle to sign players on the basis of relegation clauses in contracts.”
West Brom have been one of English football’s yo-yo teams in the last few decades and have been relegated from the Premier League on five occasions since 2000.
23 questions about some of West Brom’s best ever academy graduates – Can you score full marks?
There can be no denying that Albion are one of the clubs that have benefitted the most from parachute payments, having dropped back into the Championship from the top flight five times in the last 21 years.
That financial boost has helped them to bounce back from those relegations quickly as well as meaning they’re more likely to splash the cash in the transfer window after they secure promotion.
Parry’s idea to remove parachute payments and instead see the Premier League surrender 25% of its income to the EFL would surely level the playing field more, which on the face of it doesn’t look like great news for the Baggies.
It’s hard to argue with Maguire about the issues caused by relegation clauses either but you’d have to say in general it would seem a system that functions better for the majority of EFL teams.
Whether or not the top flight are willing to part with a large chunk of their income is another question entirely.