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How distorting are parachute payments?

There is some controversy about how far parachute payments distort competition in the Championship which in many ways is a de facto Premiership 2. This article looks in some depth at their effect: A level playing field?

Looking at teams promoted over the last five years, there is an almost fifty-fifty split between those with parachute payments and those without. However, the promoted teams had a net spend of £5.18m on players in their last year in the Championship whereas for those not promoted the net spend was £1.1m.

For some time I have been puzzled by the failure of Leeds United to gain promotion. Admittedly, there have been some ownership issues and a constant search for the right manager. But Leeds is a prosperous regional capital in (having just come back from a short stay in Yorkshire) in 'God's own county'.

Whatever the explanation is, it is not the absence of parachute payments or a failure to splash the cash as the net spend at Leeds is £9.75m.

There is another route as near neighbours Huddersfield Town have shown. As Kieran Maguire of the PriceofFootball has tweeted, 'Huddersfield Town were promoted to the Premier League despite having the 4th lowest wage bill in Championship and spending less than 10 per cent of the sum Aston Villa paid for players. They had promotion costs of £11.9 million, about half of which was on wages.' (Quite a lot went on promotion bonuses).

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