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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...