EFL chairman Rick Parry provides warning over £200m 'cash hole' and insists future salary caps 'essential'

Parry labelled Premier League parachute payments as “an evil which needs to be eradicated”
Call for change: EFL chairman Rick Parry spoke to MPs during a Department for Digital, Culture, Media and Sport select committee hearing on Tuesday
PA

Football League chief Rick Parry outlined the seismic changes needed in the wake of the coronavirus pandemic in a hard-hitting appearance before MPs on Tuesday.

With all eyes on the Premier League’s Project Restart, Parry made it clear that the EFL are ready to resume football whenever possible but called for a “complete rethink” of the financial model below the top flight.

“Perhaps one benefit of going through this pain is we will be shocked into coming up with a more sustainable model for the future,” he said.

Parry warned that EFL clubs are facing a £200million “cash hole” by the end of September, described Premier League parachute payments as “an evil which needs to be eradicated”, detailed plans for wage caps across the three divisions and called for a revision of the loan system.

The former Liverpool chief executive, who was appearing at a Department for Digital, Culture, Media and Sport select committee hearing on the impact of Covid-19 on sport, insisted that clubs, players and owners “all need to share in the pain” caused by the shutdown of football, which has left many EFL clubs fearing for their futures.

His starkest warning was for the EFL’s best-paid players, who will evidently be tasked with picking up the tab for the £200m shortfall.

While conceding that “a lot of the players at League Two level are not overpaid to say the least” and revealing that no fewer than 1,400 players in the Football League are out of contract in June, Parry backed wage cuts in the short term and described the introduction of salary caps as “absolutely essential” to ensure clubs spend within their means.

Wages in the Championship accounted for 106 per cent of clubs’ turnover in 2018, while in Leagues One and Two it was an average of 80-90 per cent.

A majority of clubs across the Football League are thought to be firmly in favour of wage caps, with QPR, AFC Wimbledon and Leyton Orient all backing their introduction in Standard Sport’s special report into the Football League last month.

In the short term, wage cuts and deferrals at every club are inevitable, particularly if matches can only be played behind closed doors for the foreseeable future.

Parry said the EFL supported the players’ union request for Deloitte to have access to the books of clubs in Leagues One and Two in order to examine the scale of devastation caused by the shutdown.

“If the players, having seen the depth of the problem, are unwilling to share in the pain, it will be a very different conversation,” he warned.

In the long term, clubs are likely to be given a fixed total to spend on wages, with Leagues One and Two already thought to be in advanced discussions over figures.

Parachute payments have been a significant contributor to wage inflation in the EFL, as recently-relegated clubs are given licence to pay big salaries in an attempt to return to the Premier League, leaving other clubs spending way beyond their means to compete.

Cardiff, Fulham and Huddersfield received £41.8m this season after being relegated, which will drop to £34.2m for the second season post-relegation and £15.2m for the third.

Other Championship clubs are given just £4.5m in solidarity payments per season and Parry suggested a majority of EFL sides would be in favour of scrapping the system, which is determined by the Premier League.

“Parachute payments cause immense stress within the Championship,” he said. “The distribution model is a problem, and any model where wages are 106 per cent of turnover is ridiculous.”

The Premier League defended the scheme, insisting that parachute payments “give newly-promoted clubs the confidence to invest in their squads” and are “a vital mechanism” for relegated sides.

Parry was careful not to criticise the Premier League, but said the Football League was yet to see money “trickling down” and he would “await the day” the top flight is in a position to discuss support for the rest of the professional game.

Another possible solution suggested by Parry is a relaxation of the youth loan system, which would require permission from Fifa.

Football’s world governing body have proposed new regulations from 2022-23 that would mean clubs could only have eight loan deals per season, both in and out of the club.

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