SAINTS have been confirmed as relegated from the Premier League and could be in receipt of parachute payments over the coming seasons.

Parachute payments are the subject of controversy at present with EFL chairman Rick Parry recently warning that they are a “concern” for the competitiveness of the Championship.

However, the fees pale in comparison to Premier League broadcasting revenue – which is typically worth over £100million to each club in the division.

We have broken down everything you need to know about parachute payments and their impact on the club’s finances ahead of the return to the Championship for the first time since 2012.

What are parachute payments?

Parachute payments are a series of solidarity payments the Premier League makes to relegated clubs for up to three years.

These are designed to help the clubs adapt to reduced revenues back in the Championship, which has significantly less TV revenue.

The EFL wants to abolish parachute payments while securing a bigger share of the wealth generated by England’s top footballing division.

The Premier League, meanwhile, believes the payments help clubs to be competitive while still pointing to eight clubs in the 2022-23 Premier League that were promoted without them.

How much are they worth?

The parachute payments have been worth around £30million per year to clubs, on average, in recent seasons.

Clubs received £233million in parachute payments over the 2020-21 season, an average of £33million per club in question.

The average revenue of clubs without parachute payments during this season was circa £20million, according to independent research from Sheffield Hallam University.

Clubs relegated from the Premier League receive a percentage of the equally shared element of broadcasting rights each Premier League club receives.

This percentage drops progressively over a three-year period – 55 per cent in the first year, 45 per cent in year two and 20 per cent in the third year. 

It means a first-year payment could be worth over £50million to a club that do not seal promotion back to the Premier League, before reducing over the next two seasons. 

Parachute payments are not made at the end of a season in which the club goes on to be promoted back to the Premier League – for example, Burnley, during this campaign, will not receive a payment.

To summarise?

Saints will only be in receipt of a parachute payment at the end of the coming season should they not be promoted back to the Premier League at the first time of asking.

They will then have two further seasons where the financial blow is softened by solidarity payments from the Premier League before having to fully adjust to Championship revenue.

Saints are also likely to be in receipt of significant sums for the transfer of their senior and talented young players over the course of the summer window.

A continued financial commitment from owners Sport Republic in addition to parachute payments and player trading revenue should largely, albeit temporarily, mitigate their losses due to relegation.