The chair of the Independent football regulator, David Kogan, has issued a stark warning that relegation can be a “death sentence” for English clubs, primarily due to the severe financial disparities between divisions.
He has urged the Premier League and the EFL to swiftly agree on a new financial settlement, stating that the “clock is ticking” for a resolution.
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Kogan highlighted the dissatisfaction with the existing 2019 deal, which continues to be rolled over, and cautioned that the Independent Football Regulator (IFR) possesses backstop powers to intervene if the leagues fail to reach an agreement.
However, he expressed a preference for football to find its own solutions to the systemic issues.
His observations, shared at the Financial Times Business of Football Summit in London, precede the IFR’s first draft of a ‘State of the Game’ review later this year. Kogan painted a concerning picture of the sport’s financial health.
Premier League Chief executive officer Richard Masters has been urged to reach a financial settlement with his counterparts at the EFL (Nick Potts/PA) (PA Wire)
“The current system bakes in risk. Multiple clubs throughout the pyramid have told us they would not be able to survive a month if their owner stopped funding,” Kogan revealed.
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He added that while players’ wages are “rocketing in the Premier League”, this trend is also evident “across the pyramid”.
He elaborated on the devastating impact of demotion, stating: “Relegation, for many, is a near death sentence.
“Clubs facing relegation can see their revenues cut by up to 80 per cent if they fail to bounce back quickly, and the early analysis we’ve done suggests this is just as much of a problem between League Two and the National League as it is between the Premier League and the Championship.”
Kogan stressed the unsustainability of the current model, noting: “The whole pyramid is facing a series of cliff edges that people talk about. They have not been addressed, and without better financial mitigation they are entirely unsustainable.”
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He reiterated the regulator’s commitment: “We are there to regulate this, to protect the pyramid that English football has depended on now for over 160 years.”
Talks for a ‘New Deal’ between the leagues have stalled, potentially paving the way for the regulator to impose a solution if requested.
Kogan confirmed that the IFR would scrutinise aspects such as “the current mechanism for parachute payments, the cliff edges and the other features of the existing deal,” aligning with its mandate to enhance the game’s sustainability.
When questioned about the future of parachute payments, Kogan indicated they would not disappear immediately.
“Parachute payments are not going to vanish overnight,” he said, adding that discussions would take place, with outcomes to be revealed in due course.
