My question is, is why are relegated clubs given parachute payments? It just gives them a massive advantage over the rest of the division.
Why isn't the money given to promoted clubs to give them a better chance of competing in the Prem?
It's basically there as a guarantee to the promoted clubs.
Wihtout the guarantee of parachute payments then the promoted clubs would not be able to be competitive in the transfer market without being financially irresponsible.
They know they have a high chance of going down, so in the past you either took a huge gamble and spent big - if you went back down your club would be crippled financially for a few years or didn't bother and just sunk like a stone. The huge gulf that exists between the divions needs the parachute payments to act as a guarantee, e.g. you can spend 12 million (fees and wages) because if you go down then for the next two years you'll get 12 million.
The payments aren't massive, it's 6 million per season for 2 seasons.
It means the likes of Hull can sign Geovanni and West Brom can sign Carson, they know that if they go down they can afford his wages for the next 2 seasons.
To those who say that it means as soon as they go back down they are destined to come back up (like Gartside here) I'll say what happened to:
By the logic Gartside dispays here about yo yo clubs. And by arguing that parachute payments give a "massive advantage" over other clubs then they would have come back up - none did.
Well what about the ones that went down last year?
Birmingham are doing well in 1st but Reading are in 3rd and Derby way down in 14th.
And what about all the clubs who have gone down recently and have yet to reappear?
Leeds, Leicester, Coventry, Southampton, Nottingham Forest, Sheffield Wednesday?
The reality is we got 2 clubs coming up this year who have never played in the Premier League before.
The argument is baseless.