Why relegated Sheffield United are twice as likely to be promoted to the Premier League than their Championship rivals, according to a football finance expert
Parachute payments from the Premier League will give Sheffield United a significant competitive advantage over many of their Championship rivals next season, according to a football finance expert.
Although relegation will mean a £60 million fall in income for the club, a guaranteed payment of around £44 million this year – and two more potential future payments – will not only soften the financial blow but give the Blades a ‘£40 million headstart’ in the race for promotion, said Dr Daniel Plumley, a senior lecturer in sport finance at Sheffield Hallam University.
Parachute payments are guaranteed to clubs who drop out of the Premier League in the three seasons following their relegation – unless they return to the top flight in that time - to help them manage the drop-off in income.
Sheffield United, Fulham and West Brom could receive around £92 million over the next three years – £44 million this year, £34 million in 2022 and £16 million the following year. Recently relegated sides Bournemouth, Cardiff and Huddersfield will also receive support this season.
Dr Plumley said: “If you take the TV money and look at what the other Championship clubs get from the same deal, it’s something called solidarity payments and each club gets £4.6 million.
"Take a Millwall or a Preston, those clubs are getting £4.6 million each and last season you have got clubs like Norwich, Watford and Bournemouth – plus clubs in years two and three – and they are around £40 million ahead before a ball has even been kicked.”
Dr Plumley’s research over a 10-year period alongside fellow academics Dr Rob Wilson and Dr Grish Ramchandani found those clubs who received parachute payments “are twice as likely to be promoted to the [Premier League] compared to clubs without and considerably less likely to suffer further relegation to League One”.
"There’s exceptions and there’s no guarantees but the majority of the data told us they [parachute payments] do distort the balance,” Dr Plumley said.
“You have got clubs that are better set than others to go straight back up.”
He added: “More often than not the majority of clubs that have them go back up, or get very close to going back up in the three years they have them.
"History tells us those that spend more and have more to spend generally do better on the pitch."
In the last five seasons, at least one team relegated from the top flight the previous year has made the Championship play-offs.
In that time, four teams have been immediately promoted back to the Premier League, including Norwich City and Watford last season, while the other relegated side, Bournemouth, made the play-offs.
To date, however, all three relegated teams have never bounced straight back and only six times in 28 seasons have two relegated teams been immediately promoted.
The Blades have also spent 12 years out of the Premier League following both of their previous relegations.
But, the financial consequences of the coronavirus pandemic have strengthened Sheffield United’s “competitive advantage”, Dr Plumley said.
"They can spend a bit of money this summer if they choose to because they know they have got that £42 million,” Dr Plumley added.
"Any club without that, their biggest income would be gate receipts and those clubs have had that wiped out now for 16 months. It’s those clubs who have been hardest hit.”
Blades chief executive Stephen Bettis confirmed new manager Slavisa Jokanovic will be allowed to sign new players.
He told Sky Sports: “That's what parachute payments are there for, to help with that hangover. All of our players have relegation clauses in their contracts. That puts us in a stronger position financially.
"We don't want any of our players to leave, simple as that. We just want to strengthen. There has to be sustainability, it's not boom or bust. But Slav does have the ability to bring players in this window and he knows that.”
Bettis added: "We've successfully used the loan market at times with the likes of Dean Henderson and Ethan Ampadu and we'll look at utilising that as well.
"One of the real positives over the last few years is the relationships we've made with other Premier League clubs. I think we're tried and trusted in terms in terms of duty of care and opportunity to develop; I think clubs will be open to giving some of their players to us next season."
He did insist, however, the club won’t spend recklessly despite their desire to bounce back at the first opportunity.
Bettis continued: “When I came in, the club was being run more like a charity than a business. I think we've changed the outside view of us in the last five years. Chris was a big part of that too; he never wanted to overpay players and agents. Am I ashamed that we get good deals done and we don't throw money away? No, I'm proud of it actually.
"There are horror stories of teams paying £70k, 80k a week in the Championship. I'm a boring accountant, that's a recipe for disaster. We're trying to put the club in a good financial position and because we've done that we're in a place now where we're not saying it's a firesale.”
Dr Plumley said: “In the case of Sheffield United, what they should be doing is stabilizing a little bit off the back of those two Premier League years because the finances weren’t great before they came up.
"They were a club that spent a considerable amount on wages the season they went up.”
The Blades’ wage-turnover ratio was 196 per cent in 2019, compared to 54 per cent in 2020 – the lowest in the top flight. The £17.5 million they made in their first season back in the Premier League was their first annual profit since 2008. Those accounts covered the period when they last competed in the Premier League.