Parachute payments explained: how much relegated clubs get and why they exist
By Arasi Rex · Updated 7 August 2026 · 7 min read
Parachute payments are a series of solidarity payments the Premier League makes to clubs relegated to the Championship, for up to three years, to help them adapt to the sharp drop in broadcast revenue. A club relegated in recent seasons receives roughly £49m in its first season back in the second tier, about £40m in the second, and around £20m in a third year if it had spent more than one season in the top flight, a total north of £100m. The amounts move with each broadcast deal, so the figures vary from season to season.
How parachute payments work
The payments are calculated as a percentage of the equal share of broadcast money each Premier League club receives, and the percentage falls each year: 55% in the first season after relegation, 45% in the second, and 20% in the third. There is a catch built into the third year. A club that spent only one season in the Premier League before relegation receives payments for two years only, which is why the third-year share exists solely for clubs with a longer top-flight history. If a club is promoted back to the Premier League during the payment window, the payments stop, because the club no longer needs the cushion.
The gap between the haves and the have-nots is stark. In the 2025/26 season only four clubs were receiving parachute payments in the Championship: Ipswich Town, Leicester City and Southampton, relegated in May 2025, plus Sheffield United, relegated a year earlier. The rest of the division operated without them.
Why parachute payments exist
The purpose is to provide bridging finance for relegated clubs while they adjust their costs in line with the revenue reduction from leaving the Premier League.
The scheme dates back to the 2006/07 season, when relegated clubs received half of the per-club basic television money for two seasons. It was later extended to four years, then cut back to three from the 2016/17 season as broadcast revenue exploded and the equal share became far larger. The modern structure, with the third-year payment reserved for clubs with more than one top-flight season, has been in place since then.
How much do relegated clubs actually get
| Season relegated | Year 1 | Year 2 | Year 3 |
|---|---|---|---|
| 2023/24: Burnley, Sheffield United, Luton | ~£49m | ~£40m | none, one-season clubs |
| 2024/25: Ipswich, Leicester, Southampton | ~£49m | ~£40m | ~£20m, multi-season clubs only |
Luton Town is the cleanest example. Promoted via the play-offs in 2023 and relegated after a single season, Luton received approximately £49m in 2024/25 and a further £40m in 2025/26, after which their payments ended entirely. Sheffield United and Luton receive no third-year payment for the same reason: they were one-season clubs. Burnley, relegated alongside them in 2024, went straight back up, and promotion cancels whatever is left of the entitlement.
The sums at stake show up in the league's own budgeting. For 2026/27 the Premier League had set aside approximately £345m for parachute payments but expected to pay out only around £245m. The money not paid out is pooled and divided equally among the 20 Premier League clubs, worth roughly £5m each. Ipswich Town are the current case in point: promoted straight back for 2026/27, they are not entitled to a parachute payment, while Southampton, still in the Championship, receive approximately £40m in their second year.
The case against parachute payments
This is where the disagreement starts. The EFL believes parachute payments give relegated teams a significant advantage and force other Championship clubs to put themselves in financial jeopardy by overspending to try to compete. The Premier League's counter is that the payments help clubs to be competitive once promoted. The data leans toward the EFL's reading. Football finance expert Kieran Maguire's figures for 2023/24 show parachute clubs averaging £62.9m in revenue against £26.7m for the rest of the division, wage bills £43.3m higher on average, and squads worth an average of £157m against £19m.
The promotion record backs him up. In each of the past five seasons, two of the three clubs promoted from the Championship were receiving parachute payments. In each of the past two campaigns, all three promoted clubs were relegated straight back out of the Premier League. The system has started to look less like parachutes and more like trampolines: a launchpad for a small group of fallen clubs, and a barrier for everyone else.
EFL chair Rick Parry has called the widening gap a "major concern" and has argued for abolishing the payments in favour of a 25% share of pooled broadcast revenue distributed across all four divisions on merit. The independent football regulator will have the power to reduce relegation parachute payments when it takes up its role, the clearest sign yet that the scheme is not safe from reform.
The most uncomfortable recent example is Leicester City. The club collected a first-year parachute payment in 2025/26 and still ran a P&S breach large enough to earn a six-point deduction in the Championship in February 2026. Parachute money cushions the fall; it does not guarantee a club can spend its way back up.
Parachute payments and the fight for promotion
The system does not always win. In the 2024/25 Championship season, Sunderland, Coventry City and Bristol City all finished in the top six without parachute payments, and Sunderland won the play-off final at Wembley against Sheffield United to take the third promotion place. The play-offs, rather than the automatic places, are where the non-parachute clubs have a realistic route through.
For clubs going down this summer, the parachute question is the first thing the board asks after the maths of survival. The amounts they receive depend entirely on the value of the current broadcast cycle, so the figures above will date quickly. What does not change is the structure: three years, tapering hard, with promotion as the off switch. That is the deal with parachute payments, and it has been the deal since 2016/17.
FAQ
How long do parachute payments last? Up to three years. Clubs that spent only one season in the Premier League receive two years of payments, and any club promoted back during the window stops receiving payments immediately.
How much do relegated Premier League clubs get? Roughly £49m in the first season back, about £40m in the second and around £20m in a third year for clubs with more than one top-flight season. The amounts change with each broadcast deal.
Why are parachute payments controversial? The EFL argues they give relegated clubs an unfair advantage and push other Championship clubs into overspending, and it wants the money redistributed on merit across the pyramid.
Do promoted clubs receive parachute payments? No. Promotion cancels the remaining entitlement, and the unspent money is pooled and shared among the 20 Premier League clubs.
Key takeaways
- Parachute payments run for up to three years at 55%, 45% and 20% of the broadcast equal share, tapering each season.
- Recent first-year payments have been around £49m, with roughly £40m in year two and £20m in year three for multi-season clubs, a total north of £100m.
- One-season clubs such as Luton get two years only, and promotion stops the payments immediately.
- The EFL wants the scheme scrapped in favour of merit-based distribution, and the independent regulator will have the power to reduce payments.
- Promotion data is the strongest argument against the status quo: in each of the past five seasons, two of the three promoted clubs were parachute recipients.