When a team is relegated in the Premier League, this is one of the biggest financial hits a team could take in the world of football.

The losses

When a club is relegated this not only affects the teams reputation and standing in the world of football but there are also financial losses that occur.

The club loses out on a large amount of money when relegated mostly including the broadcasting revenue. The club has to stay afloat somehow and aside from the parachute payments which support them they often have to make cuts.

Many employees of clubs have lost jobs when their club is relegated often those in the ticket boxes and hospitality areas.

A club will often sell players, likely the most expensive and therefore some of the best performers in order to make money for the club.

Season ticket prices are going up in price for many clubs and those who are relegated could put their prices up even more.

What are Parachute payments?

When a club is relegated and takes a financial hit the Premier League will support them through this through set payments. This helps the club stay afloat and encouraged continued and new investments.

The parachute payments cover the club for three years if they remain delegated and the amounts decrease each year.

 

How much can they receive?

For the first year the club will be paid 55% of the broadcasting revenue which every club receive after an equal split. For the second club this decreases to 45% and for the third year 20%. After three years, the club will no longer receive payment even if they are still relegated.

Due to the value of the TV rights cycle parachute payments are worth at least £79.2m, this would be £43.6m in the first season, £35.6m for the second and £15.8m in the third.

 

In the 2019 season Cardiff were relegated and their parachute payments made up for 95% of their entire turnover for that season. This shows how important these payments are for the clubs.

On average the Premier League provided £233m which was £33m per club who receive payment over the 2020-21 season.

 

How much can they win?

When a club wins the premier league there is a financial win as well as the pride and reputation.

In the 2022-23 season, Manchester City collected £176.2m for winning the title which was a 15% increase on the previous season win.

Southampton finished at the bottom of the table and won £103.6m, this is earned through the equal split from TV broadcasting, facility fees depending on TV coverage and then merit payments which are distributed based on place on the board.

 

The financial loss of being relegated can plummet a club into further financial debt and create more struggle to pull themselves through.