How Money Flows Down The Football Pyramid

When the domestic football season was first suspended during the 2019/20 season to be followed by largely fanless football being played for the following 18 months, many fans, particularly of the lower league teams, were left wondering what that would ultimately mean for their team.

The truth is that for teams in the bottom two divisions and beyond, many were already in jeopardy long before this vital revenue stream of getting fans through the door was denied to them.

For fans of the big teams, it largely meant that, with the exception of Chelsea and Manchester City, transfer targets would need readdressing. But for fans of the lower based teams, it really could mean the end of days.

Even Europe’s mightiest clubs, Barcelona, Real Madrid and Bayern Munich are watching on jealously as PSG and the other sugar daddy sides pick up players for £100 million or find room for Lionel Messi’s wages.

This, in part, was one of the main drivers behind the closed off, non-relegation, greedy TV rights European Super League proposal that threatened the English participation of the Premier League’s biggest clubs.

How Clubs Make And Lose Their Money

Premier League clubs make most of their money from TV deals. During the pandemic every game was shown on TV, although contracts weren’t renewed. While more could undoubtedly be done, in England the money is more fairly allocated throughout the Premier League, which isn’t the case in Europe’s other big leagues where the big sides hog all of the big TV deals.

But for the leagues below the Premier League, from the Championship down to non-league, clubs are almost entirely reliant on gate money meaning empty stadiums threaten their very existence. During Covid times, EFL clubs lost £250 million in missing gate receipts, while the National League, comprising England’s fifth and sixth tiers, needed to secure a government grant to carry on playing.

Many teams in the lowest leagues were already on the brink long before the COVID-19 outbreak. Bury FC had been expelled from the league and now lie dormant, Bolton Wanderers and Blackpool looked like they could well go next and Southend United, now out of the football league for the first time in 101 years, were regularly being taken to court for not paying taxes as well as their players.

Which begs the question, how exactly was money flowing down the football pyramid during better times?

English Football Pyramid Structure

We have already established that the Premier League clubs enjoy bumper television revenues, which ultimately leads to transfer market power.

The whole of English football is structured in a way that is designed to allow money to flow from the Premier League giants all the way down to the smallest teams at grass level.

It is known as the English Football Pyramid system and is the structure of football divisions within the Football Associations and allows for promotion and relegation from County League level right up to the Premier League at the summit of the game.

It is an effective series of interconnected leagues that are run in a hierarchical system where promotions and relegations are in place across all of the divisions designed to allow every side to have the incentive that one day, no matter how small, they might be walking out at Anfield or Old Trafford in England’s top division, the Premier League.

The pyramid covers 11 levels or seven steps but is due for a restructuring soon. Here is how things stand at the time of writing.

England’s Football Pyramid

Project Big Picture

It’s hard to remember now, given the European Super League controversy that was to follow, but it was only last October that the footballing public were to learn of something called Project Big Picture.

Project Big Picture was the name given to a Liverpool and Manchester United led proposal that had already been approved by the Football League.

The idea proposed that, in return better financial redistributing down the existing football pyramid, the big clubs would ultimately run the top flight in return for.

While it is easy to see why these two mega teams would benefit from running things, and they are not fooling anyone, the fully priced up move would have seen 25% of any future Premier League deals being distributed to Football League clubs. The idea, described by EFL chairman Rick Parry as “great”, would also have brought an end to parachute payments as well as the Carabao Cup.

The Premier League, which would have been reduced to 18 teams, threw the proposal, which would have granted the nine longest serving EPL clubs vote rites, out without consideration, claiming the plan could have “a damaging impact on the whole game”.

Though the controversial plans were undoubtedly self-serving, Parry insists that they were absolutely about saving the football pyramid and creating a significant increase in financial solidarity from the Premier League down to the lower leagues.

Are Things Fair?

That, as it would turn out, the EFL chairman was on board with the idea from the very beginning suggests that things are not working as well as they should or could be even before the pandemic. Under Project Big Picture, the Premier League would have given the EFL a £250m bailout in return for a new arrangement where the EFL would negotiate its broadcast deals with the Premier League.

The Premier League’s long term shareholders – Liverpool, Manchester City, Manchester United, Chelsea, Tottenham, Arsenal, Everton, Southampton and West Ham – would then have the voting rites for anything important going forward.

When Parry took on his role at the EFL, he is said to have been immediately aware that the real issue behind the 72 clubs’ numerous financial problems was the staggering gulf between the Premier League and the parachute payments in the Championship, describing the parachute payments as “an evil that needs to be eradicated”.

Under the new proposals, Premier League clubs would have shared a net 25% of their future TV deals with the English Football League and provided £250m to the 72 EFL clubs below them. This would bridge the vast financial gap created by the breakaway of the old First Division from the Football League when they formed the Premier League in 1992, ironically under the leadership of Rick Parry.

The new move would also have resulted in increased money for the FA and grassroots football at a time when the Premier League had offered nothing in response to the £250 million bailout that was required by the EFL following the pandemic.

This isn’t to cheer for the proposal, but to highlight that it did, at the very least, find a way, albeit an ugly one, to free up necessary money for the rest of football that only the Premier League could find and has seemingly being failing to for some time now.