By Daragh O'Leary
Since the establishment of the Premier League, there have only been three seasons in which all the promoted sides were relegated back down to the Championship. The first time this happened was in 1998 and the second and third occasions were in 2024 and 2025. Much of the commentary surrounding the recent inability of promoted sides to survive in the Premier League has concerned the quality gap between the Premier League and the Championship. While there is an element of truth to this, I can’t help but wonder why more people aren’t also giving out about the growing gap between the Championship teams and the Premier League rejects.
Not only does the Premier League now have an issue where promoted teams can’t stay up, once they go down, they can’t stop winning the Championship – Luton Town aside. Four of the previous five Championships have been won by a team that was relegated from the Premier League the season before. The one season where this did not happen was this year when Leeds United, relegated from the Premier League just two seasons ago, won the Championship on goal difference with 100 points.
Can the English pyramid system continue to pride itself on being a testament to meritocracy when a small number of teams have such a stranglehold over both the Championship title and the Premier League relegation zone? Progression to the top tier of English football is currently restricted to a handful of yo-yo teams not good enough to survive at the top, but far too good for the second tier.
A Journal of Global Sport Management paper, Wilson, Ramchandani, and Plumley (2018), attribute this issue of competitive balance in the Championship to the introduction of parachute payments to relegated teams. Parachute payments are financial payouts for relegated clubs to soften the financial blow of relegation, and the significantly lower revenue associated with lower league broadcasting revenue.
While these payments are well intentioned, Wilson et al. (2018) observed that the number and value of parachute payments awarded are associated with reduced competitive balance in the Championship. Parachute payments were also associated with making relegated clubs twice as likely to be promoted to the English Premier League.
These adverse consequences of the parachute payments for relegated clubs provide a brilliant illustration of the difficulties associated with market intervention. Obviously, no one wants to see job losses at clubs which are relegated and incur massive financial losses, so one can understand the appeal of parachute payments. However, this appeal is informed by a bias of focusing on the losses of some without full consideration for the prevention of gains for others.
It’s all well and good to feel sorry for Leicester City going down, but why don’t we feel as bad for Blackburn or West Brom who can’t get up? Loss aversion may play a role in explaining policy decision making in this context. While it may seems a rash suggestion, I can’t help but feel the only solution to this problem is to either remove or significantly reduce parachute payments.
Since the establishment of the Premier League, there have only been three seasons in which all the promoted sides were relegated back down to the Championship. The first time this happened was in 1998 and the second and third occasions were in 2024 and 2025. Much of the commentary surrounding the recent inability of promoted sides to survive in the Premier League has concerned the quality gap between the Premier League and the Championship. While there is an element of truth to this, I can’t help but wonder why more people aren’t also giving out about the growing gap between the Championship teams and the Premier League rejects.
Not only does the Premier League now have an issue where promoted teams can’t stay up, once they go down, they can’t stop winning the Championship – Luton Town aside. Four of the previous five Championships have been won by a team that was relegated from the Premier League the season before. The one season where this did not happen was this year when Leeds United, relegated from the Premier League just two seasons ago, won the Championship on goal difference with 100 points.
Can the English pyramid system continue to pride itself on being a testament to meritocracy when a small number of teams have such a stranglehold over both the Championship title and the Premier League relegation zone? Progression to the top tier of English football is currently restricted to a handful of yo-yo teams not good enough to survive at the top, but far too good for the second tier.
A Journal of Global Sport Management paper, Wilson, Ramchandani, and Plumley (2018), attribute this issue of competitive balance in the Championship to the introduction of parachute payments to relegated teams. Parachute payments are financial payouts for relegated clubs to soften the financial blow of relegation, and the significantly lower revenue associated with lower league broadcasting revenue.
While these payments are well intentioned, Wilson et al. (2018) observed that the number and value of parachute payments awarded are associated with reduced competitive balance in the Championship. Parachute payments were also associated with making relegated clubs twice as likely to be promoted to the English Premier League.
These adverse consequences of the parachute payments for relegated clubs provide a brilliant illustration of the difficulties associated with market intervention. Obviously, no one wants to see job losses at clubs which are relegated and incur massive financial losses, so one can understand the appeal of parachute payments. However, this appeal is informed by a bias of focusing on the losses of some without full consideration for the prevention of gains for others.
It’s all well and good to feel sorry for Leicester City going down, but why don’t we feel as bad for Blackburn or West Brom who can’t get up? Loss aversion may play a role in explaining policy decision making in this context. While it may seems a rash suggestion, I can’t help but feel the only solution to this problem is to either remove or significantly reduce parachute payments.
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