David Kogan, the chair of the Independent Football Regulator, has issued a warning that relegation can be akin to a “death sentence” for English clubs, largely due to the significant financial inequalities between divisions.
Kogan has urged the Premier League and the EFL to promptly reach a new financial agreement, emphasizing that “the clock is ticking” for a resolution.
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The dissatisfaction with the ongoing 2019 financial deal, which continues to be extended, was highlighted by Kogan. He warned that the Independent Football Regulator (IFR) has the authority to intervene if the leagues fail to come to an agreement but expressed a preference for football to address its systemic issues independently.
These comments were made during Kogan’s presentation at the Financial Times Business of Football Summit in London, ahead of the IFR’s upcoming ‘State of the Game’ review later this year. He painted a troubling picture of the financial state of the sport.
Premier League Chief Executive Officer Richard Masters has been urged to negotiate a financial settlement with his EFL counterparts (Nick Potts/PA) (PA Wire)
Kogan noted the precarious nature of the financial landscape, stating, “The current system embeds risks. Several clubs throughout the pyramid have informed us they couldn’t survive a month without their owner’s financial backing.”
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He pointed out the escalating player wages in the Premier League and across all divisions.
Discussing the dire consequences of relegation, he emphasized, “For many, relegation feels like a near-fatal blow. Clubs can see revenues drop by as much as 80% if they fail to bounce back quickly. Our preliminary analysis suggests this issue is equally significant for teams moving from League Two to the National League as it is for those going from the Premier League to the Championship.”
Kogan underscored the unsustainable nature of the current model, asserting, “The entire structure is facing multiple cliff edges. These issues have not been addressed, and without effective financial protection, the system is simply unsustainable.”
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He reiterated the regulator’s role: “We are here to oversee this and safeguard the pyramid that has supported English football for over 160 years.”
Discussions for a ‘New Deal’ between the leagues have stalled, which may lead to the regulator imposing a solution if necessary.
Kogan confirmed that the IFR would examine features like “the system of parachute payments, the cliff edges, and other elements of the current deal,” in line with its mission to improve the game’s sustainability.
When asked about the future of parachute payments, Kogan noted that they would not disappear suddenly. “They are not going to just vanish overnight,” he remarked, adding that discussions will occur with subsequent updates provided in due course.