Landmark £250m EFL bailout agreed with Premier League but division remains

John Percy
·5-min read
A bailout for EFL could be agreed on Thursday - PA
A bailout for EFL could be agreed on Thursday - PA

Football was being braced for fundamental reform on Thursday night after the Premier League's landmark £250million pyramid rescue package sparked fresh division.

England's top tier ended months of wrangling by finally agreeing it would match the sum requested by the cash-strapped Football League over the summer.

However, the deal to keep clubs alive comes with strings attached, including a £200million loan which can only be accessed by Championship clubs to pay off tax.

As seven months of tortuous negotiation were finally drawn to a conclusion just 24 hours after sport was also boosted by the return of fans, it emerged:

  • Senior MPs said the long-awaited agreement is just a short-term sticking plaster and only regulatory reform will halt a "deep-rooted" crisis.

  • The Premier League attached clauses to the offer despite Manchester United claiming they pushed for emergency assistance on a “no-strings-attached basis”.

  • While the agreement was broadly welcomed by much of the cash-strapped game, at least three second tier clubs are dismayed over the terms.

  • Both competitions said the package of grants and loans will ensure that no club goes out of business due to the coronavirus pandemic.

In a letter seen by the Telegraph Sport, Rick Parry, the EFL chair, tells clubs the package "is not intended to replace lost income nor is it to prevent clubs from making losses".

The agreement means up to £50 million is available to clubs in League One and League Two as grants, with £200 million available to Championship clubs in the form of a £8.33 million loan to each club to be paid back by June 2024.

A total of £15 million will be paid immediately from the Premier League, with each League One club receiving £375,000 and League Two club £250,000. Another £15 million for Leagues One and Two divided using a calculation of lost gate revenues. The top tier pledged to cover up to £15 million in interest and arrangement fees to enable a £200 million loan to be secured for Championship clubs so they meet PAYE liabilities until the end of June 2021, capped at £8.33 million per club.

"It doesn’t solve the cliff edge at all," said one Championship executive, speaking to the Telegraph Sport on condition of anonymity. “It can only be used for HMRC payments and that suggests if you’ve mismanaged your business you get access to an £8.33m loan and if you’ve managed your business property, 's** off'. How can that be right?"

The deal comes after the Premier League came under sustained pressure from Government, which announced a £300million bailout for other sectors last month.

Oliver Dowden, the Culture Secretary who had repeatedly called on football to come to an agreement, said on Thursday that he "warmly" welcomed the deal.

However, several MPs said the saga had illustrated the need for reform within the game. In response to the bail-out, Alison McGovern, Labour’s shadow sports minister, said it "is equally important that we see long term reform of football governance and finance" as the pandemic "has exposed deep-rooted problems". Julian Knight, the Digital, Culture, Media and Sport committee chair, added  that "this fiasco is evidence of a lack of accountability within football’s governance structure".

Calls for a regulator have been gathering pace in recent weeks since the Telegraph Sport's revelations around the Project Big Picture plot to revolutionise the game.

United and Liverpool were accused by critics of an attempted power grab that would have put controlling power in the hands of the biggest clubs in return for a £250 million rescue package for the Football League to see them through the Covid-19 crisis. On Thursday night, Ed Woodward, the United executive vice-chairman, insisted the plans were altruistic as he claimed on Thursday that the club pushed the rest of the Premier League to provide emergency assistance to the EFL on a “no-strings-attached basis”.

EFL clubs initially asked for a £250million grant package from the Premier League in September. They have since turned down various versions of an offer based on a £50million package of loans and grants for Leagues One and Two only. Parry, the EFL chief, said in a statement that "we have maintained throughout this will provide much needed support and clarity following months of uncertainty." Richard Masters, the Premier League CEO, said the league was "very pleased to have reached this agreement and we stand together with the EFL in our commitment to protect all clubs in these unprecedented times”.

EFL bail-out: The key points
EFL bail-out: The key points

The bail-out sticking point for England's top tier had been that the competition's smaller clubs did not want to hand competitive advantages to teams in the immediate league below. The likes of Brighton have said they would have needed to make redundancies to afford the initial EFL request.

However, ministers pointed to Premier League teams spending £1.2billion in the mid-pandemic summer transfer window as evidence that football can afford to solve its own problems. Dale Vince, the owner of League Two Forest Green Rovers, expressed gratitude to the  Premier League. "I don't think we've seen another sector of society fund its neighbours this way," he added.

An end to months of wrangling would round off a rare positive week of news across the sector in 2020. Crowds of 2,000 returned across sport for the first time since March on Wednesday night, and major events are stepping up plans to host capacity sell-outs next summer after the first coronavirus vaccine was approved for use.