The Premier League offers the greatest financial riches of any football competition in the world, adding to the pressure faced by clubs hoping to escape relegation each year and extend their time in the extravagantly lucrative top flight.
The Championship playoff final to decide which team will be the last to join the Premier League each season is often described as a £100 million game, and the price of dropping out of the division involves figures even higher than that.
When sides struggling near the foot of the table sack managers, the desperation of their decision makers is usually driven by the fear of foregoing the vast rewards involved in being part of the Premier League.
Here's a look at how much being in the Premier League is worth and the financial damage relegation can wreak.
MORE: How many teams are relegated from Premier League?
How much is being in the Premier League worth?
Clubs in the Premier League split around £2.6 billion in prize cash and central funds during the 2021-22 season.
The figure is a huge increase from the inaugural Premier League season in 1992-93, when clubs shared slightly more than £35m.
In May 2022, expert Nick Harris estimated how much each club made from their share of TV and commercial money and merit payments – the incrementally increasing prize money based on final league position.
Harris suggested champions Manchester City made around £164m from those sources, while bottom side Norwich City raked in almost £100m.
The Premier League's 20 clubs will split approx £2.6bn in prize cash and central funds this season. If the table finishes as it starts today, here's an *approximate* guesstimate of how it will be shared. pic.twitter.com/VUw4L0f8Su
— Nick Harris (@sportingintel) May 22, 2022
There are also numerous variables that make being in the Premier League hugely more valuable to clubs, such as increased commercial activity, marketing power and global interest in the team.
"If you talk to commercial directors, they say they can charge 10 times as much for a 30-second advert on the pitch side perimeters in the Premier League than in the Championship because it's going out to a global audience," football finance oracle Kieran Maguire told The Mirror, naming the total value of participation for promoted clubs as £170m. "For example, Leeds got an extra £6m in commercial income once they were in the Premier League."
Premier League TV money value
As well as a £79m share of TV money, clubs received around £940,000 per televised game they were involved in during the 2021-22 campaign.
That created a discrepancy in the figures between clubs selected for live broadcasts the most and the teams who appeared least on our screens.
Liverpool and Arsenal, for example, each played in 29 televised games to the tune of around £27.3m. Watford, Norwich, Burnley and Southampton only took part in 12, so they received £11.3m in what is known as 'facility fees'.
"Teams in the Championship would normally get around £7.5-8m from TV," said Maguire, articulating the stark contrast in TV revenue for elite teams.
Cost of Premier League relegation
Despite the steep drop in revenue and commercial clout, clubs often still find themselves paying Premier League wages to some players when they drop into the Championship.
At the other end of the scale, job losses among club staff, who tend to earn far less than players, is a common hidden cost of relegation.
In 2018-19, EFL chairman Rick Parry said the gap in earnings between Championship winners Norwich and Huddersfield Town, who finished bottom of the Premier League, was an "unbridgeable" £88m.
Premier League parachute payments
Some clubs have swiftly plummeted through divisions and suffered a financial crisis after being relegated, and the introduction of parachute payments across the English league system in 2011-12 was made in the hope of easing the pressure on clubs who go down.
From the 2015-16 season, the funds have been distributed by clubs receiving 55% of the broadcast revenues in their first year after relegation (around £40m), 45% (£35m) the year after that and 20% (£15m) in the subsequent year.
If a club stays in the Premier League for a solitary season, they only receive the first two parachute payments.
In November 2022, Premier League clubs agreed a mandate to significantly increase the payments given to EFL clubs and said further discussions will take place over the future nature of parachute payments.
The three clubs promoted to the Premier League last season (Fulham, Bournemouth and Forest) lost £174,500,000 between them despite two of them receiving parachute 🪂 payments
— Kieran Maguire (@KieranMaguire) April 4, 2023
EFL clubs have not previously earned a sliding scale of merit money, but they will in future in return for following the same financial rules and spending limits as Premier League clubs.
In February 2023, Parry proposed a new parachute payments system pooling Premier League and EFL TV revenues, with 75% going to top-flight clubs and the rest of the league sharing the remainder.
The former Liverpool chief executive also wants the TV money to be distributed according to position in the Premier League, following the distribution format of the EFL.
How do clubs cope with relegation to the Championship?
There are financial measures clubs can take to make relegation easier, such as adding pay cuts into player contracts and selling stars.
Manager Rafael Benitez could not save Newcastle United from relegation at the end of the 2015-16 campaign, but he led them to promotion the following season having made the club a profit during the summer thanks to selling players including Moussa Sissoko, who joined Tottenham for almost £30m.
The financial hit is still hard: clubs who earn the maximum amount from parachute payments still end up with a minimum of around £10m less than they would from Premier League TV payments alone, with broadcasting income from the Championship negligible in comparison.
"The current system with parachute payments leads to irrational behaviour by clubs in the Championship and that is unsustainable," Parry told The Sun, calling relegation or a failure to win promotion "catastrophic".
Norwich have won praise for appearing to take a wider view than chasing promotion at any cost, but club boards of directors still routinely seem to believe that going for broke is the best bet.
It has worked for some: Fulham were promoted back to the Premier League at the first attempt in 2021-22, and Bournemouth only needed two seasons to regain their place following relegation in 2019-20.
