Cost of Premier League relegation: How much will Leeds United lose after dropping to Championship?

Leeds United are headed for the Championship after suffering a final Premier League defeat to Tottenham Hotspur. Fans’ hearts broke as Everton earned their safety, sending both the Whites and Leicester City into the bottom three with Southampton.

Of course, facing relegation is any club’s nightmare but the impact it has is far beyond the players simply swallowing their pride and dropping into a lower league. Championship football is not an alien concept to Leeds but they will be disappointed to have lost their Premier League spot and will know all too well how a team is impacted financially as a result.

Here’s a look at how the subject of money will change now that Leeds have lost their place in England’s top flight.

Premier League prize money and endorsements

Leeds will still scoop a decent amount of money for their efforts this season, depsite the overall outcome. Based on last season’s prize pot, they will pocket £104.6 million, which is the same amount 19th-placed Watford earned last year.

However, despite the bittersweet prize money, relegated teams will enter a league where they will earn significantly less in television and endorsement deals. In the Championship, it is as low as £8 million but it skyrockets to £100 million after being promoted to the Premier League, according to football finance expert Kieran Maguire.

“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,” he said in an interview with The Mirror.

“For example Leeds got an extra £6 million in commercial income once in the Premier League. And you will probably add in more from matchday income, although not a lot, as remember, there are fewer games.”

Player wages

Another adjustment relegated teams must make is to their squads. After paying Premier League wages to players, clubs often have to offload a few of them in order to free up some funds. However, this may not be the case for Leeds as there is a clause which will decrease players’ wages by 50 percent once in the Championship.

While this will save some headaches over finances, there is still risk of an exodus as players may not want to stick around on a heavily reduced salary.

Parachute payments

Parachute payments were introduced to help clubs avoid suffering financially after being relegated from the Premier League. It is worth a total of £100 million each season, which is distributed throughout the league.

Payments are issued over three years, or two years for those only in the Premier League for one season prior to their relegation. Clubs that earn promotion again within three years of relegation do not receive the parachute payments.