The Premier League and English Football League must “urgently” agree on sharing more revenue with clubs down the football pyramid, or risk having a settlement forced on them, say MPs.

It also concludes that the sport must be held accountable for how it tackles discrimination by the new regulator, saying it is “sceptical” it will deliver standards by itself.

The committee called for equality, diversity and inclusion (EDI) measures to be included in a new code for football governance and for the regulator to have powers to assess clubs’ action plans.

The MPs want “an increased, strategic redistribution from all leagues down to the grassroots” in order “to safeguard the long-term stability of the game”.

“Unless the football authorities get their act together soon on agreeing a fairer share of revenue, we risk more clubs collapsing, with the devastating impact that can have on local communities,” said chair Dame Caroline Dinenage MP.

“It’s in the best interests of all involved to get this sorted quickly.”

How have we got here?

The committee took evidence from the football authorities in February when talks between the Premier League and EFL over a new funding settlement were scrutinised.

The plan for a regulator, recommended by a fan-led review, has been confirmed by the government and should be established by 2024.

Ensuring a fair distribution of money filters down from the Premier League is one of its aims, along with stopping clubs going out of business, giving fans greater input and introducing a tougher owners’ and directors’ test.

Putting the broadcast revenues of both leagues into a shared pot is one proposal being considered, although parachute payments to clubs relegated from the Premier League have been a sticking point for the two organisations.

The regulator will have ‘backstop’ powers to impose a new financial settlement if agreement cannot be reached, effectively forcing the Premier League to share more money down the pyramid.

EFL chairman Rick Parry wants a 25% share of pooled broadcast revenue with the Premier League, merit-based payments across all four divisions, and the abolition of parachute payments to teams relegated from the top flight.

In April he said the Premier League’s stance on the payments was “disappointing”.

Parachute payments are solidarity payments made to help relegated sides adjust to lower revenues. The Premier League believes they help clubs be competitive once promoted, and has pointed to the fact there were eight clubs in the league last season that were promoted without parachute payments.

The payments have been criticised for creating ‘yo-yo’ clubs and financial disparity between sides in the Championship.

The Premier League has said it gives away 15% of its revenue already, and in 2020 also agreed a £250m rescue package to help ease the financial challenge faced by EFL clubs as a result of the Covid-19 pandemic.

This month Sports Minister Stuart Andrew MP said he was “optimistic that discussions between the Premier League and EFL will find a solution on this urgent issue”, and was “hopeful that the resolution will be found soon”.

He added: “I would urge both sides to reach a deal as soon as possible. It is in the game’s interests to avoid the risk of further financial uncertainty.”

‘Football has dragged its heels for too long’

The government has said legislation for the new regulator will be one of the first bills to progress after the King’s Speech in the autumn.

However, it said in its white paper on football governance published in February that it did not believe EDI matters should fall within the immediate scope of the regulator, despite the fan-led review recommending they should be in the regulator’s remit.

The CMS committee says it is “sceptical” football will come up with suitable collective standards by itself, given the “limited progress” it has observed.

Its report, which recommended the government set up the regulator in shadow form by the end of the year, stated: “We are concerned that the government has ignored recommendations to include EDI action plans for clubs and oversight of these plans within IREF’s remit.

“We believe that IREF would be well placed to receive and publish standardised data on compliance with EDI requirements in football, as well as monitoring and enforcing compliance with equality standards through EDI action plans.”

Kick It Out chief executive Tony Burnett welcomed the committee’s recommendation and added: “Football has dragged its heels for too long when making the change needed to make it a more welcoming sport.

“There is still a lack of diversity in boardrooms, coaching and refereeing, while players and fans suffer from discrimination from the professional game down to grassroots. There has been progress, but a lack of collaboration and few solid outcomes over the past decade mean it’s time for the process to be accelerated.”

Both the Premier League and EFL declined to comment.