Premier League clubs vote for five-year limit on transfer fee amortisation

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Premier League clubs have voted to limit the period over which a player’s transfer fee can be spread in their accounts to five years, regardless of the length of their contract.

This rule change, however, will not be backdated to include transfers that have already happened or contracts already signed and brings the Premier League in line with UEFA, which set its own five-year limit on transfer fee amortisation in June.

The clubs voted on the measure at a shareholders’ meeting on Tuesday. The vote passed with 15 clubs — including Chelsea, who had attracted attention for the long contracts of some of their new signings in the past 18 months — in favour, two against and three abstentions.

The Premier League confirmed the rule change for new and extended contracts in an official statement following The Athletic’s report later on Tuesday.

The statement added that teams had also voted in favour of enabling the Premier League board to stop a club from registering more players in situations where they owe a transfer debt to another Premier League or English Football League (EFL) side until that outstanding payment has been made. The offending club could also see the outstanding amount deducted from their share of the league’s prize money.

Previously, clubs could amortise — spread the cost of a transfer, in accounting terms — over the full length of any contract.

This enabled them to sign players on long contracts and potentially spread out the impact of transfer spending over a longer period to help them fulfil their financial obligations — a player signed for a £60million ($75.2m) fee on a six-year contract would cost a team £10m ($7.52m) per year in their accounts.

But the lack of legislation in this area drew criticism after several of Chelsea’s high-profile signings over the past 18 months were signed to lengthy deals. Mykhailo Mudryk, for example, signed an eight-and-a-half-year contract — the longest in Premier League history — with Chelsea following his €70m (£62m) move from Shakhtar Donetsk in January. Enzo Fernandez also signed a deal until 2031 after his £106m January move from Benfica.

UEFA, which has a separate set of financial regulations from the Premier League, moved to close this loophole in the summer. It also set a five-year limit on the amortisation of transfer fees, irrespective of contract length, and similarly did not backdate its new amendments.

Under the Premier League and UEFA’s legislation, contracts can still be any length but it is the period over which a transfer fee can be spread in accounts which is limited to five years.

Premier League clubs are permitted to lose a maximum of £105m over a three-year period to comply with the league’s Financial Fair Play regulations (FFP).

UEFA has recently changed its financial sustainability rules and introduced a squad cost control rule which restricts spending on player and coach wages, transfers, and agent fees to 70 per cent of club revenues. This will be implemented gradually, first at 90 per cent in 2023-2024, 80 per cent in 2024-2025, and 70 per cent in 2025-2026 and from thereafter.



Why Chelsea believe their £900m transfer spending is within FFP rules

(Photo: Darren Walsh/Chelsea FC via Getty Images)

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Source theathletic