English Premier League football clubs agree five-year limit on transfer fee amortisation

LONDON – English Premier League football clubs will have a maximum of five years across a player’s contract to spread the cost of a transfer fee under newly tightened rules announced by the league on Dec 12.

The move brings England’s top flight in line with European regulations after governing body Uefa said in June it had closed a loophole allowing clubs to spread a fee over a longer period.

Previously, clubs could amortise the cost of a transfer fee over the full length of any contract.

Assuming the fees are spread evenly over the course of a contract, the longer the deal, the smaller the annual payment on the club’s accounts.

“Premier League shareholders today agreed to amend the rule on amortisation of player registration costs to bring it in line with Uefa’s regulations,” the league said in a statement.

“Going forward, a five-year maximum will apply to all new or extended contracts.”

In essence, a £100 million (S$168 million) transfer fee would amount to £20 million a year with a five-year contract, but at only £12.5 million a year if a deal was for eight years.

Most Premier League clubs have taken advantage of amortisation, and recently Chelsea have signed players on eight-year contracts or more, allowing them a much longer period in which they can write off the transfer fees.

This allowed clubs to get around the Premier League’s Financial Fair Play regulations, whereby clubs are permitted to make only a loss of a maximum of £105 million over a three-year period.

Chelsea were one of 15 clubs who voted to amend the amortisation rule – a motion needs the support of 14 clubs to be passed – even though they have benefited from it when they awarded 8½-year contracts to Enzo Fernandez and Mykhailo Mudryk in January.

Moises Caicedo also arrived at Stamford Bridge for a contract that lasts at least eight years, while Cole Palmer and Romeo Lavia penned seven-year agreements when they joined in the summer.

The new regulation will not be backdated, so will not include any contracts already signed.

“Nobody wanted to punish Chelsea here, which is why they’ve decided not to backdate. Crucially, it means Chelsea have had the advantage of putting these players on long contracts but they won’t be allowed to do that again with new players,” said Sky Sports senior reporter Rob Dorsett, who analysed the change in rule.

“I don’t think it will have an impact on transfer fees. It’s just an accounting procedure. Clubs can account for the player they’ve signed. Clubs can still make longer deals but, accounting-wise, the cost can only be spread over five years.

“This brings the Premier League in line with Uefa rule, who already had this in place. It makes clubs more sustainable and reduces their risk.”

In terms of sustainability, Chelsea posted a loss of £121 million in their most recent accounts and are being investigated by the Premier League and the Football Association after reporting that “incomplete financial information” had been submitted during former owner Roman Abramovich’s tenure. Uefa has fined the club £8.6 million over the admission.

Apart from the change in the amortisation rule, the clubs have also agreed to a rule amendment which allows the Premier League Board to stop a club from registering more players when a club owes a transfer debt to another Premier League or EFL (English Football League) club until the outstanding debt has been paid.

“The Board can also have the option to deduct the amount from the club’s entitlement to the league’s central funds,” a Premier League statement said. REUTERS, AFP