Premier League clubs vote in favor of a five-year limit on amortization of transfer fees

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

However, this rule will not be changed retrospectively to include transfers that have already occurred or contracts already signed, bringing the Premier League in line with UEFA, which set its own five-year cap on amortization of transfer fees in June.

The clubs voted on the measure at a shareholders’ meeting on Tuesday. The vote was approved by 15 clubs – including Chelsea, which has attracted attention for the long contracts of some of its new players in the past 18 months – with two against and three abstentions.

The Premier League confirmed the change in rules for new and extended contracts in an official statement afterwards The athlete Report later Tuesday.

The statement added that the teams also voted to enable the Premier League Board of Directors to prevent a club from registering further players in situations where it owes a transfer debt to another team in the Premier League or English Football League (EFL) until that payment is made. to make. The offending club can also deduct the amount due from its share of the league prize money.

Previously, clubs could amortize debt – spread the cost of a transfer, in accounting terms – over the full term of any contract.

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

But the lack of legislation in this area has drawn criticism after several high-profile signings at Chelsea over the past 18 months were signed on long-term deals. For example, Mykhailo Modric 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 Fernandes has also signed a contract until 2031 following his January £106m move from Benfica.

UEFA, which has a separate set of financial regulations from the English Premier League, moved to close the loophole in the summer. It also set a five-year cap on the amortization of transfer fees, regardless of the contract term, and similarly did not backdate its new amendments.

Under Premier League and UEFA legislation, contracts can still be of any length, but the period over which transfer fees can be allocated in the accounts is limited to five years.

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

UEFA recently changed its financial sustainability rules and introduced a team cost control rule that restricts spending on player wages, coaches, transfers and agent fees to 70 per cent of a club’s revenue. This will be implemented gradually, first by 90 percent in 2023-2024, 80 percent in 2024-2025, and 70 percent in 2025-2026 and thereafter.

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