Uefa’s Financial Fair Play (FFP) and the Premier League’s Profit and Sustainability Rules (PSR) are financial regulations intended to make clubs sustainable.
FFP is designed to prevent clubs that compete in European competitions from not spending more than they earn, while PSR demands clubs operate within their financial means and avoid excessive losses.
Premier League clubs can lose up to £105m over a three-year period and may be deducted points if they go over that limit.
It has become common practice in football for clubs to amortise (spread out) the transfer fee they pay for any new signing.
For example, if a new player is signed for £80m on a four-year contract, amortisation means that fee is listed as £20m per year for four years in the accounts. Spreading costs that way allows clubs to abide by FFP and PSR rules more easily.
That could allow them to spend more money on new players in a single window, because as far the financial records show, the full cost of the transfer fees they agree to pay isn’t counted until further down the line.
Youth players automatically have very low amortised values, because little or no transfer fee was paid for them in the first place. Whatever price they are then sold for can be counted as almost ‘pure profit’ in the accounts.
Chelsea – in particular – have used this rule to allow them to keep spending by selling academy prospects including Mason Mount, Conor Gallagher and Lewis Hall for fees.
