The Premier League has limited the amortization period for player agreements to five years.

English Premier League (EPL) clubs have voted to amend player transfer regulations, agreeing to limit the amortization period of new players’ contracts to five years. The absence of such a restriction led to teams circumventing financial fair play (FFP) rules by signing extra-long contracts with players. A striking example of this is the behavior of Chelsea in the transfer market, for example, in the case of the purchase of Enzo Fernandez for €121 million, a record price for English football. The contract with the Argentine was signed for eight and a half years, and then almost immediately extended for another year , which allowed him to almost halve his pressure on the club’s reporting.

The clubs of the English Premier League supported changes to the regulations on player transfers by a majority of votes (15 for and only 5 against). The clubs agreed that all new player agreements (the next window for transfers in Europe will open on January 1) will be subject to a rule limiting their depreciation period to five years. This doesn’t mean you can’t sign longer contracts. The only point is that depreciation will be calculated for a maximum of five years. The purpose of the innovation is to stop the practice of circumventing the FFP regulations. Already concluded contracts are not subject to the updated regulations. However, if they are extended, it will be in accordance with the new rules.

The scheme against which the Premier League’s decision is directed is quite simple. The FFP regulation contains a depreciation rule. That is, the cost of a player bought, say, for €100 million and signed a contract for five years (the regulations of the International Football Federation state that the maximum duration of the contract is just five years, but it also allows for longer terms if the rules of the country allow it, to which the club belongs) will be taken into account in the expenditure side of the balance sheet in equal shares of €20 million per year. This means that the longer a player’s contract, the less pressure he puts on the club’s reporting and the easier it is for him to meet the key FFP parameter in his reporting – break-even.

Teams have always taken advantage of this loophole in one way or another, to which regulatory authorities usually turned a blind eye, until Chelsea began to abuse the imperfections of the regulations. Back in the summer of 2022, the Londoners began buying players en masse (the club spent more than €1 billion on strengthening over three transfer windows), signing unusually long agreements with the players. The most striking example is the transfer of Argentinean Enzo Fernandez from Benfica for €121 million at the beginning of 2023. The deal itself is quite remarkable, because it became a record for the Premier League. But at the same time, the contract with the Argentine was signed for eight and a half years. And in the spring it was extended for another year. That is, in reality, Fernandez committed himself to Chelsea for nine and a half years. As a result, Chelsea’s accounts indicate that the annual cost of purchasing the Argentine is €12.7 million. If Fernandez had a five-year contract, the figure would be €24.2 million. The benefit is obvious. In addition to Fernandez, Chelsea also signed contracts for more than five years with other players – for example, the Ukrainian midfielder Mikhail Mudryk (bought for €70 million plus another €30 million can be paid as bonuses), with whom an agreement was signed for eight and a half years.

We also note that Chelsea’s behavior almost immediately caused a reaction from the Union of European Football Associations (UEFA). Back in the summer, UEFA introduced amendments to the FFP regulations, which seemed to close the loophole that Chelsea loved so much (why it took the Premier League six months to bring its regulations into line with the European ones is unclear). By the way, at the same time UEFA restricted another cunning scheme, the use of which, in particular, Juventus was caught: the Turin team adopted the fashion of exchanging football players, at the same time inflating the value of outgoing players and understating the valuation of incoming ones. The difference in numbers looked very good in the accounts, giving the impression that the club had made a profit. Under the new rules, if the fair value of the players involved in the trade cannot be determined, then the income from such a transaction will not be counted. There is no single system for determining the price of a football player, so the Turin scheme is also a thing of the past.

Alexander Petrov