Premier League make major transfer decision impacting Newcastle United and Chelsea’s FFP battle

Premier League clubs have voted in favour of limiting how long transfer fees and wages can be amortised over the length of a player’s contract. The new rules, which bring the Premier League in-line with UEFA’s current rules, mean clubs cannot amortise transfer fees and wages over more than a five-year period.

This issue was brought into common debate after Chelsea’s lavish spending under new owner Todd Boehly. Chelsea gave a host of their new signings eight-year contracts and thus were able to spread the fee paid for these players over an eight year period and thus being able to spend heavily during single transfer windows without having a major impact on their financial reports and thus Financial Fair Play restrictions. 

In all, 15 clubs voted for the implementation of the new rule with Chelsea among the clubs that voted in favour of its introduction. Two clubs voted against the rule whilst three abstained from the vote.

Under the new rules, clubs can still give players eight-year deals but will only be able to amortise the transfer fee over a five-year period. The new rules will not be backdated, however.

Newcastle United CEO Darren Eales was asked about FFP ahead of the new season and referenced the potential use of amortisation as a way to navigate these constraints, he said: “The first way we’re trying to meet FFP as a club is to grow revenues. The more revenue you have, the more you’re able to spend on players, on salaries and on transfers.

“One of the ways you can get the income is by moving players. If you move a player, you recognise all that revenue at that time but when you buy a player, you amortise that.

“What that means is you spread out the cost across the length of the contract so what that does mean is that if you are churning players, you get more availability to spend money. But for us, what we’re focusing on is how do we have the most efficient spend?

“We know we’ve got a certain amount, so that’s why we spend a lot of time talking to Dan [Ashworth] and Eddie [Howe] about what the squad looks like, how we want to build it and what type of players and profile are Eddie and Dan looking for?”