Chelsea’s approach to player transfers has been weakened by the decision of Premier League shareholders to limit amortisation to a period of five years.
During their meeting on Tuesday, clubs discussed the practice of contract amortisation, which involves gradually reducing the initial cost of a player over the duration of their contract. It was decided that the Premier League would align with Uefa’s approach to this matter.
Chelsea’s owners, Todd Boehly and Clearlake Capital, have sought to distribute the expenses of transfers over a period of up to eight years. However, it is believed that they supported the decision, which will only affect new and extended contracts. In order for this motion to be approved, it requires the backing of 14 clubs.
Fortunately for Chelsea, the updated policy was not applied retroactively to the previous summer. The lack of support for this change prevented it from being put to a vote. During that time, Chelsea spent over £400m on acquiring players and even shattered the British transfer record with their purchase of Moisés Caicedo from Brighton for £115m.
Boehly and Clearlake have issued eight-year contracts after purchasing Chelsea from Roman Abramovich. This has enabled them to disperse transfer payments over a longer period of time, which is beneficial for financial fair play compliance. However, Uefa closed this loophole last year and now clubs are only allowed to spread out payments over five years according to their regulations.
Chelsea may still offer longer contracts, but they would likely need to make changes to their amortization if they were participating in European competition.
Uefa did not backdate the move. As a result, Chelsea purchased Caicedo and offered him an eight-year contract. According to the league’s profit and sustainability regulations, teams are allowed to have a loss of £105m within three years, with allowances for any impacts from Covid.
The latest financial report from Chelsea showed a deficit of £121m and the team is under scrutiny from the league and FA for allegedly providing incomplete financial data during Abramovich’s ownership. As a result, Uefa has imposed a fine of £8.6m on the club.
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Additionally, the clubs have agreed to a change in the rules that would implement a transfer sanction on teams who have a transfer debt with another club in the Premier League or EFL. This sanction will remain in effect until the debt has been fully paid.
The league released a statement stating that the board may choose to subtract the amount from the club’s share of the league’s central funds.
Source: theguardian.com
