Football Finances Simplified
1. Amortization in Football Transfers:
In football, amortization refers to how a player’s transfer fee is spread over the length of their contract for accounting purposes.
Example: Let’s say a club buys a player for £60 million on a 5 year contract. In the accounts, this transfer is amortized at £12 million per year (60 ÷ 5). So even though £60m might be paid upfront or in installments, the books only show £12m in each financial year. This helps clubs manage their books under PSR.
2. What is PSR (Profit and Sustainability Rules)?
Premier League clubs must follow rules that limit how much they can lose financially over a 3 year period. Currently, the PSR limit is £105 million in allowable losses over 3 years (i.e. £35m per year).
Certain costs are excluded like infrastructure, youth development, women’s football, and community projects. But transfer fees, wages, and agent fees are all included. Clubs must show they’re staying within these rules, or face penalties like points deductions (see Everton or Nottingham Forest).
3. Why Selling Homegrown Players such as Marcus Rashford is Powerful:
When you sell a ‘Homegrown’ player (someone developed through your youth system, like Rashford), there is no amortized cost, they’re essentially recorded in the books as having £0 cost because the club didn’t purchase them. So if Manchester United sell Rashford for £60 million, the entire £60 million counts as immediate profit for PSR purposes.
Compare that to buying a player for £60 million on a 5 year deal, it only costs £12 million per year in the accounts. So, selling Rashford: +£60m profit in Year 1. Buying three players at £60m each: -£36m total amortized cost in Year 1. That’s where the “3x what we can spend” logic comes in. For every £1 of homegrown sale, a club might be able to responsibly spend £3-4 in transfer fees (spread across contracts) and still meet PSR.
Written by Philip_hunter2003 April 23 2025 12:00:24
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