The Premier League has recently undergone a significant rule change regarding the way transfer fees can be spread over a player’s contract.
Previously, clubs could distribute the cost of a transfer fee evenly throughout a player’s contract, even if it spanned over a decade.
However, the new rule amendment limits the maximum length of a new or extended player contract to five years, which will bring the Premier League in line with UEFA regulations.
The change means that clubs can no longer spread out transfer fees over extended periods, which would have a significant impact on the accounts of clubs.
For instance, a transfer fee of £100m would have been remunerated at £20m per year with a five-year contract, but only at £12.5m annually if the deal was for eight years.
This accounting procedure allows clubs to record smaller annual payments on their accounts, the longer the contract period.
Chelsea signed a few players on lengthy deals last year, including Enzo Fernandez and Mykhailo Mudryk, who were both handed eight-and-a-half-year contracts.
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However, the new rule amendment will not be retroactively applied, meaning such deals will be unaffected.
In addition to this, clubs have also approved a rule amendment that empowers the league’s board to prevent a club from registering new players if they owe a transfer debt to another Premier League or EFL club.
The board also has the option to deduct the amount owed from the club’s entitlement to the Central League funds.
While the new rule amendment limits the length of new or extended player contracts, it will not affect the transfer fees paid by clubs.
Clubs can still make longer deals, but the cost can only be spread over five years, which will make clubs more sustainable and reduce their risk.
The decision was not made to punish Chelsea, who have used the previous rule carefully and cleverly.
However, it means that Chelsea will not be able to put new players on long contracts going forward.
