Selling the kids to balance the books: it’s the Premier League’s new game

 

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By Tony Attwood

Quite why Premier League clubs are getting into a frenzy of selling and buying young players has become clear at last.

If Arsenal sell a player for £20m then that money goes straight onto their balance sheet even if they have not received all of it.  The balance sheet shows (for example) £5m going in to the bank account and £15m owed.   But the whole £20m either adds to their profit or reduces their loss for the season..   

So if they had in the financial year spent more than they should have done and were liable to be penalised by the League, that is £20m knocked off the overload.  True they have lost a player, but that can be better than being docked four points.

So sell a player and avoid getting points docked – that looks like a way forward.  But apart from it appearing to be treating young players like farm animals, there is a twist.

If a club buys a player for £20m that is shown as a £20m purchase on the balance sheet – no matter how long the contract. 

In summary, if Club A signs a player for, say, £10m and sells another player for £10m, the money they pay can be spread over the length of the contract, while the amount received can be immediately put on to the balance sheet to reduce the club’s losses. no matter how long it takes to pay off the debt.

So selling one player can immediately put a club that was teetering on the edge of the FFP rules into the clear.  Buying a player on a five year contract and selling him after two years can be a very profitable activity.

What this means in short is that clubs are starting to understand that part of their buying and selling arrangements has got nothing to do with the well-being of the team, but rather everything to do with working the rules.

Which is why a couple of years back Chelsea had more first team players than they could put in the 25.

And this is why now several clubs seem to be anxious to sell academy players for a profit before the end of the current financial year on 30 Iune.

So now the Premier League itself is investigating a whole raft of transfers to see whether they were real or not – not least because of the habit already established of clubs buying a young player and immediately loaning him out to a lower league club.  It is being suggested that Newcastle United, Chelsea, Aston Villa and Everton, are particularly involved in deals which have been set up just to get around the rules.

In short if a club is looking at its accounts and sees that it has spent £50m over what is allowed it can move on 10 academy players at £5m each and bring themselves immediately back into line – even if the buying club hasn’t paid any money.  The buying club doesn’t mind because it has four years to pay the money promised – by which time the player could be sold on again.

So this takes transfers to a new level – the buying of young players simply to accommodate the rather odd accountancy rules of the league – not for the benefit of the team.

Of course this is nonsense and there are proposals for yet another set of rules – but there isn’t agreement on this yet.

However there is a rule that says, “For the avoidance of doubt and by way of example only, it shall be a breach of the duties under this rule to … engage in conduct that is intended to circumvent these rules.”  

To see this in operation consider this: Chelsea have signed Omari Kellyman from Aston Villa for £19 million.  He is 18 and played under 45 minutes in the League last season.   One year before he cost £600,000.

Of course all that may be fair and reasonable.  But it also might just be a set of transfers to get around the rules.

Which raises the question, how has such a stupid set of rules come to be implemented in the Premier League?  Or put another way, is it some sort of convoluted interpretation of these bizarre rules that Man C are relying on as their get-out-of-jail clause?   I am not sure how that could work.  But then this would be Man C.

Meanwhile, other clubs are buying and flogging young players like mad as a way to get around the rules their own league invented.