For accountants at certain Premier League clubs, there has been no getting away early on holiday this summer. Almost £250m was spent on players in the space of four days at the end of June – more than the entirety of the January transfer window – leading to Sunday 30 June being described as an unofficial transfer deadline day as a scramble took place in order to balance the books and be compliant with profitability and sustainability rules (PSR).
The most eye-catching business was undoubtedly the number of transfers that took place between six clubs who are thought to have been most in danger of exceeding the permitted losses of £105m over a three-year period, starting in July 2021. Aston Villa, Chelsea, Leicester and Newcastle, plus Everton and Nottingham Forest, both of whom were handed points deductions by the Premier League last season after transgressing PSR rules, were all especially active in the transfer market ahead of the deadline that marked the end of the accounting period in which clubs finances are assessed.
The academy products Tim Iroegbunam and Lewis Dobbin were exchanged in separate deals between Everton and Villa for a reported £9m each. Then Villa, who recorded a £119m loss last season, sold the teenager Omari Kellyman to Chelsea for a reported £19m, with the Dutch defender Ian Maatsen moving the other way for £37.5m. Forest spent more than £30m on Newcastle’s 21-year-old midfielder Elliot Anderson while Chelsea completed the signing of Kiernan Dewsbury-Hall for £30m from Leicester.
There is no suggestion any of the clubs involved have breached any rules, although Maheta Molango, the chief executive of the Professional Footballers’ Association, has described the loophole as “nonsensical”.
“The clubs have been very clever to say that these are not swaps, they are just individual deals signed off pretty soon after one another,” said the football finance expert Kieran Maguire. “Generally speaking there’s nothing to stop them saying, ‘I’ve got a player who you want and vice versa. We think that your player is worth £5m more than mine, so we could agree that the prices are £10m and £15m or we could agree that they are £25m and £30m’. Either way, you get that extra £5m.
“That appears to be a driving force in relation to these transfers. And there is no such thing as a genuine price: Brighton have paid £32m for Yankuba Minteh from Newcastle and they have got no PSR issues. So if that’s the price for a 19-year-old, it could be argued that some the other deals don’t look overstated. But he has just had a spectacular season with Feyenoord.”
A few days before the end of June, the Premier League sent a letter to all of its clubs to explain its rules regarding the fair valuation of players involved in transfers after “a significant number requested clarification”. It is understood that more than one had raised concerns over the potential loophole being exploited, with the letter warning that part of a transfer fee would have to be returned by the selling club if it decides a fee has been inflated.
“Any transaction for more than £1m is potentially subject to a fair market value review,” said Maguire. “But the people trying to agree what a fair price for a player have got an almost impossible job. There’s no list prices for them because they are all unique – it’s not like buying an iPad.”
Nonetheless, the Premier League’s director of governance is expected to investigate some of the recent transfers having warned that clubs may be “requested to provide information and evidence to assist determination of whether the transaction should be considered as being conducted at arm’s length”. If not, “a fair market value assessment of the transfer to determine the value the transaction can be approved at will take place”.
While PSR rules are expected to be replaced next year by a new cap on player spending that was voted in unanimously by clubs in May, that does not necessarily mean the end for this kind of transfer. With teams expected to be able to spend a maximum of 85% of their turnover on play-related costs, which includes transfer fees, wages and agent fees, Maguire believes the system could still be open to manipulation. “PSR in its present form is likely to expire in 12 months’ time and then the Premier League is going to adopt the Uefa-style model which say you can spend no more than x% of your total revenues plus profits on players sales,” he said.
“So again there is an incentive for clubs to overstate player sale profits. Uefa’s rules say you can spend 70% of revenues plus players sale profits can go on wages, agents fees, amortisations and player write-downs, so there’s still an awful lot of scope to make the numbers fit in with number of unusual transactions.
“We saw it with both Barcelona and Juventus [in June 2020] when they swapped [Miralem] Pjanic and Arthur for what seemed like vastly overstated deals. That could become more common in the future.”
