The Premier League has issued a statement to its clubs regarding the fair valuation of players in transfer deals.
This comes after inquiries from clubs seeking clarification, particularly following recent swap deals involving young academy players.
Concerns Over Potential Loophole
Earlier reports suggested a club planned to discuss the issue with the league. This arose from concerns that clubs might exploit a loophole in Profit & Sustainability Rules (PSR) by inflating transfer fees for academy players in swap deals. These inflated fees could help clubs meet financial fair play regulations before an upcoming deadline.
Premier League’s Warning
The League’s explanation highlights that inflated fees could result in consequences for the selling club. If the Premier League determines a fee is significantly above fair market value, the selling club might be required to return the excess amount to the buying club.
Recent Swap Deals
The statement comes after a series of transfers involving young academy players raised eyebrows. These included reported deals between Everton and Aston Villa involving Tim Iroegbunam and Lewis Dobbin (both £9 million) and a potential £19 million move of Omari Kellyman (Villa) to Chelsea. In the opposite direction, Chelsea’s Ian Maatsen reportedly joined Villa for £37.5 million.
Financial Implications of Transfers
The Premier League clarifies the accounting treatment of transfers. When a club sells a player, any profit is recognized immediately. This is particularly beneficial for homegrown academy players, who generate “pure” profit. Conversely, the buying club spreads the transfer fee over the contract length through a process called amortization.
Potential Financial Boost Through Swap Deals
By agreeing on inflated transfer fees for academy players in swap deals, clubs could potentially gain a significant financial advantage.
Ensuring Fair Market Value
The League emphasizes its commitment to fair market value in transfers. The letter warns clubs that they might be required to provide evidence to demonstrate a deal is conducted “at arm’s length” (fair and independent). If not, the League may conduct a fair market value assessment and potentially require the transfer value to be adjusted.
Compliance Reminder
The Premier League concludes by reminding clubs of their legal and regulatory obligations regarding financial practices. Failing to comply could have serious consequences.
