UEFA's Executive Committee have endorsed amendments made to the UEFA Club Licensing and Financial Sustainability including that club will no longer be able to amortise registrations over a period longer than five years, even if a player's contract is in excess of that time. The rules are set to come into force on July 1st.
Since Todd Boehly and Clearlake Capital completed the takeover of Chelsea, their approach to signing players to long contracts made waves as they spread vast sums across a number of years in their accounting. That is in contrast to when selling a player as profits from a sale go immediately into your books and are offset against FFP losses.
With the west London side having spent in excess of £600million, they saw the likes of Mykhailo Mudryk and Enzo Fernandez sign deals until 2031. Mudryk's move for example could have been represented on this year's FFP accounts as just £7.3million-per-year rather than in excess of £80million including add-ons.
Any deals made before July 1st will not be impacted by the ruling, however.
Moves quickly emerged in January to try and counteract the practise Chelsea had undertaken after criticism from other clubs. UEFA took action and now new rules are set to be implemented for the upcoming year, to prevent financial burdens being pushed down the line.
UEFA say they are making the adjustment to 'ensure equal treatment of all clubs and improve financial sustainability'. The move also hopes to limit the exploitation of swap deals for accountancy purposes. The Executive Committee noted: "This approach aims at dissuading that transfer operations take place with the sole intent to artificially inflate transfer profits rather than for sporting purposes."
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UEFA said in a press release:
"New UEFA Club Licensing and Financial Sustainability Regulations – Edition 2023
"The UEFA Executive Committee endorsed a few important amendments to the UEFA Club Licensing and Financial Sustainability Regulations which will come into force on 1 July 2023.
"The new regulations define the accounting treatment to be followed on the amortisation of player’s registration and in case of player exchange transactions (so called “swaps”).
"The amortisation of the player’s registration will be limited to five years in order to ensure equal treatment of all clubs and improve financial sustainability. In case of contract extension, the amortisation can be spread over the extended contract period but up to a maximum of five years from the date of the extension. Such a change will not restrict the way in which clubs operate (i.e. clubs that are allowed by their national governing bodies to conclude player contracts for a period exceeding five years can continue to do so) and will not apply retroactively to transfer operations that have already taken place.
"With regard to the player exchange transactions, the regulation specifies that it is the responsibility of the clubs to assess whether a transfer operation should be qualified as a swap, in which case it shall be accounted for in line with the international accounting standards. This approach aims at dissuading that transfer operations take place with the sole intent to artificially inflate transfer profits rather than for sporting purposes.
"It is now required that clubs’ auditors confirm the correct application of the described accounting requirements and report any discrepancy should this not be the case."
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