When you look at financial report of any club, you will see player amortisation rate as one of the biggest expenses. So, what is it?
In short, this is a way that football clubs account for the cost of players. You will see different figures in the media, because they will show you other data. The media will speculate about the net spent on transfers, and the will write about the overall cost of the transfer fee. Player amortisation is calculated differently.
In this way, you can’t see a player’s wages in the bill, and it is completely different from the way football clubs account the cost of new players. Let’s do an example.
Angel Di Maria: Net loss, but in fact a profit
Manchester United spent €65 million on Di Maria, but after the poor season at Old Trafford, they sold him. PSG paid €48 million and got a player who moved on to be PSG’s all-time top assist maker in history.
So, looking into this transfer you could say that Manchester United lost €17 million. But if you look at their financial reports, you will find a different look at this.
Di Maria signed a five-year contract with Manchester United, and the cost of his transfer was split evenly across 5 years. So that’s €13 million per year. Then you add his wages to this, and he got €15.85 million for a year in Manchester.
So, now you add these two figures and get annual player amortisation of €28.85 million. But when clubs sell their players, they add the whole amount received in their books instantly.
So, when Manchester United added €48 million, they got a profit of nearly €20 million on Di Maria. This may come very handy to clubs when they are trying not to breach Financial Fair Play Rules.
It was the sole use of Barcelona’s exchange of goalkeepers with Valencia. Neto and Cillesen changed clubs, their transfers were divided by the number of years at the club. And both clubs balanced their financial sheets when they immediately put the whole amount they got for the transfer in their financial report.