How to account (FFP) for player purchases and sales

Buying a player

When a player is bought, they are treated as an intangible asset (intangibility is to do with the legal right to services, not actually physically owning a player as a tangible asset). So the amount paid for the player is equally divided up by the number of years of the contract and then the annual cost is applied to the account each year as amortisation.

So a player bought for £20m and put on a 4-year contract will have 20/4 = £5m charged to the accounts as a cost (amortisation) each year. The book value of the asset will diminish by £5m each year, in line with the cost charge to the profit and loss accounts.

The wages of the player, as well as signing on bonuses, performance bonuses, add ons when they are activated, all are additional costs to the accounts.

Selling a player

When selling a player, the key figure to work out is how much 'value is left on the books', NOT what the player was bought for. So if a player was bought for £50m on a 5-year contract, the amortisation cost will be £10m per year for 5 years. If the player is sold for £30m 3 years later, the accounts actually book a £10m profit.

This is because the 'book value' after 3 years is £50m - (3x£10m) = £20m. £30m is received, so the profit is booked for £10m.

Also when weighing up whether to sell a player for a reduced fee for FFP purposes, the player staying vs going will or will not have their wages and also amortisation cost hit the accounts, which can be avoided by selling the player at the start of the financial year, or just before it.