Marking the way
The Blues is one of the longest-standing and most influential English teams in the sport, who have apparently found a loophole in the strict Financial Fair Play rules and are taking full advantage of it to bring some of the world’s most expensive players into their ranks. As a result, UEFA may be preparing to fill the loophole with new rules.
What is Chelsea doing?
The so-called Financial Fair Play is a set of rules and regulations aimed primarily at preventing clubs, in their relentless pursuit of victory, from spending more money than they earn and thus endangering their long-term financial stability. Likewise, “fair play” attempts to prevent outside organizations or individuals from interfering with tournaments by injecting huge funds. Thus, many UEFA teams have had to improve their economic practices and find ways to avoid sanctions, which can sometimes amount to millions of dollars in fines or even the loss of titles.
However, Chelsea appears to have found a new way to spend far more money than they earn while avoiding penalties. How? By extending the length of contracts. That’s right, signing their stars to long-term contracts allows the Blues’ accountants to split the transfer fees over the full contract years when submitting their annual financial reports. Thus, for example, the signing fee for Mykhailo Mudryk, who cost more than 100 million euros, is only valued at just over 12 million per year, because the contract was signed for 8.5 years.
UEFA's response
This is not the first time Chelsea has used this technique to get away with it, as the recent contracts of Benoit Badiashile and David Datro Fofana were for six-and-a-half years and Noni Madueke for seven-and-a-half. In fact, all indications are that despite the fact that under financial fair play rules clubs can only spend a maximum of 5 million more than they have earned in the last three fiscal years, it is estimated that the London team has managed to exceed that barrier by using this trick. Therefore, the chances of this practice spreading throughout the Premier League, and from there to the rest of the continent, are extremely high.
The problem lies in the fact that even though the fees are paid in installments, they will still have to be paid at some point so if the club does not receive sufficient income, it would go into deficit and could face bankruptcy. On the other hand, such long contracts are very risky for the players, as they could not only contribute to the inflation of their transfer prices, which would affect the entire market but could also make it difficult for them to leave the team if required.
That is why, UEFA decided to take matters into its own hands and set a new limit not on the length of contracts, but on the number of years over which transfer fees can be split. Thus, clubs will still be able to offer long-term contracts, but will only be able to split transfer fees up to a period of 5 years.
Final decision?
While for many this may be seen as an unnecessary intrusion or even a disrespect to the financial freedom of clubs, the truth is that UEFA has a duty. The governing body must ensure the safety of its members, and while “big” clubs such as Chelsea can afford to take such risks, if the practice spreads to less solvent clubs, it could result in disaster for the entire confederation.