Football is exciting. Accountancy less so.
The transfer window has closed and Premier League clubs are once again spending extraordinary amounts of money on footballers, over £3 billion. That follows more than £3 billion spent in summer 2025 and just under £2 billion in 2024. £1.29bn (43%) of that money was transfers within the Premier League. £1.7bn (57%) is spending on players arriving from elsewhere.
In other words, Premier League clubs have spent approaching £8 billion buying players in the last three summer transfer windows alone. And that doesn’t include the January transfer windows.
Compare that with what has happened to the businesses which ultimately have to pay for all these footballers. Premier League clubs generated combined revenues of around £6.3 billion in 2023/24. That increased by 8% to £6.8 billion in 2024/25.
So the turnover of Premier League football has certainly grown. But nothing remotely like the rate at which money is being committed to buying players. More worryingly, while revenues increased in 2024/25, Premier League clubs’ combined pre-tax losses increased from £135 million to £948 million.
This isn’t an industry struggling to generate revenue. It is an extraordinarily successful industry which seems capable of spending money even faster than it can make it. And this season the Premier League has introduced new rules which are supposed to make clubs more financially sustainable.
So how can they still spend like this?
The new Squad Cost Rules
For 2026/27, the Premier League has replaced its old Profitability and Sustainability Rules with a new financial system centred on the Squad Cost Ratio, or SCR.
The basic principle sounds sensible. A club’s spending on its squad — principally player and coach wages, transfer amortisation and agents’ fees — is supposed to be limited to 85% of its football revenue, adjusted for the profit or loss it makes selling players. UEFA has a similar system, although its limit is 70%.
But the Premier League’s 85% isn’t quite the hard ceiling it might appear to be. Clubs also have a multi-year allowance equivalent to another 30 percentage points which can be used to exceed the 85% limit. Using that allowance incurs a financial levy. Once it has been exhausted, clubs have to return to the 85% limit or risk sporting sanctions.
The Premier League itself describes one of the features of the new system as allowing clubs to “spend ahead of revenues”. That phrase is worth remembering. Because spending ahead of revenues is another way of saying that you are committing tomorrow’s income today. The rate at which clubs are spending future money is growing much faster than future incomes.
How a £100 million footballer doesn’t cost £100 million
This is where football accounting starts to matter. Suppose a club buys a player for £100 million and gives him a five-year contract. The club has committed £100 million to buying the player. Depending upon the transfer agreement, the cash itself may also be paid in instalments.
But it doesn’t normally record a £100 million expense in its accounts in the year the player arrives. The player is treated as an intangible asset. The £100 million transfer fee is then written off — amortised — across the player’s contract.
So, in our simplified example: £100 million ÷ 5 years = £20 million a year.
The club has committed £100 million, but initially only £20 million a year appears as an amortisation charge. Buy five £100 million players on five-year contracts and the club has committed £500 million to transfer fees. But the annual amortisation charge is initially around £100 million.
This isn’t some dodgy accounting wheeze invented by football clubs. It is normal accounting treatment for an asset whose economic value extends over several years. But once financial regulations are constructed around accounting costs, it creates some interesting incentives.
Selling players works differently
Suppose our club has an academy player who cost virtually nothing to acquire and consequently has little or no value remaining in the accounts. Another club offers £50 million for him. Sell him and something approaching that entire £50 million can be recognised immediately as profit on the disposal of the player.
Now spend £100 million replacing him with somebody on a five-year contract. The new player initially creates around £20 million a year of amortisation. So, very crudely, the club can sell a player for £50 million, buy another for £100 million and nevertheless improve its accounting result in that year by around £30 million. It has apparently become financially healthier.
In cash and economic terms, however, it has sold a £50 million footballer and committed itself to buying a £100 million one. The accounting isn’t wrong. The question is whether financial regulation based upon those accounting numbers creates the right incentives.
This isn’t merely theoretical. In the summer of 2024, Aston Villa bought Everton academy graduate Lewis Dobbin for around £9 million while Everton bought Villa youngster Tim Iroegbunam for a similar amount. Chelsea sold academy graduate Ian Maatsen to Villa for £37.5 million while buying Villa teenager Omari Kellyman for around £19 million. Newcastle sold academy graduate Elliot Anderson to Nottingham Forest for around £35 million while buying goalkeeper Odysseas Vlachodimos from Forest.
Nobody needs to allege that these weren’t genuine transfers. The problem is more interesting than that. The rules themselves created a powerful incentive for clubs to do them. Sell an academy player and virtually the whole fee can appear immediately as profit. Buy another player and his cost is spread over the life of his contract.
The regulations therefore created the peculiar situation in which two clubs could potentially improve their short-term financial-regulation positions by selling players to each other.
Rules intended to make football clubs more sustainable had inadvertently created an incentive for them to trade their own academy graduates.
The bill hasn’t disappeared
There is another problem with amortisation. It doesn’t make transfer expenditure disappear. It postpones it.
Imagine a club spends £200 million this summer on players with five-year contracts. Very roughly, that creates £40 million of annual amortisation. Next summer it spends another £200 million.
It could now be carrying something approaching £80 million of annual amortisation. Spend another £200 million the following summer and the accumulated annual charge could be approaching £120 million. And that is before paying the players’ wages, bonuses and agents’ fees.
Real football accounts are considerably more complicated than this. Players are sold, contracts expire, values can be impaired and contracts can be renegotiated. Nevertheless, the fundamental point remains. Today’s transfer spending becomes tomorrow’s cost. And transfer costs are increasing much faster than revenues.
What happens if revenues stop rising?
For the moment Premier League football is an astonishing commercial success. Television companies pay billions for broadcasting rights. Stadiums are full. Sponsorship and commercial income continue to grow. International interest in English football remains enormous.
Perhaps those revenues will simply keep increasing. But there is no law of economics which says that they must. Broadcasting revenues could stagnate. Commercial revenues have limits. A club can miss out on European competition. A sponsor can disappear. A team can be relegated. Owners can also change their minds.
And the problem with committing future income is that the commitment remains even when the income doesn’t arrive. A club which has spent aggressively for several seasons can find itself carrying substantial amortisation charges from players bought years earlier. It still has to pay their wages. It still needs to maintain a competitive squad. And if it needs to create financial headroom, the obvious solution is to sell players.
Which creates another potentially dangerous cycle: clubs need profitable player sales to create the accounting capacity to buy the next generation of players.
And even if the money dries up the problem remains, in 3 years time the 30% headroom is used up clubs which have used up all of their headroom in year one will face a financial problem in future years.
Hull City: from transfer restrictions to a £200 million spending plan
Hull City provide an extraordinary example of how quickly the financial arithmetic changes on promotion to the Premier League.
In their latest published accounts, for 2024/25, Hull generated turnover of just £25.8 million. Their wage bill was £36.7 million — 142% of turnover — and they made a £10.2 million pre-tax loss despite recording £33.1 million of profit from selling players.
The following season they operated under EFL restrictions which prevented them from paying transfer fees, and were also subjected to temporary transfer embargoes following overdue payments. Even after winning promotion, Hull sold Ivor Pandur and Aidon Shehu for a combined £8.5 million before the June accounting deadline in order to satisfy EFL financial rules and avoid possible sanctions.
Then they became a Premier League club. If Hull finish 17th this season, I estimate their turnover could rise to somewhere around £150–160 million — roughly six times the revenue reported in their latest published accounts. And they have immediately begun spending accordingly.
Owner Acun Ilıcalı has talked about a budget of around £130 million for transfer fees together with another £70–80 million in player salaries: potentially around £200 million of investment in the squad following promotion. The contrast is remarkable. A club which recently had annual turnover of £25.8 million and was prohibited from paying transfer fees can, little more than a year later, contemplate committing around £200 million to its playing squad.
That doesn’t mean Hull are doing anything wrong, nor does it mean that £200 million will actually be spent. Promotion genuinely has transformed the club’s finances. But it demonstrates the enormous risk inherent in the system. Premier League revenues arrive immediately. Long-term player costs don’t disappear nearly as quickly.
If Hull survive, revenues of £150 million or more may make those commitments perfectly manageable. Maybe. But if they are relegated, broadcasting income falls dramatically while the wages, transfer instalments and amortisation charges associated with players signed on four- and five-year contracts remain. They have effectively bet the clubs future on the outcome of one season.
A club can therefore go from financial restrictions to enormous spending capacity almost overnight — and potentially back to financial crisis just as quickly. For rules supposedly designed around sustainability, that is a rather peculiar form of sustainability.
An £8 billion arms race
This is why the scale of recent spending matters. Premier League revenues were around £6.3 billion in 2023/24 and £6.8 billion the following season. Yet clubs have committed approaching £8 billion to transfer fees during just the last three summer windows. Some of that money simply circulates between Premier League clubs, of course. One club’s £100 million purchase can be another club’s £100 million sale.
But that doesn’t eliminate the commitments accumulating on individual clubs’ balance sheets. Nor does it eliminate the competitive pressure.
If one Premier League club spends £200 million strengthening its squad, its competitors have an incentive to respond. That pushes up transfer fees. It pushes up wages. And it encourages clubs to commit more of their future revenues simply to stand still competitively.
It begins to look less like investment and more like an arms race.
So are the sustainability rules working?
It would be unfair to declare the new Squad Cost Rules a failure already. They have only just come into force. The Premier League has also introduced separate rules covering liquidity and positive equity, designed to identify clubs which are running into broader financial trouble.
Those are sensible protections. But the first summer under the new regime raises an uncomfortable question. If Premier League clubs can spend approaching £3 billion on players in a single summer, after spending roughly £5 billion during the previous two summers, while the latest accounts show combined pre-tax losses approaching £1 billion, what exactly is being made sustainable?
The regulations may well prevent some of the reckless behaviour which historically pushed football clubs towards insolvency. But compliance with a financial ratio isn’t the same thing as financial sustainability. Amortisation allows today’s enormous transfer fees to be spread across tomorrow’s accounts. The Squad Cost Rules explicitly give clubs some capacity to spend ahead of their revenues.And player sales can create immediate accounting profits which provide room for still more purchases.
Each element makes sense individually. Put them together, however, and they risk allowing clubs to accumulate increasingly large claims on future revenues. Perhaps Premier League revenues will continue growing quickly enough to pay those bills. Perhaps they won’t.
We may eventually discover that football’s new sustainability rules haven’t stopped clubs spending beyond today’s means. They have simply given them a sophisticated way of spending tomorrow’s money as well.
There is a historical warning here. At the turn of the century Serie A was the richest and most extravagant league in world football. Italian clubs discovered the same accounting asymmetry: profits from selling players could be recognised immediately while the cost of buying their replacements was amortised over future years. By 2002, more than 70% of reported profits were being generated by player-sale gains, while clubs such as Inter and Milan were repeatedly exchanging players — including academy youngsters — at increasingly remarkable valuations. Italian clubs repeatedly broke the world transfer record. Christian Vieri went to Inter for about €49m in 1999 and Hernán Crespo to Lazio for roughly €55m in 2000.
Italian clubs discovered precisely the accounting asymmetry we’ve been discussing:
Sell a player = recognise the profit immediately. Buy a player = amortise the cost over his contract.
That encouraged clubs to exchange players at increasingly heroic valuations. Inter, Juventus, Lazio, Milan and Roma in particular transfered players with questionable valuations. By 2002, more than 70% of reported profits were being generated by plusvalenze — profits from player disposals. Clubs increasingly exchanged players, sometimes at inflated valuations, creating immediate accounting profits while pushing the acquisition costs into subsequent years.
In 2001/02, Roma reportedly generated €95m of capital gains by selling 26 mostly young or little-known players. Roma sold three players to Torino for €24.2m and shortly afterwards bought three Torino players for €17.4m. Inter and Milan repeatedly traded young players with each other. In the accounts ending June 2003, Inter sold four youngsters to Milan valued at €3.5m each; Milan sent four youngsters the other way at €3m each. Between 2000 and 2002, the two clubs reportedly generated around €65m in capital gains through reciprocal transactions.
But the underlying finances of Italian football were deteriorating, and the overvaluation of player registrations worsened the financial crisis that emerged in 2001/02. Lazio’s Sergio Cragnotti era collapsed; Parma’s finances imploded alongside Parmalat; Fiorentina went bankrupt and had to restart further down the pyramid.
That doesn’t mean transfer amortisation caused the collapse of Serie A. There were plenty of other problems: heavily indebted owners, stadiums, broadcasting, governance and ultimately Calciopoli. But the accounting problems are the same.
If this sounds familiar Aston Villa and Chelsea have developed one of the most remarkable trading relationships in the Premier League. Since Chelsea’s current owners took control in 2022, eight players have moved between the two clubs, permanently or on loan — more than between any two Premier League clubs according to Reuters, and joint-highest according to the BBC.
The traffic has gone in both directions. Chelsea bought Carney Chukwuemeka from Villa for £20 million in 2022. Villa subsequently bought Ian Maatsen from Chelsea for £37.5 million, while Chelsea bought Villa youngster Omari Kellyman for £19 million. Axel Disasi then went from Chelsea to Villa on loan. This summer the relationship has accelerated dramatically. Chelsea have bought Morgan Rogers from Villa for £117 million, while Nicolas Jackson has moved in the opposite direction. Alejandro Garnacho has also joined Villa from Chelsea on loan with a conditional obligation to buy, while Emiliano Martínez has moved from Villa to Chelsea.
Since 2022, Chelsea have spent more than £160 million buying Villa players, while Villa have spent around £100 million acquiring Chelsea players, with that figure potentially rising further if conditional deals become permanent.
There is no suggestion that any of these transfers are improper. Most have obvious footballing explanations. But the sheer volume of trading between the clubs illustrates an important feature of football’s financial rules. When a club sells a player for more than his remaining accounting value, it can recognise the resulting profit immediately. When it buys a replacement, the transfer cost is normally amortised across the player’s contract.
The June 2024 deals illustrated the effect particularly neatly. Chelsea sold academy graduate Ian Maatsen to Villa for £37.5 million, while Chelsea bought Villa youngster Omari Kellyman for £19 million. Kellyman had cost Villa only £600,000 two years earlier and had made just six first-team appearances.
Both clubs could therefore recognise substantial profits from their sales immediately, while spreading the costs of their purchases over future seasons. This is exactly the same pattern we saw between Italian clubs 20 years ago.
Nobody needs to suggest that clubs are breaking the rules. The more interesting question is why financial sustainability rules create such a powerful accounting incentive for Premier League clubs to keep selling players to one another.
The accounting helped postpone the problem. It didn’t make the underlying costs disappear. Individual clubs are clearly taking huge financial risks, not just Premier League new boys like Hull, but established Premier League teams too. Three teams will have to be relegated this season, and only a small number of Premier League clubs are robust enough to go down without a financial crisis. But there is also a systemic problem – if something happened to shrink the income of the Premier League, or even slow it’s growth, most clubs will be in trouble.