When Manchester City appointed Martyn Hawkins and Alex Byars in 2012 it made few ripples in the world of football.
They were two number crunchers at Deloitte, recruited into the sort of positions that still today share little of the spotlight. No way near as important or glamorous as the manager, or the world-record striker, or the sporting director, or even the assistants and first-team coaches.
In fact, Manchester City were, yet again, getting ahead of the game. At Deloitte, Hawkins and Byars had been seconded to Uefa where they were key figures in the creation of football’s first set of Financial Fair Play rules, agreed in 2009. They had helped build the gates, then became the poachers who knew where all the holes were.
Fast-forward a decade and the accountants and financial advisers are becoming some of the most valuable assets Premier League clubs can own. Hawkins is still at Manchester City, as finance director (Byars went on to roles at Everton and Rugby Football League). The rules are constantly evolving and each governing body has versions of their own.
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Never has it been more important to have on your staff professionals who can look at a dense, thick rulebook full of legalese and economic jargon and point out where it can be tested — where there are weak areas that might flex a little to lend some wiggle room for that extra £88m winger.
“Being an accountant is as boring as people claim, but being a creative accountant is a lot of fun,” football finance expert Kieran Maguire tells i.
Purists would like to think of financial fair play as a set of rigid rules creating a system that is unbreakable. In reality, it is more akin to a Swiss cheese, where smart accounts are able to flex their creative muscles to find clever loopholes to keep spending. The bigger the hole, the better.
“When the original FFP rules came out I came up with 10 schemes to get around it easily,” Maguire, a senior teacher in accountancy at the University of Liverpool, adds. “If I can do it and I’m just a teacher, imagine what the guys at Deloitte and PwC can do.”
Todd Boehly has steamed into Chelsea and pushed FFP spending to such limits that Uefa has been forced to close a loophole the American billionaire and his team of calculator warriors have seized upon.
“Amortisation” is a term football fans, particularly in west London, have had to familiarise themselves with in recent months. It essentially means they sign Mykhaylo Mudryk for £88m, but securing him to an eight-and-a-half-year contract means only £10.35m shows up on their books each year when it is checked by FFP inspectors.
“Chelsea’s strategy is intriguing,” Maguire says. “It’s high risk, but potentially high reward, especially if Mudryk turns out to be fantastic. In normal circumstance, a player would sign a contract for two to three years. If they do well, Real Madrid might come in to buy them towards the end, or Chelsea give them another contract on far more generous terms.
“The downside is, if he’s another [Romelu] Lukaku, or Winston Bogarde, they’re stuck with him. It’s an interesting strategy. You’ve got to have the money to do it in the first place.”
Chelsea transfers under Todd Boehly
- Mykhailo Mudryk from Shakhtar Donetsk, £88.5m
- Wesley Fofana from Leicester, £75m
- Marc Cucurella from Brighton, £60m
- Raheem Sterling from Man City, £47.5m
- Benoit Badiashile from Monaco, £35m
- Kalidou Koulibaly from Napoli, £33m
- Noni Madueke from PSV, £29m
- Malo Gusto from Lyon, £26m
- Carney Chukwuemeka from Aston Villa, £20m
- Andrey Santos from Vasco da Gama, £18m
- Pierre-Emerick Aubameyang from Barcelona, £10.3m
- Gabriel Slonina from Chicago Fire, £9m
- David Datro Fofana from Molde, £8m
- Denis Zakaria from Juventus, loan
- Joao Felix from Atletico Madrid, £9.7m loan
Uefa intend to limit amortisation to five years from this summer, regardless of length of contract. But not bad for Boehly, managing to break the rulebook in under a year. And his spending has done more than just that.
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Chelsea’s outgoings on players since the consortium he spearheaded purchased the club last May has already topped half a billion and with around half of that spent in January — on mainly young players on long deals, including Mudryk, Benoit Bardiashile and Noni Madueke — it has fuelled a record Premier League winter transfer window. The previous record stood at £430m from winter 2018 — winter 2023 has now seen the record rise above half a billion for the first time.
The way the system works, while the £88m for Mudryk shows up as £10.35m for each year of his contract, when a player is sold the entire amount is considered profit in that year’s accounts, regardless of how the payment is structured. So had Chelsea sold Conor Gallagher to Everton for £40m, as mooted, they would bank all of it even if, say, Everton paid £10m of the transfer a year over four years.
So one Gallagher sale would enable Chelsea to spend £320m on players in one year’s accounts, provided all arrivals agreed eight-year deals. Is this… normal? “It’s the standard accounting practice on sale of any asset,” Maguire explains.
And this is despite the fact Premier League clubs appear to be increasingly operating under a multi-billion-pound buy now, pay later scheme, with more deals than ever structured to be paid over several years, rather than in a lump sum. Maguire goes into more detail below.
Outstanding fees reach record high
Premier League clubs’ outstanding money owed on transfer fees has smashed previous records and reached around £2bn, according to Maguire.
In recent years, clubs have increasingly structured transfer payments over several years meaning they pay less up front and enabling them to spread the cost so that yearly expenditure in their accounts is less.
For example, when Sir Alex Ferguson retired in 2013 Manchester United owed £34m in outstanding transfer fees to other clubs, whereas that figure is now around £306m.
Maguire monitors and records transfers and by his calculations clubs currently owe over £1.8bn in outstanding transfer payments. In 2021, the figure was £1.57bn.
“That’s the highest ever,” Maguire told i. He also believes it is a symptom of the increased competition in the Premier League, with the Big Six now being joined by Newcastle United, backed by Saudi riches, for four Champions League places. At the other end, the bottom seven clubs are currently separated by three points and it is now more valuable than ever to be in the top-flight.
“If you sign one player who gets you one point to secure survival, then an additional season in the Premier League on TV money alone is worth £60m minimum. Plus an increase from sponsors,” Maguire said.
“A Leeds United or West Ham dropping down a division you’re talking a drop in revenue of about £80m per season — and that’s with parachute payments.”
When Chelsea won the Champions League, in 2021, they earned around £106m in prize money. “Add to that bonuses from major sponsors,” Maguire said. “That also gives you six or seven home games picking up £3m-4m per game from Champions League ticket sales.
“It works out for every pound you earn in the Champions League, you get around 22p in the Europa League and 11p in the Europe Conference League.”
But, far from fearing financial ruin, clubs’ spending is fuelled by the belief that the Premier League has much room to grow internationally and via other future revenue streams.
“Since the start of the Premier League [in 1992], revenues have increased by 2008%,” Maguire said. “We’re moving into a streaming world, there will be some sort of opportunity for other matches to go out on streaming platforms on top of existing deals. There is the scope for future growth, no doubt.”
And until all those streams dry up — if they ever do — they’ll keep on finding more ingenious ways of spending it.
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