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What is the cost of a player?

Andy Carroll and Kenny Dalglish

With our very first guest article, the excellent Chris Bailey of Off The Bench brings us an expert and inside view of the true cost of a player and how football clubs structure transfer deals.

While the transfer window is open and the press and fans alike speculate on what was paid for a particular player, the truth often is that only the club knows. The press will attribute a value for a player if it is not disclosed by the clubs involved, for without it their article loses its worth. “A Player was signed for an undisclosed sum”; what use is that? Fans will not be able to say “he’s never worth that” or less commonly “we have got a bargain there!”. The value of a player is in fact a complex question, which is constantly reviewed throughout his time at the club. This article attempts to cover the various calculations of that value in the books of a club at various times.

On acquisition it would appear to be fairly simple to ascertain the value, however there are many factors to take into account. As an example let’s consider the acquisition of Player A for which the transfer details were:

Transfer Fee £12m

Payable by installments of £6m on acquisition, £3m in six months, £1.5m in 12 months, £1.5m in 18 months.

Add-ons: £1m on 20 starting appearances, £1m on 40 starting appearances payable when achieved.
£1m on gaining first full England cap

Player’s contract length: three years.

I think you will agree that it’s starting to look complicated! To calculate the financial treatment of the acquisition let’s assume that he arrives at the start of the accounting year, that he makes 30 appearances in his first season, is injured at the end of the season and plays no games in season two, and that he makes 30 appearances in year 3 when he is capped for England.


Components of transfer Narrative Year 1 Year 2 Year 3
Transfer fee Depreciate over life of contract £4m £4m £4m
20 Appearances Spread over remaining life of contract £0.33m £0.33m £0.33m
40 Appearances Spread over remaining life of contract £1m
England Cap £1m
Cost per annum £4.33m £4.33m £6.33m


If you contrast this with the actual cash outflow, which in the day-to-day running of the club is more important (as without cash a club is obviously in dire straits), there is a major difference in the financial profile.


Components of transfer Narrative Year 1 Year 2 Year 3
Transfer fee Per agreement £9m £3m
20 Appearances Spread over remaining life of contract £1m
40 Appearances Spread over remaining life of contract £1m
England Cap £1m
Cost per annum £10m £3m £2m


As can be seen the profile of cash and cost charged to the profit and loss account are completely different, with year one being the most cash hungry and year three – in part to the injury to the player – being the highest cost charged in the accounts.

To further complicate the position, most clubs (and certainly the two I have worked for) review the value of their players on a monthly basis, with the Chief Executive, Club Secretary, and Finance Director participating in a discussion to value the player, though strangely not the manager. This valuation is provided to the board each month for discussion and is the starting place for reviewing any bids for their players. It is also a potentially contentious value if the Chairman has personally bought a player for £10m and the value given is £5m!

The review of the written-down value of players (written down value = cost –amortisation), is considered more formally at the end of the financial year when the auditors will question player values. To add a further twist, due to accounting conventions the player values cannot be increased as it would not be prudent, and they are only adjusted downwards in a process called impairment. In the case of Player A, as he was injured at the end of season one, if there was a major doubt that he would play again then he may have his value completely written off, incurring a charge of £13 million in year one. A fan can only hope that a player is fully insured in such a situation.

UEFA's Financial Fair Play Regulations kick in during the 2013/14 season

As a result of this financial rule youth players can only be valued at the price paid for them, not the value gained as part of their apprenticeship, which is borne out by the story last week that Andy Carroll was valued by Newcastle United last season at just £1m.

With the UEFA financial fair play regulations coming into play in the 2013-2014 season the effects of each and every player acquisition needs to be considered more than ever. The profit on sale of a player is in the year it occurred for the transfer fee, and for any add-ons that have solidified, while the effect of any player purchase depends on many factors, as can be seen from this article.

The answer is obviously in the detail and the press and the fans will continue to speculate on the transfers themselves and the effects on their club. I wonder how many will speculate on the effect of the accounting treatment.


Chris Bailey is a former finance director at Watford and Fulham FC.  Since leaving Fulham in 2010 he has established a company called Off The Bench, which provides non-sporting products and services to football clubs. Follow them on Twitter here.


Really informative and easy to read article, top work mate, I really enjoyed that!