The real cost of a modern-day footballer - everything you need to know

Fees paid to players’ agents

In addition to this, clubs also have to account for wages and any agent’s fees. The Premier League publishes an annual list of the total amount of agent fees paid by each club, but this is only for their overall transfer dealings in the window and isn’t broken down by transaction.

Agents usually take a sizable chunk of the transfer fee though, and UEFA estimates that an average of 12.6% of each transfer fee is paid separately to agents. The Premier League alone paid out more than £115 million to agents over the January 2014 and September 2014 transfer windows.

Jorge Mendes (L) is one of the biggest agents in Europe today

Thus, the cost of a player to his club looks like this: (Transfer fee + Annual Wages + Agent Fees) / Length of the contract. For example, Fernando Torres, who signed a 5-and-a-half year deal which was reportedly worth £175,000 a week, cost Chelsea £9.1 million in wages annually. Add that to the £50 million transfer fee (which works out to just about £9.1 million amortized over the length of his contract), and Torres was costing Chelsea £18.2 million per season, before any agent fees are included.

If a player is signed in the January transfer window, his FFP cost is divided by half for the initial season in which he signed. Thus, when Torres moved, he cost Chelsea £9.1 million for that half season, and then another £91 million over the remaining five years on his contract.

The staggering cost of Fernando Torres could have worked out to nearly £100 million over those five years, which represents one of the worst returns on investment in modern football.

Extending player contracts

Another key thing to note is that extending a contract of a player amortizes the remaining amount left on the transfer fee over the extent of the new deal. This allows clubs to tie players that they deem valuable into long-term contracts, securing their future at the club and ensuring that they are able to obtain maximum value if or when they choose to sell them.

The nature of this math is that clubs can even afford to give key players a raise in the new contract, and still have it cost less per season.

Consider the example of Eden Hazard. Chelsea bought Hazard from Lille in the summer of 2012 at a cost of £32 million, on a 5-year deal reportedly worth £185,000 per week. His cost would have been just over £16 million per year to the club, of which £6.4 million was the annual payment towards the amortized transfer fee.

Eden Hazard’s contract extension actually cost Chelsea less per year in spite of higher wages

With half the contract down, Chelsea still had to pay £16 million towards the transfer fee over the remaining two-and-a-half seasons. When Hazard renewed his contract until the 2019/20 season in February 2015, this amount would now be spread over five-and-a-half years instead of two-and-a-half, bringing down the annual amortized amount due to just £2.91 million.

Chelsea could thus afford to pay Hazard £3 million more per season (due to the savings), and have it cost them less per season than it did on the original contract.

This accounting allowed Chelsea to give Hazard a raise to £200,000 per week, but his annual FFP cost for the remainder of his contract would only be (£200,000 × 52 = £10.4 million + £2.91 million), i.e., £13.31m per season – a saving of more than £2.5 million per season.

Player sales

Player sales are far more straightforward to account for. Two kinds of player sales exist: academy products and purchased players. Academy sales are very straightforward, as they don’t have transfer fees attached to them when they reach the academy. Any amount received for them is added straight away.

For purchased players, however, UEFA allows clubs to record all sales as a one-time income in the books. This means that when a player is sold, his entire remaining value on his contract becomes due. This is also known as a player’s book value.

Let’s look at the example of André Schürrle. He was purchased from Bayer Leverkeusen by Chelsea for around £19.5 million in 2013 and signed to a five-year deal. His transfer fee is thusly amortized to around £3.9 million per year. When Schürrle was sold to Wolfsburg for a reported £24.1 million, his entire book value became due.

Thus, the amount left was £3.9m × 3.5 years (the time left on his contract), which works out to around £13.65 million. The selling club must also account for wages paid during the previous season while calculating profits.

Chelsea made a profit after selling Andre Schurrle to Wolfsburg

Schürrle was on approximately £80,000 per week, and half a year's worth of those wages works out to just over £2 million. Thus, Chelsea’s profit from the Schürrle transfer works out to (24.1 – 13.65 – 2), i.e., £8.45 million, and not the £4 million-odd that is assumed merely by comparing transfer fees at the time of purchase and sale.

What does it all mean for the clubs?

Because of these accounting practices, clubs will be heavily rewarded for proper planning and structuring of their squads. Tying down key players to long-term contracts allows clubs to pay their players more while reporting lower expenditures on those players per year, and clubs must also sell expendable players at the right time to maximize their returns in the transfer market.

It is becoming increasingly clear that clubs are realizing that decisions in the transfer market must not only satisfy the fans, but the accountants at UEFA as well.