The Premier League has written to clubs seeking clarification on the rules around fair valuation of players involved in transfers after a “significant number of players have asked for clarification” following recent transfer transactions.
Earlier this week BBC Sport revealed that at least one club intends to raise the issue with the Premier League.
It comes amid fears that some clubs are looking to sell players to each other to exploit a potential loophole in the Profit and Sustainability Rules (PSR), which limit losses, ahead of Sunday’s accounting deadline.
In the letter, the Premier League warned that if it considers the fee to be “overvalued”, the selling club will have to refund part of it.
Academy graduates Tim Iloegbunam and Lewis Dobbin were reported to have been transferred between Everton and Villa in separate deals for £9 million each, after BBC Sport reported that Villa were on the verge of selling another academy product, teenager Omari Kellyman, to Chelsea for £19 million.
Then, in a separate transaction, the transfer of Dutch defender Ian Maatsen from Chelsea was confirmed for £37.5m.
There is no indication that any of the clubs involved broke any rules.
When a club sells a player, any profit is recorded in the club’s accounts for that year, meaning that academy graduates generate a ‘pure’ profit.
In contrast, the amount paid by the buying club is spread out over the life of the contract, using an accounting practice called amortization.
There could therefore be significant financial gains if the two clubs were to agree to sell players to each other, especially academy players.
In the letter, seen by BBC Sport, the league’s chief executive warned clubs: “If it is established that a selling club has overreceived a player’s transfer fee in a transaction which cannot be regarded as arm’s length, the selling club will be required to refund to the buying club any amount in excess of fair market value.”
Clubs should also be aware that they “may be required to provide information and evidence to assist in determining whether a transaction should be regarded as being conducted at arm’s length.”
If not, “a fair market valuation of the transfer will be conducted to determine the value at which the transaction can be approved,” the letter explains.
It adds that “if the board determines that the transfer is not at fair market value, it will require a restatement of the value.”
Clubs have also been told that “officers and directors must remain aware of their wide-ranging legal and regulatory obligations in relation to their financial practices and the consequences of failing to meet these obligations.”
