Premier League explains transfer rules to clubs after concern over ‘swap deals’

Premier League explains transfer rules to clubs after concern over 'swap deals'

The Premier League has written to its 20 clubs to remind them they will be punished for fraudulent player transfers, as scrutiny grows on the so-called swap deals which have been done by certain clubs in an attempt to generate funds to be compliant with financial controls.

The email to clubs went out after days of unusual activity in the transfer window which has seen certain clubs sell – or attempt to sell – one another players. It has been identified in some cases as an attempt to add book value before the end of the financial year on Sunday in order to comply with profitability and sustainability rules (PSR).

The Premier League’s legal team has warned clubs that his department is looking for “issues of concern” around whether deals represent good faith “arm’s length” transactions over £1 million. It has the power to request from clubs details on how the negotiations took place, including correspondence externally and internally and any other documentation.

If the league decides that the transfer was not conducted at arm’s length it can then impose fair market value (FMV) rules. Those rules apply on the league’s handbook to associated party transactions. Those govern deals for players or commercial contracts between a Premier League club and another entity who may share the same ownership. Those rules are intended to stop the false inflation of commercial deals, and also to stop clubs in a multi-club ownership group trading players on deals that do not reflect accurate prices.‌

The FMV rules for assessing the fair value of a player lists 18 factors it applies and details at length in appendix 19 of the Premier League handbook. Those include everything from the player’s age, to his position, playing statistics, honours, and injury history. On the club side, the Premier League will assess the “financial state and relative bargaining position” of the clubs involved and “any urgent need for liquidity” in the selling club.

The legal department has reminded clubs that it has the power to order the return of a transfer fee, in full or in part, to a buying club if it judges that the fee has been inflated. It reminds clubs they are obliged to act in all deals with “utmost good faith” and provide accurate financial information at all times.

Some clubs may have identified PSR swaps as a way to comply. Any transfer fee is booked immediately in its entirety by a selling club while acquisitions are amortised under standard accounting practice over the course of a player’s contract.

Many clubs have financial years ending on June 30, and all are still obliged to submit accounts that show they have not made more than £105 million in losses over a rolling three-year monitoring period.‌

Aston Villa are one club that could fall under scrutiny They have signed the Everton striker Lewis Dobbin, 21, for £10 million. Everton have bought the Villa midfielder Tim Iroegbunam, 20, for around £9 million. Both players are England junior internationals at different levels.

Villa have also bought Chelsea’s Dutch left-back Ian Maatsen, 22, for around £37.5 million although the club are clear that is an investment long-planned in Unai Emery’s side in a position that needed strengthening. Chelsea have acquired Villa’s very promising 18-year-old midfielder Omari Kellyman for £19 million.‌

Although Premier League rules governing transfers are broad, section B.15 requires clubs to act in “utmost good faith” towards one another and the league. “For the avoidance of doubt and by way of example only, it shall be a breach of the duties under this rule to act dishonestly towards the league or another club; or engage in conduct that is intended to circumvent these rules or obstruct the board’s investigation of compliance with them.”

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