West Ham’s sale of Mohammed Kudus to Spurs for £54.5m has taken off the pressure of a PSR breach, thanks to an accounting quirk in Premier League regulations.
Profits from player sales are recognised in the financial year they are sold, while player purchases can be spread over five years in the accounts using amortisation rules.
This anomaly benefited West Ham when they sold Declan Rice to Arsenal for £105m, allowing the Hammers to record a profit last season.
West Ham initially paid €43m (£37.1m) with an additional €3m (£2.6m) in add-ons in 2023 for Mohammed Kudus, as confirmed by an Ajax statement at the time.
The sale of the Hammer for £54.5m to Spurs will create a one-off £30.7m gain on paper in West Ham’s accounts, as the club has already written down two years of the five-year amortisation period for the initial transfer fee for Kudus.
Since most new transfers are written off over the maximum five years, you only need to balance the initial first-year instalments, meaning a £30.7m profit can be worth £153.5m in PSR terms in one financial year.
The challenge with that strategy is that it becomes very short-termish. While it solves a problem with PSR this season and this summer, it means that West Ham would have to make a similar profit on a player or players each summer after that to continue to balance the books.
This is a model which served Brighton well, but it relies on discovering young talent and selling them later for profit to support continued transfer spending.
Hardly a revelation Sean and perhaps you could help by stopping the other writers here suggesting that a 20 million sale means that we have 20 million to spend. However I thought the current problem was a cash flow one. We had lots of money going out on installments and very little coming back in. Therefore we didn’t have the money to pay for the first installments on players we might want to buy. All the PSR headroom in the world is meaningless if you’ve no cash. The club needs a cash injection but presumably the Gold family are the problem there. They haven’t money to put into the club (they want out) and therefore any investment by the other owners would mean some reallocation of percentage ownership that the Gold family won’t want either. Things are going to be awkward until the Gold family find a buyer.
Sorry I thought it has been shown wh doesn’t have PSR problems ? But cash flow ( aka tight owners)
Is this BS back on the menu now ?
May as well have come directly out of Sullivan’s own mouth.
We also need to bring our young academy players through. In the distant past that is where we reduced our spend and made profits when we had to sell. This has not been the case, but for a few exceptions over the last decade
Just like all tax and financial rules. PSR was well intentioned to begin but very quickly became a silly game using workarounds to overcome any hurdles.
Probably why FA’s case against Man City has taken so long. Still hoping not to lose face. Also FA need to pronounce on Man City case before delivering verdict on Paqeta.
Smoke & mirrors!
It’s a completely unsustainable model.
E.g. You sell and make a 50m profit. That profit gets recognised for 3 years. But if you don’t spend that profit and have it recognised in the same year you get screwed in the year it falls off.
Like the Rice deal:
100m in….spend that 100m and spread it over 5 years @20m per year.
In year 4the 100m is gone…but there is still 80m of spending against it to account for (as only 20m shows in the same season) that it no longer balances against. So you end up with 60m of losses across the three year period in the accounts, even though that spending was fully covered by the original 100m sale, because the 100m disappears from the PSR accounting period (even if you didn’t spend it all).
As I say it’s totally unsustainable way of doing things and no wonder clubs want rid of it.
It’s only viable if the profits and losses match off in the same season.
There were never any real PSR troubles just cash flow which is completely different. The title should’ve read “we’re in an even better PSR position than before” a bit long I grant you but accurate none the less.
With you Dave,
The PSR situation was only an accounting issue.
But today licks off the start of the 25/26 season ⚒️