Buy at €40m, sell at €40m: what is a club left with?

On the books, there is an €8m profit

You have probably had this thought while reading transfer news. If a club pays €40m for a player and sells him a year later for €40m, does that come out at zero? And if the two deals are taxed, does it not come out negative?

Open the accounts and, as it turns out, there is an €8m profit sitting there. But it does not mean the club made money. And the hunch that the club is left with less is right, though what takes the money is not tax.

To keep the example clean, assume the acquisition costs exactly €40m, the club receives exactly €40m, and set aside agents' fees and deductions. Both move in reality, and we will come back to them.

A transfer fee is not booked as an expense all in one go in the year it is paid. Pay €40m for a player on a five-year contract and the club capitalises it as an asset, then charges it to expense across the term of the contract. That is the idea behind amortisation. It works out at €8m a year, so after twelve months the book value has fallen to €32m.

Sell him for €40m at that point and the difference between the proceeds and the book value — €8m — is the gain on disposal. In Spanish it is called plusvalía.

What is easy to miss is that the same €8m has already gone through the accounts as amortisation during the year he was held. Over the holding period, the €8m gain and the €8m charge cancel each other out. Across his registration as a whole, the effect on profit is nil.

So that €8m is not new profit. It is expense already recognised, coming back in the form of a sale. Buy and sell at the same figure and, taken as a whole, the club is neither better nor worse off.

"Taken as a whole" is doing real work in that sentence. Amortisation starts on the day the registration is acquired, so if the holding period straddles a financial year-end, the charge and its return land in different years. Year by year, the numbers do not net to zero. We will come back to that too.

Amortisation creates no profit. It moves the year the expense lands

What is amortisation for, then? It is the rule that allocates the cost of an asset used over several years to the years in which it is used.

Hold a player to the end of his contract and the whole €40m eventually becomes expense. Sell him earlier and amortisation stops there, with the remaining book value feeding into the gain or loss on disposal. Either way, what can be moved is not the total, only the year it lands in.

Which year it lands in is not a small matter for a club. Book €40m as expense in one go and that year's accounts take a heavy hit. Spread it over five and it is €8m a year. Under rules that assess clubs year by year, that difference bites.

Which is how the length of a contract became an accounting question. With no ceiling, the same €40m could be thinned to €5m a year on an eight-year deal. UEFA capped the allocation period in the 2023 edition of its regulations. From 1 July 2023, the cost of a registration is allocated over the term of the initial contract, and over no more than five years. It does not apply retrospectively to registrations acquired earlier. Note also that the rule applies only to clubs that capitalise registration costs; clubs that expense them on acquisition under their national accounting standards fall outside it.

A contract extension gives the club a choice. It may carry on amortising over what remains of the original contract, or reallocate over the extended term. Choose the latter and a fresh five-year cap runs from the date of the extension. So a report of a contract renewal can carry an accounting meaning alongside the sporting one: the club is choosing how the expense falls.

Whether the sale crosses 30 June decides which year it lands in

Even if a disposal gain is expense coming back, the year it comes back in can move.

Take the same player, held for three years rather than one, then sold for €40m. To keep the dates tidy, say he was acquired on 1 July and the sale completed on 30 June three years later. Three years of amortisation is €24m, so the book value has fallen to €16m and the gain on disposal is €24m.

That €24m is simply what was charged as expense at €8m a year across those three years, arriving back in one lump at the point of sale. Years one and two are each €8m heavier; year three is lighter by €16m, the €24m gain less that year's €8m charge. The total is nil, but the year-by-year picture looks nothing like it.

Spanish sports corporations such as Atlético de Madrid close their books on 30 June because the rules require it, not by custom. LaLiga's budgetary regulations define a season as running from 1 July to the following 30 June, and a royal decree requires sports corporations, when setting the year-end in their articles of association, to use 30 June unless the league provides otherwise.

What decides the year a disposal is recognised is neither the date of signature nor the date of the announcement, but the point at which the conditions are met, the deal becomes substantively unconditional, and the risks and rewards attaching to the player pass. Whether that falls on or before 30 June, or on or after 1 July, decides which year carries the €24m. A club that can recognise a sale by the end of June can reflect it in that year's result, which can be one thing a club is playing for.

Why academy players look unusual in the accounts

The mechanism shows up in its starkest form with players a club has raised itself.

A signed player has an acquisition cost; a player who came up through the academy does not. What was spent developing him went through as operating expense year by year, and accounting rules do not permit a club to carry him on the balance sheet as an asset attached to that individual. His book value is close to zero, so almost the whole sale price is a gain on disposal.

And in his case there is generally no amortisation charge arising from a transfer fee. With a signed player, as much of the acquisition cost as has been amortised comes back inside the disposal gain. An academy player has no such component arising from a transfer fee, so most of what he sells for is simply that year's gain.

Between an academy player sold for €20m and a player bought for €40m and sold for €40m, only the first moves the accounts over the full period. Line the transfer fees up and the impression is the opposite.

Where tax actually falls

Back to the question we started with: if a profit shows up, does tax not follow?

Start with VAT, IVA in Spain. Transferring a player's registration rights between Spanish clubs is a taxable supply, but the buyer deducts it to the extent the conditions for recovery are met, and what is recovered leaves no real burden behind. Where the counterparty is a foreign club and no Spanish establishment is the recipient — the ordinary case — Spanish IVA does not apply at all, because the place of supply is determined by reference to the recipient; what happens next depends on the other country's system. Either way, it is not a mechanism that shaves a percentage off every deal. A payment made under a release clause is outside IVA altogether, being compensation rather than consideration for a service.

Corporate tax falls on profit, not on the size of the transaction. The measurement needs care, though. Buy at €40m and sell at €60m and the gain across the holding period is €20m. But corporate tax is computed on income year by year, and the gain recognised in the year of sale is set by the book value at that moment. Sell after one year and cumulative amortisation is €8m, book value €32m, and the accounting gain €60m less €32m, or €28m. The €28m gain, net of the €8m charge, leaves the same €20m. What is not guaranteed is that the €8m and the €28m fall in the same tax year.

"Sold for what I paid and still taxed on it" is not, as a rule, how this works. But it changes if the amortisation years and the sale year are separated and a tax loss arises in an amortisation year. The proportion of later income against which such a loss can be offset is capped: at 50% where net turnover in the preceding twelve months was at least €20m and under €60m, and 25% where it was €60m or more. The first €1m may be offset regardless of those percentages. So a deal that nets to zero over its life can still generate tax in a given year.

What was actually taking the money

Up to here, agents' fees and deductions have been left out to keep the arithmetic clean. Put those two back now, and count in wages alongside them. A club that buys and sells at the same figure does end up with less. What takes the money, though, is not tax.

Wages are the largest item. Hold a player for a year and a year of salary goes out. It runs through a different account from the transfer fee and no disposal gain brings it back.

Then there are agents' fees. Fees directly attributable to the acquisition are capitalised into the cost of the registration alongside the transfer fee itself, so the book value of a player "bought for €40m" is in fact higher than €40m. Sell at the same figure and the club is short by that difference.

And there is solidarity contribution. It arises when a professional moves during the term of a contract, where the former and new clubs belong to different associations, or where clubs within the same association are involved but a training club belongs to another. Up to five per cent of the compensation, training compensation aside, is distributed among the clubs that trained him; the amount follows which clubs he was registered with, and for how long, in each calendar year between his 12th and 23rd birthdays. The rate per year differs between ages 12 to 15 and ages 16 to 23, so a player who moves young can fall short of the full five per cent. The default under the regulations is a deduction from the gross figure, though contracts sometimes fix a figure net of it and put the burden on the buyer.

All of these go out separately from the fee itself. On tax, as the previous section showed, timing differences between years can produce a charge — but buying and selling at the same figure does not send a fixed share of the fee away to the revenue.

Atlético's bottom line came out at almost nothing two years running

All of this appears as line items in the accounts Atlético publishes. Take the year to 30 June 2025.

Net turnover was €416.05m. Against it, wages for the sporting staff of €229.31m and amortisation of players' acquisition rights of €76.37m were charged as expense. On the other side, results from transfers and deregistrations of players came in at a positive €48.09m. The club landed on a loss of €5.92m before tax and €5.99m after.

Set the previous year alongside it and the movement shows. In 2023-24 amortisation was €60.42m, results from transfers €27.34m and wages €233.25m, for a profit of €0.98m before tax and €0.69m after.

As more players carrying an acquisition cost are capitalised, the amortisation burden tends to grow. Gains on player sales, meanwhile, lift the result through a separate line. Across these two years amortisation rose by €15.95m while results from transfers rose by €20.75m. The mechanism described above is sitting there as rows in a set of accounts.

For a club whose net turnover now runs above €400m, the bottom line came in under €6m in absolute terms in both years. Hold everything else constant and, without that €48.09m from transfers, the 2024-25 pre-tax loss works out at €54.01m.

It came out at zero, and the club was still worse off

The instinct that a club selling at the price it paid ends up with less was right. What takes the money is not tax, though: it is wages, agents' fees and, where the seller bears it, solidarity contribution. All amortisation moves is the year an expense lands, never the total.

So when a fee is reported, it is worth asking when the player was bought and for how much. The older the purchase, the lower the book value, and the larger the number that reaches the accounts for the same sale price. How long the contract ran, and whether it was later extended, matters too — an extension lets a club choose afresh which period the remaining book value is spread over.

Whether he came through the academy is worth knowing as well. A disposal gain on a player with no acquisition cost generally has no amortisation charge to cancel it out. The same sale price reaches the accounts in an entirely different way.

On the structure of transfer fees themselves, conditional extras are covered in the piece on add-ons, a share of the next sale in the piece on sell-on clauses, and unilateral termination in the piece on release clauses. For how much a club can spend in the first place, the piece on UEFA's financial rules is the way in, and the squad cost rule covers the ceiling itself.