Football finance expert Kieran Maguire has explained how Man United will actually make a profit on the West Ham deal for Aaron Wan-Bissaka.
Man United have been haggling with West Ham for the best part of two months for Aaron Wan-Bissaka.
The Hammers want Wan-Bissaka as part of their major summer rebuild. And pre-season performances have proved they sorely need the defensive specialist.
Initially West Ham wanted to pay around £10m. Man United were demanding between £15-18m and – according to reports – the two clubs have settled on £15m.
The Red Devils signed Wan-Bissaka from Crystal Palace for £50m in 2019.
So it is understandable Manchester United want to recoup as much money as possible from the deal with West Ham for the 26-year-old.
But given Wan-Bissaka is in the last year of his Man United contract, one might think they would be happy to get anything like a decent return as they look to cut their cloth amid strict PSR rules.
Not to mention the fact Erik ten Hag needs to raise money through sales to fund signings – with Noussair Mazraoui set to replace Wan-Bissaka at Old Trafford.
Wan-Bissaka will become the Hammers’ eighth signing of a busy summer for a reported £15m. Although some claim the fee could be as high as £20m.
Maguire: Man United will make profit on West Ham deal
Landing one of the best one-on-one defenders in the Premier League for that kind of price looks an excellent bit of business from the Irons.
For Man United many might see the deal as a £35m loss given the original outlay.
But, rather staggeringly, Kieran Maguire says Man United will make a profit on the West Ham deal for £50m Wan-Bissaka.
The weird and wonderful world of football finance can be difficult for fans to get their heads around at times.
Especially in light of PSR and what some fans see as one rule for one and one for another.
Wan-Bissaka is said to be having his medical at West Ham on Sunday afternoon.
Maguire has been discussing Wan-Bissaka’s imminent move to the London Stadium.
Why Wan-Bissaka sale will be booked as significant profit
And he says the Wan-Bissaka sale will go down as a significant profit for Manchester United.
“If Aaron Wan-Bissaka signs for West Ham for £20m Manchester United will book a £12m profit on a player they signed for £50m in 2019,” Maguire said on X.
“Amortisation.”
But what does amortisation actually mean for clubs like West Ham and Man United when it comes to transfers and balance sheets?
It refers to the method by which the cost of acquiring a player is spread over the duration of their contract.
When a club purchases a player, the transfer fee is not immediately recorded as an expense. Instead, it is capitalised on the balance sheet and amortised over the player’s contract term.
So where Man United signed Wan-Bissaka for £50 million on a five-year contract, the annual amortisation expense would be £10 million. This amount is recorded as an expense on Man United’s income statement each year, reflecting the gradual usage of the player’s value.
What is amortisation?
Amortisation serves two purposes in football finances: it matches the cost of the player with the revenues they help generate over time, and it also provides a clearer picture of the club’s financial health by not front-loading costs.
It can create financial strain if clubs engage in excessive spending as the Premier League has seen with the likes of Everton and Forest while Aston Villa and Newcastle find themselves somewhat restricted despite their vast riches.
If a player’s value diminishes due to injury, poor performance, or a market downturn, the remaining unamortised value may need to be written down, leading to potential financial losses.
Amortisation interacts with Financial Fair Play (FFP) regulations, which assess club profitability. By spreading costs over several years, clubs can better manage their finances to comply with FFP/PSR rules.
Clearly Wan-Bissaka is a cash loss for Man United. But one a club of that enormity can probably swallow.
Some may see the fact the Wan-Bissaka sale to West Ham goes down as an official profit as ludicrous.
But ultimately it is, on paper at least, a good deal for both the Hammers and Manchester United as a result.
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