Transfer at Chelsea: Why Modric had an eight-and-a-half year contract

Status: 01/17/2023 8:53 PM

Miklo Modric has an unusually long contract with Chelsea. One reason for this is the Financial Fair Play rules – such a contract in the Bundesliga is hard to imagine.

Chelsea are said to have made a transfer of up to €100m to Shakhtar Donetsk for Mikhailo Modric. In addition to this amount, there is another detail worth noting: the term of the contract is eight and a half years. Currently, Modric is linked with Chelsea until the end of the 2030/31 season – which raises many questions.

Why would Chelsea give up such a long contract?

The background is UEFA’s financial rules. Even with UEFA’s new rules on “financial sustainability” (formerly known as financial fair play), expenses are limited, and there should be a corresponding income. After a transitional period from the 2025/26 season, the club’s squad costs should only be 70% of the season’s income. €100m would cut Chelsea’s current balance sheet somewhat in terms of spending.

This is exactly what the club wants to prevent in the long run. According to UEFA rules, clubs can write off transfer costs during the term of the contract. So 100 million euros will be distributed over eight and a half years. The transfer only makes itself felt around twelve million per season, giving Chelsea room to maneuver in the further formation of the squad.

Are these long contracts allowed?

Not right. In its transfer regulations, FIFA stipulates that the contract may last for a maximum of five years. But she makes an exception to this rule. Where permitted by national law, longer contracts may also be entered into. This is possible in the UK, so the Premier League rules state: The contract between the club and the player can be for any length of time.

Chelsea took advantage of this opportunity several times during the winter transfer window: Benoit Badiachel came from Monaco and was given a seven-and-a-half-year contract, and his transfer fee was said to be €40m. David Fofana has been signed from Molde FK for six and a half years. Chelsea also signed several new players for six or seven years in the summer.

Chelsea Stamford Bridge Stadium

What happens if the player leaves before the contract expires?

In this case, the transfer costs not yet written off result in the “residual book value,” which is immediately due for current expenses. If there is any income from the player moving to another club, this must be offset against the remaining book value, resulting in a profit or loss.

Is it also possible to retain talents at a young age in the long run?

No. For players under the age of 18, there is a general three-year limit on the possible contract period. This has been a source of conflict for a long time. The mid-sized clubs fear that the big, financially strong clubs like Chelsea, Paris and Manchester City will be able to buy great talent from them at a low price or even for free. This is why they have repeatedly demanded longer terms.

However, advisors are not the only ones making money from new contracts and changes that conflict with the longer terms of contracts with minors. A long-term contract can be disadvantageous to the young players themselves, if they suddenly increase in value at the age of 18 or 19 and the previously concluded contract is much lower and lasts for the long term.

Are such long-term contracts possible in the Bundesliga?

Basically yes, but in practice this is almost never the case. According to FIFA regulations, the “Player Licensing Regulations” of the German Football League (DFL) state: The maximum term of the contract shall not exceed five years. The word “should” leave a tailgate open, which Bayer Leverkusen has been using recently. Young Belgian player Noah Mbamba has been awarded a five-and-a-half-year contract until 2028.

The fact that clubs in Germany almost never go over this limit is due to German law on part-time and fixed-term contracts. This states that an employment relationship of more than five years can only be terminated by the employee after five years with a notice period of six months. The risk of serious injuries or a significant deterioration in form would be the same with an eight-and-a-half-year contract as Modric alone with the club – making such contracts unattractive in German football.

Leave a Reply

Your email address will not be published. Required fields are marked *