Aston Villa’s complex transfer deals: Big sale needed, Douglas Luiz and PSR issues to solve

Over the past 18 months, all junctures have been leading to this summer for Aston Villa.

The can had been kicked down the road in adhering to profit and sustainability rules (PSR). The issue, fleetingly, alleviated last summer through creative methods of circumventing PSR rules, chiefly by selling academy talent.

Yet in truth, the first steps on the narrowing path can be traced back to this time two years ago, when Keinan Davis’s proposed move to Nottingham Forest collapsed. An effective loan was expected to fetch £15million ($19.3m), helping to balance the books and avoid a big sale elsewhere.

But Davis ended up staying and the school of thought diverged, giving focus to Steven Gerrard’s botched tenure and then his successful replacement, Unai Emery. Villa’s recruitment became more about placating the manager as opposed to falling in line with PSR.

Such rope could only stretch so far. Even at a time when Villa are prosperous on the pitch and will compete in the Champions League next season, they are hamstrung in what they can — and pertinently, cannot — do.

It stings Villa’s senior figures, having known for some time that a big sale will likely happen to sign the calibre of players fitting for a first Champions League campaign.

Owner Nassef Sawiris is considering taking legal action against the Premier League’s PSR rules. Sawiris insisted the regulations, which place a limit on the amount clubs can lose across a three-year period, “do not make sense” and “are not good for football”. Last week, Villa’s proposal to raise the maximum permitted losses from £105million to £135million over three years was rejected at the Premier League’s annual general meeting. Only one club was in favour of Villa’s idea, while three abstained.

Villa view PSR sanctions as restrictive and impede upwardly mobile clubs from regularly competing among the elite.

Evidently, such a hardened viewpoint has been influenced by Villa’s latest set of accounts, reporting a loss of £119.6million after tax in the year ending May 31, 2023, at odds with the marginal profit of £300,000 from 12 months earlier.

Despite Champions League money adding to the revenue pot for the next set of accounts, Villa have reached the point where something needed to give. NSWE, Villa’s ownership group led by Sawiris and co-owner Wes Edens, appointed Bjorn Schuurmans as a secretary. Schuurmans has worked in tax and structuring at other companies, with his skill set being relied upon in managing this summer’s finances.

Villa’s wages-to-turnover ratio — the percentage of money spent on employees’ salaries — stood at 89 per cent in 2022 and 2023, the fourth-highest in the Premier League. It is a concern, though, that the three teams above were Leicester City, Nottingham Forest and Everton, all of whom have breached PSR rules and are in varying processes of being sanctioned.

Douglas Luiz is increasingly likely to be the player that signals Villa giving ground. This is, in part, due to the strong interest in the midfielder from several clubs — in theory, making a deal more straightforward and boosting Douglas Luiz as an asset — but also those who hold admiration, such as Juventus, are interested in doing cross-player transactions.

Exchange deals are forming a notable part of Villa’s thinking this transfer window. Ordinarily, Douglas Luiz’s outright value would exceed what Juventus can afford to pay, so at least one player — U.S. midfielder Weston McKennie has featured in talks — plus cash would be preferable.

Juventus and USMNT midfielder McKennie could be part of a swap deal for Douglas Luiz (Jonathan Moscrop/Getty Images)

This way, the player leaving can be booked onto the club’s accounts, while the cost of the player signing can be amortised (spread) over the length of their contract, in turn lowering figures in the next set of accounts. In this instance, time is of the essence in ensuring a sale materialises before June 30, meaning it can register in the next set of accounts. A similar notion has been attributed to Villa’s interest in Conor Gallagher, with Chelsea, the selling club, remaining interested in Villa forward Jhon Duran.

The theme of searching for creative and complex solutions to ease the threat of PSR began last summer, when academy players were used as assets. Leading into pre-season, the original thinking had been for premium young talent to form the club’s DNA for years to come.

The shift in stance started with Aaron Ramsey. The 21-year-old was regarded as one of the leading ‘project players’ and Villa, initially, were not interested in selling.

This gradually changed as funds needed to be raised. Burnley were interested and an agreement was struck at £14m, with Ramsey signing a five-year contract. Villa wanted more, but structured a highly-complex deal that ensured they retained a buy-back clause and a level of power. The move was delayed due to the level of detail Villa had inserted into the contract, taking the Premier League a fortnight to ratify the move.

From a developmental perspective, figures on the football side approved the concept, believing any team signing Ramsey would have a greater desire to improve him as a player because he would be theirs permanently, as opposed to one year on loan.

Ramsey was sold to Burnley (Lewis Storey/Getty Images)

Sawiris, however, has insisted financial regulations incentivise the sales of homegrown talent and punish a club’s commitment to their young players. Selling an academy player — valued at zero in the books because of accounting rules — allows Villa to receive pure bookable profit, providing PSR scope. “This obvious flaw is to the detriment of the fans,” said Sawiris to the Financial Times.

Ramsey set the template for Cameron Archer and Jaden Philogene, who later joined Sheffield United and Hull City respectively. Both transactions were considerably more straightforward than Ramsey’s as Villa knew the Premier League were on board with the structure of the deals.

Villa insisted on Archer’s sale rather than another loan, in contrast to their perception a year earlier when he signed a five-year contract. The forward was sold for £18.5m, with Villa registering the fee on the spreadsheets. However, as part of the agreement, Archer would return if Sheffield United were relegated.

Having finished bottom and Archer scoring four league goals — one against Villa — Emery will welcome the 22-year-old back for pre-season. Financially, Villa will receive significantly less than the original £18.5m figure. Plainly, Archer’s move turned out to be the equivalent of a loan fee in the single-digit millions.

Philogene’s departure was the most surprising, given his impressive pre-season and Emery hoping to keep the winger in the squad. But after Philogene spoke of his desire for regular football, having spent two seasons on loan in the Championship, it was agreed that a move elsewhere — providing it suited Villa’s conditions — was preferable. A £5m deal was finalised, with the 22-year-old signing a four-year contract.

Villa accepted they could track his progress elsewhere but included a first option and a buy-back clause. It can be revealed that Villa have a matching clause for Philogene, meaning they have to be notified of any offer Hull receive this summer. At this stage, early interest has been shown from the Premier League and clubs abroad.

This time, decisions will be made on young talents Kaine Kesler-Hayden, Tim Iroegbunam and Archer, who will try and be moved on. Each is at a stage in their career where playing regularly is paramount.

While they serve as examples of supporting the battle against PSR, the complexities of those deals add to Villa’s workload in selling players and being creative.

(Top photo: Catherine Ivill/Getty Images)