Chelsea have been employing the tactic of offering longer contracts to reduce their annually

The 21-year-old midfielder completed his switch to Stamford Bridge on Monday after turning down the chance to join Liverpool. The Reds had a £111m bid accepted by Brighton & Hove Albion on Friday. However, on Sunday, Chelsea returned with an improved £115 offer after Caicedo communicated his desire to join them over Liverpool.

The acquisition of the Ecuador international, and likely signing of another Reds transfer target in Romeo Lavia from Southampton for £50m plus add-ons, will take Chelsea’s spending to more than £900m since Todd Boehly and Clearlake Capital acquired the club back in May 2022.

Chelsea’s spending, which has seen them break the British transfer record twice this year, is not without risk, despite the large number of player sales they have made this summer summer, as they are likely to face some severe scrutiny when it comes to potential breaches of the Premier League’s profit and sustainability regulations.

Chelsea had employed the tactic of offering contracts of seven, eight and nine years to new signings, with the longer terms allowing them to amortise the cost of the transfer fee over a longer period. Guaranteed transfer fees, regardless of how they are paid, are amortised over the life of a contract for accounting purposes, with the longer the deal the smaller the annual charge on the balance sheet.

That way of doing things was stamped out by UEFA, European football’s governing body, at the start of this summer, with clubs competing in European competition now only permitted to amortise transfer fees over a maximum five years, although offering contracts longer than that period remains allowed.

But after finishing 12th last season after a dismal campaign that saw them sack both Thomas Tuchel and Graham Potter and end the season with Frank Lampard in the dugout, Chelsea aren’t in European competition this season, meaning that UEFA’s financial sustainability regulations do not apply to them for the time being at least.

The Premier League’s profit and sustainability rules apply to all member clubs and still allow for amortisation to occur over a longer period than five years, although clubs in Europe have to be bound by the new five-year limit in order to compete.

Chelsea offered Caicedo an eight-year contract with an option for a ninth year, meaning that they could amortise the guaranteed £100m sum at £12.5m per year, while for Liverpool it would have stood at £20m per year. That has, at least for now, provided Chelsea with a financial advantage due to their poor performance last season, although they will be forced to adjust their accounting practice in line with UEFA’s should they qualify for European competition next season, with retrospective action on Caicedo a possibility.

According to the Daily Mail, the Premier League are set to bring their accounting rules around the amortisation of transfer fees in line with UEFA’s by next summer, in response to pressure from some clubs unhappy with Chelsea’s approach to the transfer market.

Chelsea’s adoption of longer contracts and amortising the transfer costs over a longer period of time has allowed them, for the time being, to give themselves room to manoeuvre in the market, although they are likely to face significant restrictions on spend in seasons to come due to the mammoth outlay of the past 12 months. The gamble that Boehly and Clearlake are taking is based on the belief that the young talent being assembled now will lead Chelsea to the summit and return them to the riches of the Champions League, allowing the club to maximise revenue opportunities.

The proposals, the Mail claims, are to be discussed at a Premier League shareholders meeting later this season where they are likely to receive support from many member clubs.