If Celtic sign a player we generally know how much has been paid in transfer fees, the figures from www.soccerbase.com are a good source.
The club has to pay the transfer fee to the selling club. In the club accounts it then has to report how much it views each player's worth has declined each year. So for example Scott Brown joining for £4.4m on a four year contract would cost the club £1.1m per year. This is what is reported as 'amortisation' in the club accounts. At the end of the contract the player can just leave on a 'free' so he is viewed as potentially no worth to the business after that.
This only covers the costs for players bought in. So Aiden McGeady, for example, does not have any effect on the amortisation costs of the club, as he was never bought from another club. Other clubs only spread the transfer cost across the length of the initial contract.
Celtic have taken the view that if they sign a player on a 4 year contract, but he then signs a new extended contract then they can extend the amortisation. So using the Scott Brown example, say he has been with Celtic two years and has been hitting the books at £1.1m, and has £2.2m worth of his transfer fee to be written off. If he now signs a new 5 year deal then the remaining £2.2m is spread across those 5 years, at £400,000 per year. Instantly the books look better as £400k is going out every year, rather than £1.1m.
The annual amount the club are paying out for players looks to have reduced over the last few seasons. This is always a sign that the club has not been spending money in the transfer market, and this is shown here. The figure is liable to leap dramatically with the signing in the summer of 2007.
In 2005 Celtic wrote off £1.4m from the value of players who were about to be transferred it isn't clear which specific players this refers to. this refers to. The club accounts have this £1.4m as a one-off cost, but we have included it here. Similarly in 2006 there was a write off of player values, this time of £400,000. The 2007 figure was a £2.66m write-off
If a player is sold when he has no worth on the books the club see this as pure profit. So Craig Beattie for example will hit the books as a £1.2m profit.
