|Notes in Accounts|
When Watford signs 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 Danny Shittu for £1,60,000 on a four year contract costs the club £400k 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 Lloyd Doyley, for example, does not have any effect on the amortisation costs of the club, as he was never bought from another club. Also once a player has finished his initial contract he stops being counted. So if Tommy Smith was on a three-year contract he would have no effect.
The graph shows how the club clearly spends more on players when they're in the Premiership. The problem with buying players and then getting relegated is that you are stuck with them, and the cost of them. The high figure in 2002 is the fall out from the 2000 relegation and not managing to get the players off the books. The lessons from then clearly weren't learned after 2007.