Amortisation
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 West Ham signing Kieron Dyer for £6,000,000 on a four year contract costs the club £1.5m 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 'amortisation' only covers the costs for players bought in. So Mark Noble, 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 this covers someone like Danny Gabbidon.
The other way to look at amortisation is that it is the average amount being spent per year on bringing new players in. The graph shows the club ran with an average "player" spend of just over £5m a year up to 2006, then they just went mad and by 2008 it was up to nearly £19m. Whether the club can afford this is hugely questionable. In comparison Everton for example, run at £13m a year
