Many of Chelsea opponents’ fans are baffled by the Blues’ record-breaking spending last summer and this winter, know how the club is not in breach of the FFP rules in the 2022-23 season
It’s understandable that some Chelsea fans are confused by the club’s financial decisions, given that Financial Fair Play regulations prohibit clubs from incurring significant losses.
However, actual economics and football economics are very different. Far from it. And because of that, Chelsea may freely spend as much as it wants without worrying about breaking any rules.
How are Chelsea not in breach of financial fair play (FFP) rules in the 2022-23 season
UEFA Financial Fair Play standards cap Chelsea’s losses at about £25m over three years, compared to the £35m per season allowed by the Premier League. However, because of the financial toll the Covid epidemic took on Premier League clubs, many of which had to play practically behind closed doors for over a season, the rules were relaxed.
While those leniencies no longer apply, the method by which clubs account for expenses and revenues gives Chelsea a chance to really delve into their finances.
After a season hindered by a Uefa transfer ban, former manager Frank Lampard spent roughly £223 million on players such Timo Werner, Hakim Ziyech, Ben Chilwell, £72 million Kai Havertz, and Edouard Mendy in 2020-21.
Selling players for £68.4m, Chelsea made a “loss” of £154m.
However, in football accounting, transfer fees are amortised throughout the contract’s duration, but the full amount of sales and loans is recorded. Similarly, the club spent £24m on signings last season after acquiring Romelu Lukaku (for a club record £97.5m) and Saul (on loan) and earning £143.5m through the sales of players including Fikayo Tomori, Mark Guehi, Tammy Abraham, and Kurt Zouma.
Because of the way transfer fees are calculated, a sizable annual chunk is guaranteed no matter how long the contracts last. Nonetheless, this also means that the nearly £250 million that Chelsea had already spent this summer before Thursday morning had only added roughly £40.6 million to their official FFP spend, an amount that was virtually perfectly matched by incoming fees.
Wesley Fofana, who just signed a contract extension until 2029, will cost £70 million over the course of seven years, or £10 million per year. For the 2020-21 season, Chelsea reported a loss of £153.4m on revenue of £434.9m.
Offical sanctions against ex-owner Roman
With fans once again filling Stamford Bridge last season, the club was poised for revenue nearing £500 million before government sanctions against previous owner Roman Abramovich cut their profits.
This problem can even benefit the future owners. Abramovich’s £1.6 billion loan was paid in full, clearing the financial slate for Chelsea. Many analysts believe that Chelsea’s spending this season can exceed £300 million without putting the club in financial distress.
UEFA will implement its new “financial stability” standards to replace FFP, and it is quite likely that clubs found to have violated the old restrictions would face light penalties.
Chelsea is in a precarious position, and the Boehly proposal to renovate the Bridge is focused on the club’s long-term financial health. It appears like Chelsea fans have nothing to worry about at this time. Unless the accountants have inside information.
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