How Chelsea have splurged £385MILLION on transfers this season without breaking FFP rules – but it’s a VERY risky plan
CHELSEA’S stunning January spending has left plenty of rival fans pointing fingers and wondering how it is allowed.
The imminent arrival of PSV Eindhoven winger Noni Mondueke will take the club’s winter splurge to around £181m, on TOP of the net £203m spent last summer.
This month’s eye-popping cash lay out by new Blues owner Todd Boehly appears a significant statement of faith in under-pressure Graham Potter.
But the complexities – at times bafflingly so – of football finances means Chelsea are still on the right side of Financial Fair Play regulations.
At least for now.
For while clubs face more stringent cost control mechanisms now than ever before, the truth is that football economics and REAL economics are not the same thing. Or even close.
Premier League rules allow Chelsea to lose £35m per season, while Uefa’s current FFP regulations limit losses to £25m over a three year period.
But Uefa are transitioning to new regulations linking spending to revenue, with clubs initially allowed to spend 90 per cent of their income, set to reduce to 70 per cent by 2024-25.
Additionally, the impact of the Covid pandemic on incomes, when clubs played effectively behind closed doors for more than a season, has seen a loosening of the regulations.
And while those relaxations are now over, the way club expenditure and income is calculated also allows Chelsea to dig deep.
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In 2020-21, after a season impacted by their Uefa transfer ban, then-boss Frank Lampard spent around £223m on acquiring players including Timo Werner, Hakim Ziyech, Ben Chilwell, £72m Kai Havertz and Edouard Mendy.
Chelsea’s total receipts on players sold was £68.4m, for a nominal “loss” of £154m.
But football accounting means that incoming transfer fees are spread over the length of the contract – a concept called “amortisation” – while all the money for sales and loans out are booked at full value.
Likewise, last season’s transfers of Romelu Lukaku (at a club record £97.5m) and the loan fee for Saul meant an amortised spend of £24m, while sales including those of Fikayo Tomori, Mark Guehi, Tammy Abraham and Kurt Zouma banked £143.5m.
Of course, those amortised calculations mean that transfer fees are “paid” for the duration of contracts, ensuring a hefty wedge each season.
But it also means that the money Chelsea spent this summer only added around £40-45m to their official FFP spend, a figure almost exactly balanced by incoming fees.
And it has been notable that Chelsea have announced contracts of seven-plus years for many of their winter recruits, spreading those transfer fees over the longer-term.
Chelsea’s latest accounts, for the 2020-21 season, stated a turnover of £434.9m and a loss of £153.4m.
But last season, despite the restrictions on income after government sanctions against former owner Roman Abramovich, Chelsea still had revenues – according to accountants Deloitte – of £481m.
There was even a positive effect from the forced sale to Boehly.
By paying off the £1.6bn debt owed to Abramovich, Chelsea’s financial slate was wiped clean.
And the various legitimate accounting tricks allowed by football regulations mean that even with this year’s spending, Chelsea are likely to stay within the allowable losses.
Chelsea, though, may be storing up long-term issues.
Football finance expert Swiss Ramble calculated their player amortisation costs are likely to be £212m this season.
In addition, having green lit such huge spending, other clubs now know the Blues have to offload players – they currently have three more senior players than the 25 allowed and must act by the end of the window – and will “low-ball” them with offers.
Failing to qualify for next season’s Champions League – as seems likely – will also bring a £40-50m black hole in revenues.
It might get tougher. Much tougher.
But, for now, Chelsea fans do not appear to have anything to worry about. And rival supporters can keep pointing their fingers, to no avail.