Chelsea’s unprecedented spending in recent years under Todd Boehly and Clearlake Capital has come with plenty of warning labels about the impact on the club as a business.
With almost £1.5bn spent on new signings since the American consortium bought Chelsea from Roman Abramovich for £2.5bn in May 2022, they have been living dangerously in terms of PSR.
PSR, or Profit and Sustainability Rules, decree that Premier League clubs who exceed £105m in financial losses over three years are liable to face a fine or points deduction.
An infographic explaining how PSR (Profit and Sustainability Rules) work in the Premier League and UEFA
The PSR system is under intense scrutiny at present, with Man City’s challenge to the Premier League’s financial regulations raising a number of valid questions about the rules.
The £105m cap, for example, has not been adjusted since the rules were first introduced over a decade ago, despite the fact there has been huge inflation within football and the wider economy since then.
UEFA’s spending rules – which Chelsea are subject to by virtue of their participation in the Europa Conference League this season – are slightly different and still go by the term ‘FFP’.
European football’s governing body are phasing in a system that will eventually cap spending on transfers, wages and agent fees at 70 per cent of turnover. This year, the cap is 80 per cent.
Chelsea Co-owners Todd Boehly (L) and Behdad Eghbali (R) during the Carabao Cup Final match between Chelsea and Liverpool at Wembley Stadium on Feb...
Photo by Marc Atkins/Getty Images
Chelsea are expect to comply with Premier League spending rules this season, thanks in part to the sales of the women’s team and two hotels at Stamford Bridge which could be worth around £250m in total.
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However, the consensus among analysts is that the Blues will have far more difficulty meeting UEFA’s financial threshold, which also includes provisions for allowable losses.
But recent developments in Barcelona suggests that Todd Boehly and Clearlake will be confident that they can steep the ship away from the rocks in terms of FFP.
Good news for Chelsea as Barcelona issued tiny PSR fine
Chelsea’s financial strategy in recent times might seem somewhat erratic, and Barcelona’s has been almost as wild.
Granted, their issues are more to do with the enormous debt they have taken on in recent years, while any comparisons with Chelsea must also be caveated with their contrasting ownership model.
Chart showing Chelsea's annual revenue over the last six seasons, from 2018-19 to 2023-24
However, Barcelona were found to have breached UEFA FFP by £222m and had a an appeal at the Court of Arbitration for Sport (CAS) rejected in October.
They were subsequently fined just over £500,000.
As regular talkSPORT football finance commentator and former Man City Stefan Borson points out via X, that is less than one per cent of the Spanish giants’ annual revenue.
Citing the ruling from CAS, Borson said UEFA has set an “astonishing” precedent for clubs who have committed a “deliberate, material” breach of FFP.
For Chelsea, however, that can only be seen as a positive sign given that compliance with UEFA FFP looks increasingly unlike.
Why Chelsea might not comply with UEFA FFP
In 2022-23, the last financial year on record, Chelsea’s wage bill was £404m and their amortisation bill (how clubs account for transfer fees over a period of time) was £205m.
That gives them a ‘squad cost’ of £609m. Their revenue was £512m over the same period.
To get within UEFA’s 80 per cent cap, Chelsea would need to bring their squad cost down to £409.6m.
General view of the Chelsea corner flag during The Emirates FA Cup Fifth Round match between Chelsea and Hull City at Stamford Bridge on February 1...
Photo by Catherine Ivill/Getty Images
Granted, their modest net spend this summer and strategy to favour incentivised player deals ahead of contracts with massive base rates will have helped.
However, it seems vanishingly unlike that they will get within the 80 per cent cap within the calendar year, which is the period over which UEFA assesses FFP (i.e., instead of on a season-by-season basis).
Diagram illustrating the ownership of Chelsea, split between factions led by Todd Boehly and Behdad Eghbali
What’s more, UEFA does not recognise the intra-company sales of the hotel or the women’s team for FFP purposes.
That also means Chelsea have next to no chance of getting within UEFA’s allowable loss limit of around £50m over three years.
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