Chelsea have managed to dodge the Premier League’s PSR enforcers so far, but have had less favour under UEFA’s equivalent financial rules.
Last night’s stunning Estevao-inspired triumph over Barcelona at Stamford Bridge all but guarantees that Chelsea will reach at least the play-off round of this season’s Champions League, the second under the new ‘Swiss Model’.
BlueCo’s investment in Chelsea only makes financial sense to its shareholders if the club qualifies for Europe pretty much every single season. And by extension, that means they need to comply with UEFA’s financial rules.
Chelsea, of course, are already under a four-season financial plan after admitting breaching UEFA’s Squad Cost Ratio and Football Earnings test. Then there is the matter of the FA’s 74 charges against the club for historic offences dating back to the Roman Abramovich era.
Roman Abramovich, former Chelsea owner is seen on a Chelsea mural displayed by the fans inside the stadium prior to the Premier League match between Chelsea and Watford
Photo by Clive Rose/Getty Images
Again, the new regime – led by Todd Boehly and Behdad Eghbali – have admitted that the club breached those rules. As part of the takeover, they set aside £100m to deal with any penalties that might arise from the FA, Premier League or UEFA.
Compliance with spending rules is a complex web, then. And news that the Premier League will now introduce a new set of rules from the outset of 2026-27 further tangles the threads.
Chelsea can no longer use PSR loophole to escape punishment from Premier League
Under the existing system, Premier League Profit and Sustainability Rules limit Chelsea to a maximum financial loss of £105m over a rolling three-year period, with add-backs for items like academy, women’s team and infrastructure investment.
But clubs voted last Friday to replace PSR with a new two-pronged system:
A UEFA-style Squad Cost Ratio (SCR) test
Sustainability and Systematic Resilience (SSR) test
The intricacies of the new system are complicated, but SCR will fundamentally limit clubs to spending 85 per cent of revenue and a three-year on player sale profits on first-team player and manager wages, transfers and agents’ fees. At UEFA level, the limit is 70 per cent, so Chelsea will effectively be able to send the same document to the Premier League when SCR is assessed each season.
Graph showing Chelsea's squad cost, which is amortisation plus wage bill, against their revenue
Chelsea squad cost vs revenue Credit: Adam Williams/The Chelsea Chronicle/GRV Media
SSR is more about liquidity and cash flow. Chelsea’s backers, who collectively are worth nearly £100bn, will ensure that there are no issues here.
One impact of the new rules is that the loophole which allowed Chelsea to comply with PSR by selling assets to themselves will now be closed from 2026-27.
Because SCR is a revenue-based test, the deals that saw Chelsea sell two Stamford Bridge hotels and the Women’s team to themselves to book an artificial profit are now no longer relevant.
Those transactions were worth about £275m to Chelsea, with the profit generated allowing them to pass Premier League PSR for 2023-24 when they otherwise would have failed by quite a margin.
What Chelsea need to do to comply with UEFA and Premier League rules
Going forward, Chelsea’s challenge to comply with financial rules is actually relatively straightforward, in form if not in practice. They need to bring their operating losses under control, which means raising revenue and optimising costs. The player trading they are doing will not be enough by itself.
Securing a front-of-shirt deal would be an immediate step in the right direction. Chelsea’s commercial department are close to striking a deal with giant software firm Oracle, though there is no word on how much the contract will be worth.
Have Chelsea made the right decision to wait so long for a front-of-shirt sponsor?
“Chelsea’s approach to front-of-shirt sponsorship is baffling. They clearly have a view about their brand value and merchandise. One can only assume that isn’t being replicated by interested parties.
– Kieran Maguire, football finance expert
Premier League TV revenue is starting to plateau domestically and, while there may be a few years of growth left in the international rights, BlueCo know they can’t rely on media income alone to bridge the gap between revenue and costs.
Matchday income is a growth area, but the ownership seemingly cannot agree on the strategy with the stadium going forward. Do they remain at Stamford Bridge or build a new stadium, potentially at Earl’s Court? Either way, it appears we’re a long way out from a decision.