Will post more of a summary in the financials thread for the challenged. Business Model Chelsea’s business model over the past few years owes a great deal to the accounting treatment for player trading, as the approach has essentially been to offset large operating losses with profits made from player sales. In the 10 years up to 2021/22, Chelsea have consistently posted large operating losses, adding up to nearly a billion pounds - £944m to be precise (and that excludes another £152m of exceptional items). please log in to view this image However, these losses have been largely offset by a very impressive £706m profit from player sales in the same period, including three seasons above £100m. please log in to view this image Chelsea’s approach can be perfectly illustrated by comparing their financials over the last decade with the other clubs in the Premier League. Their £944m operating loss is by some distance the worst, over 50% more than the next highest (Aston Villa £598m). please log in to view this image However, the opposite is true for player sales, where Chelsea generated by far the highest profit, with their £706m being nearly twice as much as the closest challenger, Liverpool £385m. please log in to view this image Profit/(Loss) before Tax That said, Chelsea still reported net losses in three of the last four years, so player trading is not a panacea, though it sure does help to limit the damage. The bottom line is that if Chelsea can continue to sell well, then they should be fine in terms of financial fair play. please log in to view this image please log in to view this image
Love the use of the word 'panacea', very nice. I think it's make or break, though. They sold the likes of Mount, RLC and (soon) Hall, which is pure profit, right? But those players are drying up. They still have Gallagher and James but I'm struggling to think of another youth product? Once they run out of those, the numbers don't add up - and I don't see them getting CL football, because I think they have too much youth, not enough leaders and the competition is just better than they are.
Even after shifting numerous players, there are still quite a few left that would generate decent money, especially the Academy products like Conor Gallagher, Trevor Chalobah, Callum Hudson-Odoi, Armando Broja and Ian Maatsen. Throw in a couple of out-of-favour players like Romelu Lukaku and Marc Cucurella and there are clearly gains that could still be made.
The key for Chelsea's financial stability lies in their ability to continue selling players effectively.
For FFP in the PL: However, even using somewhat optimistic assumptions, Chelsea are a long way above the P&S limit in 2023/24. The projected loss over the 3-year monitoring period is £323m, which can be reduced by £122m of allowable deductions, but still giving a £201m P&S loss, i.e. almost twice as much as the maximum allowed. My guess is that the club would argue that further adjustments should also be considered due to special circumstances: Revenue lost when sanctions were applied by the government Exceptional player impairment (which Everton have claimed as a COVID adjustment) Lost player sales – due to the transfer market being deflated by COVID and the economic sanctions preventing some deals being made. The other possibility is that Chelsea have effectively decided to ignore the P&S regulations and take their chances with any punishment imposed by the authorities. As long as this is not a points deduction or a transfer embargo, they would probably not be that bothered. Personally - I think that the final possibility is what they're doing. I don't think the penalty will be harsh enough to deter them.
If it isn't harsh, then it won't deter others either and so the 'rules' will just be pointless. Same goes for Man City and Everton breaching financial regs. The powers that be will soon need to decide whether they want to show strength and make an example of these clubs, or just to let any club do whatever they want with a public, but very tame, wrist slap. Interesting times, because once they set a precedent either way, it will be difficult for them to not be consistent. With the amount if money in football now, there could be some massive lawsuits if UEFA / EPL / FA are inconsistent in their punishments in a way that really impacts one club over another.
Given the length of the contracts given by Chelsea I’m sure they wouldn’t be concerned about a transfer embargo
UEFA compliance is a bit more complicated, and I'll post it tomorrow. Battling a sodding migraine... Long story short, they'll fail to comply when they get back intoo Europe, but get their wrists slapped, a fine and make some sort of deal (as predicted). The lack of regard to compliance is staggering however.
