You don’t see much of Todd Boehly these days. In the first weeks after he fronted the Clearlake takeover of Chelsea, he was a regular presence, telling European football what it could learn from US sport, proudly announcing his disruptive intent. Which is a shame: it would be good to know exactly where spending $1bn to transform a Champions League-winning side into one that sits 11th in the Premier League fits into his master plan.
At the start of the year, there was a belief that things were finally coming together for Chelsea. They made it to the Carabao Cup final and won three consecutive league matches, propelling themselves into the top half of the standings. It seemed like Mauricio Pochettino was starting to bring some stability to a turbulent team. However, their recent performances have shattered that notion.
After conceding four goals and being dominated by Liverpool earlier in the week, Chelsea once again allowed four goals at home against Wolves on Sunday. While the first instance may have been expected, the second was not. It wasn’t a case of Chelsea creating four opportunities and converting all of them; Wolves were clearly the superior team and could have scored even more. Chelsea’s performance was chaotic, with players bickering amongst themselves while some fans demanded for Pochettino to be fired and nostalgically sang about the Roman Abramovich era.
The issues extend beyond just the outcomes. In the immediate future, Chelsea’s actions following the takeover by Boehly and Clearlake are not concerning. According to football finance specialist Swiss Ramble, their transfer activity has been completely balanced since the takeover, with £143 million spent on wages and £116 million on amortisation from purchases, countered by a decrease of £192 million in wages and £62 million in amortisation from sales. Furthermore, there was a profit of £215 million from player sales.
The short-term appearance is impressive, but Chelsea’s recent signings have obligated them to a significant amount of future expenses, reaching £1.9 billion. Additionally, the club has experienced operating losses for the past 10 seasons, with the situation worsening over the last four years. For the 2021-22 season, operating losses reached £224 million, bringing the total losses over the decade to £944 million. However, player sales have helped offset some of these losses, totaling £706 million.
Based on the decrease in salary expenses and forecasting other sources of income and expenses for the current season, Swiss Ramble has calculated a projected deficit of £131.6m for 2023-24, in addition to the £70.2m loss from last season and £121.4m from the previous season. However, there are certain acceptable deductions for expenses related to the academy and women’s team, which are estimated to be around £40m per season. Considering the additional allowances for losses during the Covid season, Chelsea’s total losses for the three-year period leading up to 2022-23 remained just above the threshold of £105m.
In the upcoming 2023-24 season, the team is facing significant difficulties. According to Swiss Ramble, their projected losses for the next three years are estimated to be £201m. This estimate was based on the assumption that they would finish sixth, but this now seems overly optimistic.
The regulations set by Uefa are not currently applicable, but there are plans to alter the Financial Fair Play (FFP) system to a cost control ratio. This means that by 2025, the amount of money spent on player salaries, transfers, and agent fees cannot exceed 70% of the club’s revenue and profits from player sales. Currently, Chelsea’s ratio is approximately 90%.
Chelsea is currently under investigation for potential past violations of FFP during the Abramovich era. This could result in penalties, such as point deductions, that would make their future endeavors even more challenging. Currently, they are facing significant difficulties as it is. Although they managed to stay afloat in the three-year period leading up to last June, it was only possible due to exceptional sales. With fewer academy players and fully amortized players remaining, their options are limited. For example, if they were to sell Moisés Caicedo next summer for the same £100m they paid for him, while it would reduce their costs in terms of amortization and wages, the profit would only be £100m minus his book value. This means that with seven years left on his contract, the profit would only be £12.5m.
It will be extremely challenging for clubs to continue generating the same level of profits they have enjoyed in the last ten years. Academy graduates like Conor Gallagher and Reece James may face pressure from owners to consider offers from other teams. This goes against traditional football knowledge, which suggests that having a core group of players who have been raised within the club, such as John Terry and Frank Lampard, leads to a deeper loyalty to the team beyond just a paycheck.
There is a possibility that Chelsea may receive special permission for their financial losses caused by sanctions against Abramovich. However, there are no assurances, especially with the high chance of not qualifying for the Champions League next season. This makes it difficult to predict a significant increase in revenues. Additionally, with 12 players signed to long-term contracts, the tactic of spreading out expenses over several years seems to be burdening the team.
The club is currently in a state of chaos, and the main culprits responsible for this are the disruptive new owners.
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