by You don’t see much of Todd Boehly these days. In the first weeks after his takeover of Chelsea by Clearlake, he was a regular presence, telling European football what it could learn from US sport, proudly announcing his disruptive intentions. What a shame: it would be good to know exactly where spending $1bn to transform a Champions League-winning squad into one that sits 11th in the Premier League fits into his master plan.
It was thought around the start of the year that things might be falling apart for Chelsea. They reached the Carabao Cup final and won three league games in a row to drag themselves into the top half of the table. Perhaps Mauricio Pochettino was finally finding some order in a chaotic squad. The last two games put an end to that idea.
After conceding four in a comprehensive win over Liverpool in midweek, they dropped another four at home to Wolves on Sunday. The first may be understandable, the second is not. This was not a team that had four chances and took it all; Wolves were the better side and could easily have won by more. Chelsea were in shambles, players arguing amongst themselves as sections of the crowd called for Pochettino to be sacked and he was enthusiastically chanted about the Roman Abramovich era.
The problems go much deeper than the results. In the short term, Chelsea’s activities since the Boehly/Clearlake takeover are not a problem at hand. Football financial expert Swiss Ramble noted in August that transfer activity since the takeover had been neutral, with £143m in wages plus £116m in amortization from purchases offset by £192m in wages and £62m in amortization from sales. Even better, there was a £215m profit in terms of player sales.
Which looks great – in the short term. But Chelsea’s signings have promised them £1.9bn of future spending. And this is a club that has posted operating losses in each of the past 10 seasons, a picture that has been worsening over the past four years. In 2021-22 operating losses were £224m, bringing total losses over the decade to £944m. That is roughly balanced by £706m in player sales.
Taking into account the reduction in the wage bill, and other income and outgoings projected for this season, the Swiss Ramble has calculated an estimated loss of £131.6m for 2023-24 to go with £70.2m last season and £121.4 m the previous season. Deductions are allowable for ‘healthy’ expenditure such as that on the academy and the women’s team, which can be estimated at £40m or so per season. And, when the extra allowances for losses in the Covid season are taken into account, that kept Chelsea just above the £105m threshold in losses for the three-year period up to 2022-23.
For 2023-24, however, they appear to be in deep trouble, with the Swiss Ramble estimating their losses at £201m - and that was assuming they finish in sixth place, which is now very hopeful.
Uefa regulations are not immediately relevant but it is changing its FFP model to a cost control ratio, whereby player wages, transfers and agent fees will be limited by 2025 to 70% of revenue and profit on player sales. Currently, Chelsea’s is around 90%.
Chelsea are already being investigated for potential historic breaches of FFP in the Abramovich era, which could lead to points deductions (or worse) making their job even more difficult. And it is already extremely difficult. They threw their heads just above water in the three year period to last June but that amounted to exceptional sales. They don’t have many academy products or fully amortized players left. Say they sold Moisés Caicedo next summer for the £100m they paid for him: yes, they would cut costs for his amortization and wages, but his eight-year contract means the profit would only be £100m minus his book value , that is, for seven years. of the eight years of his contract would have left £87.5m: that is, £12.5m.
It will be extremely difficult to continue making the profits they have made over the past decade. The owners of the remaining products, such as Conor Gallagher and Reece James, are likely to be keen to listen to offers. And of course this is the reverse of standard football wisdom, that clubs benefit from having core players brought up in the ways of the clubs, the figures of John Terry and Frank Lampard, who are attached to the institution that goes over salary.
Chelsea may be granted additional concessions for losses suffered following the imposition of sanctions on Abramovich, although there are no guarantees, but with the likelihood of no Champions League football, it is hard to see how they will rise income significantly next season. With 12 players on contracts of eight years or more, the amortization trick looks more like an albatross.
This is a club in terrible shape and the only people to blame are the disruptive new owners.
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This is an excerpt from Jonathan Wilson’s Soccer, the Guardian US’s weekly look at the game in Europe and beyond. Subscribe for free here. Do you have a question for Jonathan? Email soccerwithjw@theguardian.com, and he’ll answer the best in a future edition
