With Chelsea spending £601.7m last season and already splashing £345.9m on new signings this summer, many football fans are asking the same question: how are they operating within Financial Fair Play rules?
The £115m arrival of Moises Caicedo saw Chelsea break the British transfer record for the second time in six months and took the club’s spending under co-owner Todd Boehly to almost £900m, a figure that has since increased with confirmation of Romeo Lavia’s £58m move.
So, with more incomings at Stamford Bridge a distinct possibility before the end of the summer window, Sky Sports News spoke to football finance expert Kieran Maguire to explain how the Premier League club have appeared to stay within financial guidelines.
How are Chelsea squaring this incredible outlay of money since Boehly took over?
Chelsea have decided to spread the cost of the players by signing them on long contracts.
For example, by signing Mykhailo Mudryk on an eight-and-a-half year contract, in terms of accounting and FFP purposes, you take that £88.5m cost and you spread it over eight-and-a-half years, and that works out at just over £10m a year.
This process is called amortisation, which spreads out the cost of transfer fees over a longer period so that the annual cost is reduced.
That appears to be the strategy that Chelsea have employed over the last couple of windows.
So, that would be the same for players such as Romeo Lavia, who has signed a seven-year deal at Stamford Bridge?
Absolutely. It can work both ways for Chelsea.
If the players really develop and are a huge success it gives the club protection for when other clubs come in and try to poach those players because they will still have many years left on their contracts.
The downside is if the player doesn’t perform then you’ve got the complication of the fact that they are likely to be on very high wages and you are committed to those wages for the next six, seven or eight years.
Therefore, if it works it is fantastic but if not, it is weighing the club down a bit like an anchor slowing things down.
How far can this strategy stretch? Could Chelsea keep doing this, keep giving long contracts and therefore still be okay in terms of FFP?
The issues will be that you are restricted to a 25-man squad as far as both the Premier League and UEFA are concerned.
You can’t just keep adding to the player roster and remember that each of these players is likely to be on a contract that is worth £7m, £8m or £9m-a-year.
All of a sudden you’ve got more players on these big contracts and then your wage bill goes up by £50m or £60m, and with the new UEFA financial and sustainability rules, which are starting to come into effect from next summer, you are only allowed to spend 90 per cent, then 80 per cent and then 70 per cent on your income on wages, agents fees and your net transfer costs.
Now Chelsea haven’t qualified for the Champions League this season, will that affect their spending in future transfer windows?
It would be restrictive if Chelsea are not in the Champions League next season. It could catch up with them sooner rather than later.
If we take a look at Chelsea when they won the Champions League in 2021, that generated around about €120m (£106m) in prize money.
You’d normally expect to make £3m to £4m for each home game that is taking place at Stamford Bridge as well, and there will be bonuses from sponsors.
Now, if you then compare that to the Europa League, for every £1 you make in the Europa League you are making around about £4.50 in the Champions League.
Has the spending since Boehly took over surprised you?
It has surprised me to a certain extent because given that Boehly’s background is that of private equity where the main aim traditionally is to hollow out the costs and try to make a business more attractive to future owners.
You would be surprised that it is committing itself to such a large commitment in terms of cashflow, in terms of both transfer spend and wages.
So, I think it has taken a lot of people by surprise compared to the largesse we saw under Roman Abramovich.
Remember, Chelsea lost £900,000-a-week under Abramovich over his 19-year period of ownership.
How relevant is FFP? Can clubs always find ways to skirt around FFP rules?
There is an element of whack-a-mole in terms of every time we see a new series of rules come in, the accountants and the lawyers look at them from a forensic point of view and try to identify the stresses and weaknesses contained within those rules.
Then what we tend to see is that the regulators try to respond to that.
Certainly, looking at these rules I think there are opportunities for clubs to perhaps be what we might describe as a little bit creative with some of the ways that they acknowledge their costs, and therefore this is likely to lead to future conflict between the administrators of the game and individual clubs, who perhaps have a more fast and loose approach to the moral and ethical issues surrounding financial and sustainability rules.
UEFA’s rule change in response | Does this not apply to Chelsea?
Chelsea’s strategy won’t be able to be copied by rivals in the future, though, with UEFA moving to close the loophole around stretching transfer fees over long contracts. From the summer, clubs will only be able to spread transfer fees over a five-year period.
However, these rules will not be applied retrospectively, which benefits Chelsea.
The changes will not impact the club’s Financial Fair Play calculations following their extraordinary January transfer window.
Selected incomings under Todd Boehly
- Romeo Lavia – Southampton, £58m, 7 year contract
- Moises Caicedo – Brighton, £115m, 8 year contract
- Christopher Nkunku – RB Leipzig, £52m, 6 year contract
- Nicolas Jackson – Villarreal, £32m, 8 year contract
- Wesley Fofana – Leicester, £75m, 7 year contract
- Pierre-Emerick Aubameyang – Barcelona, £10.3m, 2 year contract
- Benoit Badiashile – Monaco, £35m, 7.5 year contract
- Andrey Santos – Vasco da Gama, undisclosed, 5 year contract
- Mykhailo Mudryk – Shakhtar Donetsk, £88.5m, 8.5 year contract
- Noni Madueke – PSV, £29m, 7.5 year contract
- Malo Gusto – Lyon, £26.3m, 7.5 year contract
- Enzo Fernandez – Benfica, £106.8m, 8.5 year contract
- Marc Cucurella – Brighton, £60m, 6 year contract
- Raheem Sterling – Man City, £47.5m, 5 year contract
- Kalidou Koulibaly – Napoli, £33m, 4 year contract
- Carney Chukwuemeka – Aston Villa, £20m, 6 year contract
So how come Chelsea have been able to secure deals longer than five years this summer?
UEFA closed this loophole this summer by including a five-year maximum on contract length, but the Premier League has not yet followed suit.
Furthermore, Chelsea are using the fact they didn’t qualify for this season’s UEFA competitions to their advantage. By finishing 12th last season, the Blues do not have to adhere to the new UEFA regulations.
The future: Will the UEFA ruling spell the end of long contracts?
Benefits include helping to protect a club’s investment: avoid losing the player as a free agent and potentially benefitting from inflation, increased transfer value and wage expectations over the longer term.
The risks? If a player fails to live up to expectations, they could still remain on the books with high wages for the entire contract term.
Increasingly, teams are signing younger players for greater sums and the five-year deal – which often expires around a player’s peak age – appears to be a common contract duration for most significant deals this summer and, perhaps, beyond.
Player sales offsetting huge outlay
Chelsea spent roughly £600m last season, which averages at £75m per year as you are dividing £600m by eight.
Chelsea have also been busy offloading high earners this summer, such as Pierre-Emerick Aubameyang and Kalidou Koulibaly, recouping over £200m in player sales with Kai Havertz’s £65m move to Arsenal fetching an accounting profit.
Mason Mount and Ruben Loftus-Cheek – two academy graduates – were sold for a combined £75m and appear as pure profit on the books.
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Who will be on the move this summer when the transfer window opens on June 14 and closes at 11pm on September 1 in England and midnight in Scotland?
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