It’s often said that if you stand still in the Premier League you are going backwards and it’s easy to see why.
Clubs in England’s first division are all doing their utmost to stay ahead of the game, or at least keep up, and more money is being spent each transfer window.
Fees for players continue to skyrocket as clubs attempt to strengthen their squads and if that wasn’t challenging enough, teams now also have to juggle Financial Fair Play and show that their pursuit of glory is sustainable.
So, what about Chelsea’s financial situation? How much can the Blues spend during the 2023/24 campaign? And could they be in trouble?
Here, we’ll take a detailed look to see where Chelsea stand with Financial Fair Play.
Chelsea FFP Report
Chelsea spent more than half a billion pounds on players throughout the course of the 2022-23 season.
Bringing in 16 new faces for a total cost of £585.5m, the Blues’ astronomical spending spree certainly raised eyebrows.
Now, as we explained in another study, the Premier League has its own Financial Fair Play rules and every club must comply with these regulations.
One of the rules clubs must adhere to is that a team must not register a loss that exceeds £105million over a rolling three-year period.
Chelsea’s vast spending blew that figure out of the water and came as the Blues revealed they made a net loss of £121.3million over the course of the 2021/22 season.
So of course, this level of spending led to plenty of questions from observers as to whether it is sustainable and within the rules.
Are Chelsea in Trouble with FFP?
Chelsea are currently on a UEFA watch list over their finances, according to the Evening Standard. However, despite their frantic spending, the club insists they continue to comply with both UEFA and Premier League financial regulations and so there is no FFP issue.
So, how have the Blues managed it? Well, the Stamford Bridge club were able to sign new players without falling foul of FFP regulations due to amortisation.
“They have amortised contracts over incredibly long-term deals, more than the standard five-years,” Jake Cohen, a sports lawyer for Mackrell Solicitors, told the Evening Standard.
“Amortisation is a standard accounting practice in the sport that would see a transfer fee spread over the length of a player’s contract. A £50m transfer on a five-year deal wouldn’t be accounted for up front but would cost £10m a year.”
This means rather than spending big in one go, they have spread transfer fees over a number of years and it is these figures that would be used in FFP calculations.
It is also the case for contracts, with midfielders Enzo Fernandez and Mykhailo Mudryk reportedly signing eight and eight-and-a-half year contracts respectively when they moved to west London. Such deals lower the annual cost of a player, which puts Chelsea at less risk of breaching FFP rules.
The Blues’ giant outlay during the 2022-23 campaign reportedly led to European executives complaining to UEFA and there are plans now in place to set a five-year maximum for the length of time over which a transfer fee can be spread.
However, the change will not apply retrospectively, so right now, there is no case for Chelsea to answer.
How Much Can Chelsea Spend in 2023/24?
Chelsea are extremely unlikely to spend the same eye-watering figures as before, though they are expected to make improvements to their squad after struggling during the 2022/23 campaign.
With a new management team in place for 2023/24, the bloated squad will need to be trimmed to allow new signings through the door at the club’s Cobham training ground.
The 2022/23 season was officially the Blues’ worst season since the Premier League’s inception as they finished 12th in the table and so the blow of failing to qualify for Europe will have dented the club’s capacity to spend further.
Chelsea announced its annual financial results for the year ended June 30, 2022 in March 2023 which showed the club’s turnover figure had increased to £481.3million from £434.9million the previous year.
This was despite restrictions placed on Chelsea’s previous owner and sanctions, meaning the club were required to operate within the limitations of a special licence issued by the UK government. These restrictions were lifted upon the completion of the club’s sale in May 2022.
The Blues earned more than £100million for winning the Champions League in 2021 and pocketed a further £80m for reaching the quarter-finals the season after and so before a ball has even been kicked, we already know Chelsea will be without a large amount of income they have previously earned annually.
Chelsea P+L (Profit and Loss)
Here, we’ll reveal the profits and losses registered by Chelsea in the last six campaigns as published by the club’s statement of accounts.
As we can conclude, Chelsea have recorded losses of more than £100m for three straight seasons and this is before we take into account the club’s huge recent expenditure on player transfers.
There is work to do for the Blues to return to making a profit as they did back in 2019.
Chelsea Transfer Net Spend Year-by-Year
Here, we’ll check out Chelsea’s Net Spend over the last six seasons as compiled by Transfermarkt. This figure is the total sum of all transfer dealings conducted by the Blues during each campaign since 2016/17 and features both player arrivals and exits.
If a club spends more on new signings than it makes on player sales, the net spend will be positive. However, if a club’s income is greater than its outgoings, the figure will be negative.
As we can see, Chelsea have a net spend of €781.82m over the last six campaigns. However, €543.66m of that total was accumulated entirely during the 2022/23 campaign.
What is the Financial Situation with Chelsea?
It is clear Chelsea will not be able to spend such mega amounts every season as they did during the 2022/23 season. Instead, it will be interesting to see if they can rely on their high risk, high reward approach and whether it pays off.
If the players they have tied down to long contracts shine and help the club win silverware, they will have made shrewd investments.
They will also be protected if another club comes in with an offer to buy one of their prized assets as they will be able to command a high fee.
However, issues could arise if the signings bought for huge money on lengthy deals fail to impress. If this occurs, Chelsea could struggle to recoup any money or worse, be stuck with players who simply won’t leave Stamford Bridge.
Ahead of the 2023/24 campaign, offloading unwanted players must be the first port of call for the Blues after their heavy season of spending.