ANDYou don't see much of Todd Boehly these days. In the first few weeks after he spearheaded Clearlake's takeover of Chelsea, he was a regular presence, Tell European soccer what it could learn from American sport., proudly announcing its disruptive intention. Which is a shame – it would be nice to know exactly where spending a billion dollars to transform a Champions League-winning team into one that sits 11th in the Premier League fits into their master plan.
Towards the turn of the year it had been thought that things might be fitting into place for Chelsea. They reached the Carabao Cup final and won three league games in a row to move into the top half of the table. Perhaps Mauricio Pochettino was finally starting to find some order in the midst of a chaotic team. The last two games have erased that idea.
Having allowed four while being comprehensively outplayed at Liverpool in midweek, They leaked another four at home to the wolves on Sunday. The first may be understandable, the second not. This was not a team that had four opportunities and took advantage of them all; The wolves were much better and could have easily won by more. Chelsea were a disaster, players arguing among themselves while sections of the crowd called for Pochettino to be sacked and sang wistfully about the Roman Abramovich era.
The problems are much deeper than the results. In the short term, Chelsea's activities since the Boehly/Clearlake acquisition are not a problem. The football finance expert Swiss Ramble stood out in August that transfer activity since the takeover was exactly neutral, with £143m in wages plus £116m in amortization of purchases offset by a reduction of £192 million in salaries and £62 million in sales amortization. Even better, there was a £215 million profit in terms of player sales.
Which seems great… in the short term. But Chelsea's signings have committed them to spending £1.9bn in the future. And this is a club that has posted operating losses in each of the last 10 seasons, a picture that has been worsening over the last four years. In 2021-22, operating losses amounted to £224m, bringing total losses over the decade to £944m. To some extent this has been offset by £706m in player sales.
Taking into account the reduction in the wage bill and projecting other income and expenses for this season, Calculated Swiss Ramble Estimated losses of £131.6m for 2023-24, on top of £70.2m last season and £121.4m the season before that. Deductions are allowed for “healthy” expenses, such as those for the academy and the women's team, which can be estimated at around £40 million per season. Which, when additional provisions for losses in the Covid season are taken into account, kept Chelsea just above the threshold of £105m in losses for the three-year period to 2022-23.
However, for 2023-24, they would appear to be in big trouble, with Swiss Ramble estimating their losses at £201 million, and that was under the assumption that they would finish sixth, which now looks extremely optimistic.
UEFA regulations are not immediately relevant, but it is changing its FFP model to a cost control ratio, under which player salaries, transfers and agent fees will be capped by 2025 at 70% of income and profits from player sales. At the moment, Chelsea's is around 90%.
Chelsea is already being investigated for possible historical FFP breaches in the Abramovich era, which could lead to point deductions (or worse) that would make their job even more difficult in the future. And it is already extremely difficult. They almost stayed afloat during the three-year period to last June, but that was with exceptional sales. They don't have many academy products or fully amortized players left. Let's say they sold Moisés Caicedo next summer for the £100m they paid for him: yes, they would reduce his amortization and salary costs, but his eight-year contract means the profit would only be £100m minus his book value which, with seven of the eight years remaining on his contract would be £87.5 million: that is, £12.5 million.
Continuing to make the kind of profits that have sustained them over the past decade will be extremely difficult. Remaining academy products, such as Conor Gallagher and Reece James, will likely find their owners extremely eager to listen to offers. And of course this is the opposite of standard football wisdom, that clubs benefit from having a core of players trained in the ways of the club, the figures of John Terry and Frank Lampard, who have a link to the institution they It goes beyond salary.
Perhaps Chelsea will be granted additional dispensation for the losses suffered following the imposition of sanctions on Abramovich, although there are no guarantees, but with the likelihood of no football in the Champions League, it is difficult to see how the revenue will significantly increase the next season. With 12 players on contracts of eight years or more, the payback trick is looking more and more like a liability.
This is a club in the throes of a terrible disaster and the only ones who can really be blamed are the disruptive new owners.
This is an excerpt from Soccer with Jonathan Wilson, Guardian US' weekly look at the game in Europe and beyond. Subscribe for free here. Do you have any questions for Jonathan? Email footballwithjw@theguardian.comand will answer the best in a future edition.
