On February 6, The Guardian revealed that Chelsea suffered two consecutive defeats in the Premier League, losing to Liverpool on the road and defeating Wolves at home, and the previous upturn seemed to have suffered another setback, with some fans beginning to put pressure on Mauricio Pochettino. However, for Chelsea, the challenge they face is much more than just a loss on the field of play.
From a short-term perspective, Chelsea's financial situation under Burley and Clear Lake Capital looks trouble-free. Soccer finance media outlet Swiss Ramble noted last August that Chelsea's transfer outlay and revenue have balanced out since the American owners took over: they have a wage bill of £143 million, transfer amortization of £116 million, and a combined income from wage declines and amortization of £192 million, on top of the £215 million profit they have realized through player transfers.
In the short term, this seems like good news. But Chelsea's slew of contracts puts their future outgoings at a whopping £1.9 billion. Chelsea have lost money every season for the past decade, and the losses have climbed year on year. in 2021-22, Chelsea's operating losses are a whopping £224 million, bringing the ten-year cumulative loss to £944 million, despite offsetting revenues from player sales of £706 million.
According to Swiss Ramble's calculations, Chelsea are expected to make a loss of £131.6m in 2023-24, £70.2m last season and £121.4m the season before, taking into account a reduction in the wage bill as well as this season's revenues and expenses. "Health" costs (such as spending on the youth training academy and the women's soccer team) are around £40 million. The extra room for loss in the epidemic season makes it likely that the loss in 2022-23 will be slightly above the £105m cap.
However, Chelsea could face even greater difficulties in the 2023-24 season with a projected loss of £201 million, based on the assumption that they could finish sixth in the league - which may be too optimistic for them. UEFA is in the process of changing the original Financial Fairness Act to a cost-containment ratio model. Under this model, players' wages, transfer and agency fees will be limited to 70% of a player's sales revenue and profit by 2025. Currently, Chelsea's percentage is as high as 90%.
Chelsea are being investigated for possible breaches of the Financial Fairness Act during the Abramovich era, which could lead to a points deduction or even more serious consequences. As of June last year, they were barely holding on under financial constraints because of higher player sales. But now the situation is even more dire as they lack a youth product and fully amortized player sales. Let's say they sell Caicedo for £100m next summer: they will certainly lose some of the amortization and wage costs, but the value of his 8-year contract will be the profit.
If Chelsea want to continue to make a profit over the last decade, it will be extremely difficult. Youth training products such as Gallagher and Reece James, who are still in the squad, may find the owner's interest in their offers keen. This is a far cry from conventional wisdom. In the past, clubs would have benefited from core players such as Terry and Lampard because they were linked with much more than wages.
Perhaps Chelsea will be able to get additional exemptions from losses after the Abu sanctions - although this is not guaranteed - but the possibility of not being able to play in the Champions League next season makes revenue growth difficult to predict. With 12 of the team's players under contract for eight years or more, the way they are being amortized seems more and more like a burden.
The club is in a real mess at the moment, but it's the destructive new owners who are really to blame.
