Enzo Fernandez has signed for The Blues on an eight and half year contract, for 120M Euros. This deal takes Chelsea’s total January Spending to 328.5M Euros on Eight new players.
In less than one year and two transfer windows, Todd Boehly has spent over 600M Euros on new arrivals at Chelsea, signing 14 players permanently with Dennis Zakaria and Joao Felix joining them on loan.
Breaking the EPL transfer record for Enzo and high-profile players like Mudryk, Malo Gusto, and Benoit Badiashile in a busy winter window.
Many of you wonder how and why Chelsea could spend this much amid FFP regulations, and I am here to answer your questions.
QUESTION: HOW MUCH HAS CHELSEA SPENT SO FAR?
The league record fee paid for Enzo Fernandez added to expensive deals in the summer and the arrivals in January amount to 612M Euros spent.
With very few outgoings accounting for 68M Euros, Chelsea had a net spend of 544M Euros in the 2022/2023 season.
QUESTION: WHAT ARE THE FINANCIAL RULES ON SPENDING?
- Premier League profitability and sustainability rules allow for total losses of £105m over three years. Clubs that post losses over that figure could face penalties, including fines or even a points deduction.
- Under UEFA’s current rules, clubs can spend up to 5m euros (£4.4m) more than they earn over three years. However, clubs can exceed this figure by up to 30m euros (£26.6m) if it is entirely covered by the club’s owner.
However, new rules introduced in June 2022 limit clubs’ spending on wages, transfers, and agents’ fees to 70% of their revenue.
UEFA permit clubs’ losses over three years have risen to 60m euros (£49.96m).
Clubs have been given three years to implement these changes.
Chelsea FC only has a three-year FFP loss of £5m in their most recent accounts.
QUESTION: HOW CAN THEY SPEND SO MUCH?
The finances of the club itself are fine, they are buying players and paying for them in installments.
When you buy a player, you spread the cost of the player over the life of the contract.
If we take a look at Mykhailo Mudryk, they bought him for £89m and he is on an eight-and-a-half-year contract. You do the maths, and he is costing them £10m a year for FFP purposes.
In contrast, when you sell a player, all of the profits are taken into the accounts immediately [even if actual payments are made in installments].
Profits from sales, like Tomori Fikayo and Tammy Abraham (£77M), and trophies from recent seasons have strengthened their positions.
The risk with this spread of transfer fees over the contract period is if the players turn out to underperform, you have then got a player on a high wage. And you are committed to them for seven to eight years.
No other clubs are willing to take that wage off your hands for such a long period. So, you’ve got four or five players who are happy to sit down for the rest of the contracts.
QUESTION: IS THIS SUSTAINABLE?
The sustainability of this strategy is dependent on success on the pitch and additionally, lucrative sponsorship deals which big EPL teams never lack.
Without those ongoing Champions League revenues or higher Premier League positions, naturally, your revenues go down and it puts a huge amount of pressure on the football club.
Ultimately, if you cannot afford to pay your contract value over a year and it looks like you are going to breach FFP, you either have to renegotiate the contracts to reduce a player’s wages or you have to sell them.
That is the real risk when you sign a player over five, six, seven, eight, or even nine years. They are one injury away from reducing their value and being unsaleable.
In fact, Chelsea have spent well.
Todd Boehly champions a strategy that identifies the best under 24 talents in football and ruthlessly pursue them. He secures long term deals to manage the impact on yearly club finances.
Indeed, Roman Abrahamovic has given the club a massive parting gift, having written off all director’s loan to the club. This in turn has put this new chairman in a position to spend and worry less about FFP.