A Premier League giant trapped in its own financial engineering

LondonSince the spring of 2022, following Roman Abramovich's forced departure from Chelsea precipitated by the invasion of UkraineThe club's new owners, the BlueCo consortium, made up of four American investors and one Swiss investor, have pushed the blues to lead a revolution that was more economic than footballing, despite the complete overhaul of the squad and the passage of six coaches – two of them interim – including the current one, Enzo Maresca.

As I highlighted at the end of September in the Daily Telegraph According to former Liverpool player-turned-analyst Jimmy Carragher, the real transformation of the west London club has been the implementation of a bold and permanent financial engineering machine, which seems "more interested in transfers than trophies." According to Transfermarkt, in the 2022-2025 period, Chelsea spent between €1.3 billion and €1.45 billion on signings and earned between €700 million and €900 million from player sales, leaving net expenditure between €400 million and €600 million. Other sources pointed to a higher figure: around €2 billion. To comply with Premier League financial sustainability regulations, the engineering wizards behind BlueCo have made extensive use of unusually long contracts: six, seven, or even eight years. This involves spreading the cost of a fixed sum—amortization—over the duration of the contract, significantly reducing the burden on the annual accounts. However, in 2023 both UEFA and the Premier League limited this period to a maximum of five years.

The second crucial tactic used by Chelsea to maintain its high level of investment has been the sale of academy graduates. Examples include Mason Mount's move to Manchester United (€59.5 million) and Conor Gallagher's transfer to Atlético Madrid (€37.5 million). These sales are recorded as immediate net profit, vital for staying within sustainable margins. However, the club's reliance on academy sales has generated debate. Even Enzo Maresca has called for changes to prevent clubs from feeling forced to part with emerging talent. A third common accounting maneuver used by Chelsea has been the sale of assets to subsidiaries within the group. Chelsea's accounts in April 2024 revealed that the club sold two hotels—located within the Stamford Bridge complex—to a sister company of BlueCo to comply with regulations. And so, in March of this year, Chelsea declared a pre-tax profit of €150.4 million, achieved solely thanks to that transaction and the sale of the women's team to other subsidiaries of the consortium, valued in this case at €232.4 million. Otherwise, Chelsea would have suffered losses, as in previous years, of €84 million.

But this past Friday, the Premier League again changed its economic sustainability regulations by the narrowest of margins – fourteen votes in favor, six against – which will come into effect in the 2026-27 season. And this forces Chelsea to confront a harsh reality. From now on, in principle, accounting maneuvers will be even more restricted. And this raises further questions about the economic and sporting model of the bluesMeanwhile, the vital project of the much-debated and ever-postponed expansion/construction of a new stadium remains at a costly standstill, hindering the club's ability to generate regular, rather than atypical, income, such as that mentioned earlier.

The consequences Chelsea may suffer

The legal loopholes that had allowed the aforementioned maneuvers have been eliminated with the approval of the so-called Squad Cost Ratio (SCR). The new regulations require limiting club costs (salaries and amortization) to 85% of revenue.(70% for clubs in UEFA competitions) and requires that only revenue generated from purely football-related operations count.

For Chelsea, the consequence is immediate, and will perhaps already be seen in the January transfer window. Because without the crutch of internal asset sales, the club is forced to generate income through transfers to offset the rapid amortization of its long-term signings. Selling academy players thus becomes a recurring necessity. On the other hand, UEFA's strict 70% SCR figure can only be met with a drastic increase in commercial and matchday revenue. In fact, this is the most limiting factor for Chelsea's long-term sustainability. The stadium, with a capacity of around 42,000, generates revenue of approximately €90 million.per season, according to data from the 2023-24 season. The figure clearly lags behind rivals with larger, more modern stadiums. But the plan for the future 60,000-seat stadium is highly uncertain. Costs are estimated at at least €1.7 billion. And Chelsea's current ownership is divided between rebuilding Stamford Bridge (which would involve a temporary relocation, perhaps to Twickenham, and obtaining permission from the Chelsea Pitch Owners) or moving to a new site such as Earl's Court. The club's most visible figure, Todd Boehly, has indicated that the project could take between 15 and 20 years to complete, which would leave the club at a revenue disadvantage compared to rivals for the next decade.