YYou don’t see much of Todd Boehly these days. In the first weeks after spearheading Clearlake’s takeover of Chelsea, he was a regular presence, telling European football what it could learn from American sport and proudly announcing his disruptive intentions. That’s a shame: it would be good to know exactly where spending $1 billion to transform a Champions League-winning side into one that sits 11th in the Premier League fits into his master plan.
Around the turn of the year there was the thought that everything would fall into place for Chelsea. They reached the final of the Carabao Cup, winning three league games in a row, moving them into the top half of the table. Perhaps Mauricio Pochettino was finally starting to find some order in a chaotic team. The last two games have erased that idea.
After letting in four while being completely outplayed at Liverpool in midweek, they leaked another four at home to Wolves on Sunday. The first may be understandable, the second is not. This wasn’t a team that had four chances and took them all; Wolves were much the better side and could easily have won by more. Chelsea were in shambles, players arguing among themselves while sections of the crowd called for Pochettino’s sacking and sang wistfully about the Roman Abramovich era.
The problems go much deeper than the results. In the short term, Chelsea’s activities since the Boehly/Clearlake takeover are not a problem. The football finance expert Swiss Ramble noted in August that transfer activity since the takeover has been exactly neutral, with £143 million in wages plus £116 million in write-offs on purchases, offset by a £192 million pay cut and £62 million in write-offs on sales. In fact, there was a profit of £215 million in terms of player sales.
That looks excellent – in the short term. But Chelsea’s signings have committed them to £1.9 billion in future spending. And this is a club that has suffered operating losses in each of the last ten seasons, a picture that has only worsened over the last four years. In 2021-2022, operating losses were £224 million, bringing total losses for the decade to £944 million. That was offset to some extent by £706 million in player sales.
Taking into account the reduction in wage bill and forecasting other income and expenses for this season, Swiss walk calculated estimated losses of £131.6 million for 2023-2024, followed by £70.2 million last season and £121.4 million the season before. There are allowable deductions for ‘healthy’ expenses, such as those on the academy and women’s team, which can be estimated at around £40 million per season. Which, when taking into account the additional losses in the Covid season, kept Chelsea just above the £105m loss threshold for the three-year period to 2022-2023.
However, they appear to be in deep trouble for 2023-2024, with Swiss Ramble estimating their losses at £201 million – and that was assuming they would finish sixth, which now seems extremely optimistic.
UEFA’s regulations are not directly relevant, but it is changing its FFP model to a cost-control ratio, with player wages, transfers and agent fees limited to 70% of turnover and profit on player sales by 2025. At the moment it is around 90% at Chelsea.
Chelsea are already under investigation for possible historic violations of the FFP in the Abramovich era, which could lead to points deductions (or worse) that would make their job even more difficult in the future. And it’s already incredibly difficult. In the three years to June last year they almost kept their heads above water, but with exceptional sales. They don’t have many academy products or completely written off players anymore. Suppose they sell Moisés Caicedo next summer for the £100m they paid for him: yes, they would reduce the cost of his amortization and wages, 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: i.e. £12.5 million.
It will be extremely difficult to continue making the kind of profits that have brought them over the past decade. The academy products that remain, such as Conor Gallagher and Reece James, are likely to find owners very keen to listen to offers. And of course this is the opposite of standard football wisdom, which is that clubs benefit from having a core of players who have been brought up in the club style, the figures of John Terry and Frank Lampard, who have an attachment to the institution that goes beyond than just the salary.
Perhaps Chelsea will get an additional dispensation for the losses suffered following the imposition of sanctions on Abramovich, although there are no guarantees, but with the likelihood of no Champions League football it is difficult to see how revenues will increase significantly next season. With twelve players with contracts of eight years or longer, the write-off trick is increasingly looking like an albatross.
This is a club that is in a terrible mess and the only people who can really be blamed are the disruptive new owners.
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This is an excerpt from Soccer with Jonathan Wilson, the Guardian US’s weekly look at the game in Europe and beyond. Subscribe for free here. Do you have a question for Jonathan? Email footballwithjw@theguardian.com and he will provide the best answer in a future edition