It may have been difficult to know what to expect at Chelsea under new owners. There has been a great deal of upheaval on the football pitch and behind the scenes since Todd Boehly and Clearlake Capital took over the club, but one thing has remained consistent.
Chelsea have been unafraid to spend money. The signing of Mykhailo Mudryk over the weekend has been the latest addition to Graham Potter’s squad in a series of blockbuster transfers that has seen the Blues spend in excess of £400million this season.
The west London side are not expected to have finished their business this month with negotiations for Noni Madueke ongoing, while the club still hope to reinforce the centre of midfield and at right back. Many have been bewildered by Chelsea’s ability to sign 13 players in addition to those signed for the development squad.
Especially when the likes of Manchester United have had to sign Wout Weghorst on loan, in part due to Financial Fair Play restraints. Chelsea have regularly been among the highest spenders in a transfer window since Roman Abramovich bought the club in 2003.
Kieran Maguire, Senior Teacher in Accounting and Finance at the University of Liverpool and author of The Price of Football explains how selling players such as Tammy Abraham and Fikayo Tomori has helped over the last 10 years. He said on the The Price of Football podcast:
“It is an intriguing one because we’ve seen that Manchester United are signing a player from Burnley on loan because of financial fair play considerations. What you need to do is look at all of the dynamics and the money both coming in and going out of the club in terms of how it impacts FFP. One of the downsides of FFP is that it’s based on accounting figures. I’m the first to admit they can be, I don’t think manipulated is the right word, I don’t think they necessarily show the overall true picture.
“If we take a look at Chelsea, what you find is over the course of the last decade they have sold players at a profit of £658million. That compares to Manchester United who during the same period have sold players at a profit of about £130million. So they’ve got over half a billion pounds of extra money coming in. Remember FFP is effectively your money coming in compared to your money going out.
“When we think of money, we think of cash but for FFP it comes to amortisation. Chelsea, Mudryk the Shakhtar Donetsk winger that they signed underneath the noses of Arsenal just before the show went out in effect. They signed him on a £80million contract, they’ve made some other big signings of 10s and 10s of millions but if you take a look at the way these deals have been organised, these players are on six-and-a-half year or seven-year contracts. So from an FFP basis, if I sign a player for £80million on a seven-year contract, you spread that cost through amortisation and you end with an FFP cost of just over £11million.
“Chelsea last year, they sold Tomori, they sold Abraham. Both of these of course were academy players. They sold them, probably for a profit in the region of £70million from those two players alone. When you sell a player, all of the profit goes into your calculations immediately but when you buy buy a player the cost of that player is spread over the life of the contract.”
However, while all is well at the moment, with Chelsea positioned in 10th their ability to operate in such a manner is in danger. The financial bonus of qualifying for the Champions League is significant. That is not the only risk Chelsea are taking either with the prospect of struggling to sell players. This has already been seen with the likes of Kepa Arrizabalaga. Maguire continued:
“Normally when you sign a player you’d be looking at perhaps a three or four year deal, what Chelsea have done, and this is a gamble because if these players turn out to be the next Nikola Zigic, or the next Winston Bogarde who have been signed on big contracts, on big money and they don’t deliver, you’re the left with a player on 10s if not £100,000 a week or more and you can’t shift the player because nobody else is willing to match those wages.
“It is a gamble but from a Financial Fairy Play point of view they are okay. If they don’t get into Europe it’s going to make things a lot more squeaky bum when we reach this summer’s window.”