Chelsea won’t be pressured into unfavorable deals for their departing players, thanks to a series of savvy financial maneuvers that have significantly boosted their spending power compared to their rivals.
According to i, Newcastle United is eyeing winger Noni Madueke, who could fetch more than £29m. However, clubs hoping for discounted deals following Chelsea’s significant transfer spending will be sorely disappointed.
Chelsea was believed to need to swiftly offload players to generate funds due to their relentless spending under Todd Boehly and Clearlake Capital in order to avoid violating Profitability and Sustainability Regulations (PSR). Recent infractions of these rules have resulted in harsh penalties, including points deductions.
Chelsea’s spending for the summer transfer window approached £170m with the £54m acquisition of Pedro Neto from Wolverhampton Wanderers over the weekend. Additionally, Kiernan Dewsbury-Hall joined for £30m from Leicester City, and Filip Jorgensen was secured for £20.7m from Villarreal.
However, the club’s track record of developing and selling players and smart financial strategies have put it in a strong position to spend more than its rivals.
“A combination of utilising legitimate loopholes, such as amortisation, sale of academy players and sale of real estate assets has meant that Chelsea have managed to circumvent PSR and continue to invest extensively in player recruitment,” Football finance expert Kieran Maguire explains.
Selling academy players, developed at the club’s world-leading Cobham training facility in a move pioneered by former owner Roman Abramovich, has greatly impacted transfer budgets.
“Chelsea have used their extensive academy as a form of revenue generation,” Maguire says.”
“Most clubs rely on match-day sales and broadcasting and commercial income to generate the income to run the club, which goes into their PSR calculations.”
“Chelsea have made twice as much profit from player sales over the course of the last decade than other clubs — five times as much as Manchester United. In total, over £750m in profits.”
“The likes of Tammy Abraham, Fikayo Tomori, Mason Mount, Billy Gilmour, Marc Guehi, Lewis Hall and many others have generated profits.”
“Profit is the difference between the accounting value of the player and the sale price.”
“Academy players cost nothing, so every player sold is pure profit.”
In the past 13 months, they have sold Hall to Newcastle for £28m, Mount to Manchester United for £55m, and Ian Maatsen to Aston Villa for £35m.
The new owners have also been clever in selling club assets to other companies they own. Chelsea can then include the profits in their PSR calculations and use them to fund player purchases.
Last year, it was revealed that Chelsea had sold two hotels to a sister company for £76.5m. Recently, the club also sold its highly successful women’s team to another company within the same group.
“Chelsea have been very cute regarding creative accounting,” Maguire says. “When the Clearlake-Boehly group acquired Chelsea, it came with no debt and a load of assets, which was beneficial to them.”
“What this has allowed the club to do is to sell some of the real estate assets, such as hotels and carparks, to other parts of the group and book huge profits. It’s noticeable also Chelsea sold the women’s team on 28 June, according to records we’ve seen at Companies House.”
“Todd Boehly was talking about the women’s team being worth $200m, although this raised many eyebrows. If that sale has gone through to a willing buyer, which could be another part of the Clearlake or Chelsea group, it’s profit that counts towards PSR.”
Chelsea has a big squad and wants to reduce it. They are open to selling Raheem Sterling. Another academy player, Conor Gallagher, was supposed to join Atletico Madrid for £35m, but the move has been delayed. Romelu Lukaku is expected to be sold for around £30m.
While many clubs, cautious of PSR rules, have spent relatively little, Chelsea has significantly outspent their rivals. In comparison, Manchester United has spent about £80m on Joshua Zirkzee and Leny Yoro.
Arsenal invested approximately £70m in David Raya and Riccardo Calafiori. Manchester City spent £30m on Savinho, while Liverpool has yet to make any signings.
Another critical financial factor was Boehly’s strategy of fully utilizing the amortization system before new rules limiting the number of years clubs could spread the cost of a player’s transfer.
For example, Cole Palmer has signed a two-year contract extension that will keep him at the club until the summer of 2033.
“While Chelsea have spent a lot of money on players since the arrival of the new owners, this has coincided with long contracts which allows them to initially spread the cost of players over a much longer period of time using the amortisation methods,” Maguire says.
“If you sign a £100m player on a four-year contract, that’s only going to cost you £25m in your PSR calculations. Stick him on an eight-year contract that’s £12.5m.
“Chelsea have been very clever, and while that rule is effectively outlawed, they had the advantage of getting in early with the acquisitions of the likes of Enzo Fernandez, Mykhailo Mudryk, Moises Caicedo and so on.”
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