Chelsea smashed 900 million or did you violate FFP rules? Polly was desperate and couldn't sell it later
News on August 16, Chelsea's £1 billion squad, if the new season as it qualifies for the Champions League, Polly's desperate gamble may lose completely.
115 million to buy Caicedo, 106 million to sign Enzo, about to buy Lavia for 60 million pounds...
After Polly joined Chelsea, three transfer windows cost £900 million!
One wonders, can't FFP control Chelsea?
1. Temporarily not subject to UEFA FFP or FSR
Chelsea, who finished 12th in the Premier League last season, are not competing in Europe this season and are temporarily not subject to UEFA FFP or FSR.
UEFA's FFP has evolved into FSR, with club losses rising to €60 million over three years and salary expenses accounting for 70% of revenue.
Chelsea recently fined UEFA €10 million, a penalty that Chelsea suffered for failing to provide detailed financial reports to UEFA during the Abu era.
However, Chelsea are also on UEFA's closely watched list, as Chelsea are likely to qualify for next season's European Championship.
2. Smart use of accounting standards Amortization
But Chelsea must also comply with the Premier League's FFP rule, which limits total losses of £105 million over three years.
Chelsea lost $153 million in 2020-21 and $121 million in 2021-22, with 22-23 results due in February-March next year.
Polly and his partner Egbari will ask the Premier League to calculate the three-year loss from the completion of their acquisition in June 2022. Whether the Premier League agrees to this remains to be verified.
Even if calculated from the summer window of 2022, Polly has already spent 900 million, is it not a violation of FFP regulations?
Starting with the purchase of Fofana, Chelsea have adopted a long-term contract strategy of six to eight years with players. The purpose of such extra-long contracts is to dilute the transfer fee on an annual basis, the so-called amortization.
Let's take the Caicedo transfer as an example.
The transfer fee is £115 million, the contract is 8 years, and the salary is £200,000 a week.
Under financial amortisation rules, Chelsea's annual transfer fee amortisation costs are £14.38 million. If you add Caicedo's salary, his cost alone is £24.38 million.
So, excluding player wages, the 21 new signings bought by Chelsea amortised over a cost of £150 million a year.
Third, sell a large number of "old" team members
Chelsea almost sold out of their old squad this summer, recycling £200 million. Together with the sale of players in the previous two transfer windows, a total of £269 million was recovered.
There are also financial bookkeeping rules on the seller's side.
For example, players bought and sold from outside are sold at the selling price minus the contract value for the remaining years, which is included in the profit.
Take Havertz, for example. Chelsea bought Havertz for £71 million in 2020 under a five-year contract. £65 million sold to Arsenal in 2023. The sale did not lose money.
Havertz has two years left on his contract worth £28.2 million.
6500-2820=3680
The financial bookkeeping rule is that Chelsea have a net profit of £36.8 million.
The sale of local club youth players is 100% net profit.
Chelsea made £75 million selling Mount and Cheek, and may sell Chalobah and Gallagher next.
The use of amortization in the buying side reduced the annual cost, and the seller side sold the youth players of the local club to improve the net profit, which basically stabilized.
Fourth, the issue of wages
Driving away a group of high-paid old people, Chelsea can save £2 million a week in salary expenses, which is 100 million a year!
Chelsea will leave a small number of old players, and some of them will also accept the new salary system.
All newly signed players adopt the salary structure of annual salary + bonus, and the incentive bonus part accounts for a relatively high proportion. Chelsea did not qualify for the European Championship last season and most of the incentive part of their wages were gone.
But even so, Chelsea are still under pressure from wage spending.
Without Chelsea's European Competition, the scale of income will be less than £500 million, and it will be difficult to achieve 70% of the salary expenditure.
Attentive fans will notice that Chelsea 1-1 Liverpool did not have a chest advertisement in the Chelsea shirt. Chelsea are currently trying to sign a deal and secure a main sponsor.
Fifth, dangerous patterns
Chelsea's revenue for the 2021-22 season is £480 million, with broadcast rights split into £235 million, commercial sponsorship portion $177 million and matchday revenue of £70 million.
The pressure on Chelsea now is to ramp up revenue quickly, which is why the club's top brass are trying to add seats to Stamford Bridge.
However, in the short term, Chelsea's matchday revenue increase will be limited, and the share of Champions League broadcast rights will be reduced, relying heavily on commercial sponsorship.
Without Manchester City's sponsorship of the many Abu Dhabi consortium associates, Chelsea would need to rack their brains when it comes to player transfers.
It can be said that Polly's strategy this year is completely desperate, and there is a huge risk in this gamble.
As we all know, the vast majority of Chelsea's current squad are newly bought, signed 6-8 year contracts, and bought at a high price. This means that the probability of these players selling at a high price is reduced.
Take the £68 million bought Fofana as an example, after six months of injury, what club will use £70 million to buy a glass man?
One problem with the long contract is that this batch of players will be super expensive in the transfer market and will not sell well.
And the original Chelsea players, including Academy players, are running out.
This means that in the future, it is impossible for Chelsea to return as much money as this summer in terms of player sales.
This forces Pochettino to play well with his current group of players, and the bottom line is to at least qualify for the Champions League.
Once Chelsea do not finish in the top four, Polly's third year in charge of Chelsea will encounter an irreversible financial crisis, not only a matter of being punished by the Premier League or UEFA, but also a serious threat of bankruptcy.