Can Chelsea FC afford to sign Radamel Falcao?

The Mail (as well as most of the rest of the tabloid media) is running a story today that Chelsea are willing to pay Radamel Falcao a fairly insane £200k per week in order to convince him to move from Madrid to London. On top of that wage, acquiring the Colombian would also require the club to meet his hefty buyout clause of £46 million. That's an awfully big investment in a single player, especially now that we need to take FFP into account.

We've been debating here for a while about just how wise a move this would be, and the opinion seems to be pretty widely split on the matter. Some feel Falcao would make Chelsea a nearly unstoppable force that should contend for every competition they play in, while others feel he'd take away our ability to add other parts that could make us a more complete squad. I'm going to ignore all of that for the moment, and just focus on whether or not adding Falcao could be reasonably done under the guidelines of FFP.

Assuming Chelsea pulled the trigger at the prices that we've mentioned above, how much would that cost the club annually using FFP accounting? Well the wages are pretty simple to figure, as a £200k per week salary means the club would be paying £10.4 million per year. The transfer fee depends on the length of the contract, but with a January transfer of this magnitude, a 5.5 year deal would seem like a given.

Doing the math on that, the amortized cost of the transfer fee would be £8.4 million, making Falcao's total annual cost to the club about £18.8 million. That's not an insubstantial sum, it accounts for about 7.5% of what Chelsea produces annually.

Chelsea basically broke even this season after winning the Champions League. We've managed to increase our sponsorship money because of that, and the Premier League has drastically increased our future TV revenue. It's hard to picture anything but decreased Champions League money most coming seasons though, as counting on winning the biggest prize in Europe would seem like budgeting suicide. Given the increases elsewhere, it's probably not unreasonable to expect last year's income to be a reasonable future average.

We're going to keep things quick and dirty here, and simply see if we can find £18.8 million to cut from Chelsea's current squad. The obvious place to start would be with expiring contracts, and we currently have at least five of them*. Those five players are Frank Lampard, Ashley Cole, Florent Malouda, Paulo Ferreira, and Henrique Hilario.

*Most accounts have Daniel Sturridge expiring this summer as well, but because there are a few conflicting reports, I'm going to ignore him for the moment.

So what do those five players cost Chelsea right now? Luckily enough, all five are pretty widely reported wages. Lampard is on £140k per week, Cole on £120k, Malouda on £90k, Ferreira on £40k, and Hilario on a whopping £15k. Figuring out the annual totals for each and then adding them together gives us a cost this year of £21.06 million. So by letting all five players leave the club this summer, we could reasonably afford to add Falcao.

The issue, of course, would come in replacing these five players. Malouda, Hilario and Ferreira don't really have roles right now, so we could easily let them walk without worrying about replacement. Cole and Lampard have regular roles though, and letting the pair leave would require us to replace them. With only £2.26 million to do so, about the only options we could afford would be to recall Josh McEachran and Patrick van Aanholt, and even that would cost slightly more than the remaining £2.26 million. It's close enough that we'll call it eben, as we're now within £1 million.

Chelsea could reasonably afford to spend ridiculous money on Radamel Falcao and still comply with FFP, but doing so will almost certainly mean the departures of quite a few legendary members of the squad. I'll probably never be convinced that this purchase would be anything approaching wise, but just looking at the rumored numbers, it definitely can be done. If we do, though, we better start filling holes from within, and the fans better accept the fact that the "old guard" are not going to be here. Unfortunately we can't have our cake and eat it too, as Michel Platini will take it away from us.