With FFP looming, the state of the club's finances is clearly a big question for all Chelsea fans. We all know that clubs make a small fortune in TV and gate receipts when they qualify for Europe's elite competition, and we all know that the Europa League would not have provided nearly the same sort of financial windfall that participation in the Champions League did. So the question I set out to answer today is just how much revenue did Chelsea FC secure when Didier Drogba's penalty settled in the back of the net?
The always excellent Swiss Ramble did a piece concerning our Champions League income after we knocked Barcelona out of the competition and secured our place in the final. I'm going to direct you to that and make it required reading, as the detail provided is incredible. They came to the conclusion that winning the Champions League would see Chelsea FC secure prize money and TV revenue totaling €59 million*. Most Chelsea news out there uses the pound sterling as their monetary unit, so for the sake of consistency I'm going to do the same. While the Swiss Ramble used a constant rate of €1.2 to £1 in their figures, I'm going to simply use this morning's exchange rate in mine, as I also had conversions to do from the US dollar. So using my math, Chelsea made £47.6 million in prize money and TV revenue this season from winning the Champions League.
*Of all the years to win this thing, Chelsea have easily picked the best one to do it. The shocking group stage exits of both Manchester Clubs and the customary round of 16 exit of Arsenal in the same season resulted in Chelsea making almost enough extra money to cover the entire transfer fee of either Marko Marin or Gary Cahill. Thanks guys...
I decided to break this exercise down into two parts. The first will see us look at the hypothetical. What if we had not fired Andre Villas Boas when we did and gone on to be knocked out by Napoli? If you're uncomfortable with the way I included AVB in that, just ask yourself what would we have made had we lost that game instead? First and foremost, there is one source of income that would have remained the same had we lost to Napoli. Chelsea would have still received 30% of the fixed half of the English pot for TV money. That would have resulted in £10.2 million in earnings.
The other half of the English pot would have looked a lot different had Chelsea lost though. Had Chelsea joined Arsenal in a round of 16 exit, the total number of games they had played would have been just 8. This would have seen their cut of the funds drop from £13.3 million to just £7.3 million. This would have also resulted in all of the other English clubs seeing their cut of this half of the pot jumping by around £2 million each. Ha ha...
Beyond the differences in TV revenue, our prize revenue would have dropped dramatically with the loss. We'd still have made £8.2 million due to our participation in the group phase and having reached the round of 16, but the additional £13.3 million in total we were awarded for all additional rounds (and the winner's bonus) would never have reached our coffers. Had we lost to Napoli, we'd have still earned £28.3 million from the Champions League. Everything that's happened since that night we became famous has earned us a whopping £19.3 million extra. In reality we've actually earned more than that, as I have no idea what sort of additional matchday revenues we've made from the two extra fixtures and our allotment of tickets for the final. It's likely a lot though.
That's half of the story, but we still need to look ahead. As we all know by now, winning the final has assured us a place in next year's competition. We are also acutely aware by now that we'd have failed to qualify for the tournament next season had we lost. On top of the £19.3 million made since the first leg in Naples, we need to look at how much money we assured ourselves by being granted automatic admission to the group stage next season. This brings up an interesting question though. Chelsea qualified for the tournament by an interesting route this season, so would the 40/30/20/10 split of the TV monies for the fixed half of the pot hold true for next season? While I suspected it would, I asked around to a few of the more ITK writers out there looking for an answer.
Oddly enough, as I was doing that research as the Daily Mail published this. Those numbers were confirmed by several other ITK sources as being what they've been told by UEFA, so I'm going to assume that's how the revenue for the group stage portion of the TV pot will be divided. Chelsea earned 30% of the fixed portion of the pot last season as Premier League runners up, they'll earn the same percentage next season by the odd route they took to qualify. Looks like Tottenham weren't the only club to get trolled when we won the Champions League, as City lost £3.4 million of their potential earnings from this half of the pot and both United and Arsenal saw their shares cut by £1.7 million. Again, ha ha...
Using the same total TV monies as we did for last season, Chelsea's share of the fixed portion of the pot would result in about £10.2 million*. That number is not going to fluctuate, so you can more or less set that one in stone. We have one more figure that won't be changing, and that's our prize money for participating in the group phase. That will be £5.8 million regardless of whether or not we win a game. So that brings us to £16 million in fixed income which we can already factor on having.
*I have no idea how the Mail came up with their figures, they've only accounted for £30 million out of the £34 million which was available to divide in their article. They used really old figures I guess.
Now we'll get to the variable portions of our income. When looking ahead to next season though, I'm going to be as conservative as possible in estimating our income. Each win and draw in the group stage earns the club a bonus. I'm going to let the Mets fan in me out here and assume that Chelsea lose all 6 games. That's going to result in no additional prize money for the club as we conservatively estimate the value of this title.
I'm also going to look through my Mets tinted goggles when I look at the other half of the TV pot. Last season was sort of a perfect storm for Chelsea, as they clearly benefited from the early exits of the other English clubs. For next year I'm going to assume the opposite, seeing Chelsea knocked out after the group stages, an all English final, and the fourth English team as a losing semifinalist. This would result in the lowest possible payout for Chelsea, a £4.6 million total. That's got us at £20.6 million thus far. Just for the fun, using this same doomsday scenario from a Spurs POV would see that club missing out on at minimum £13.8 million in TV revenue and prize money due to our win.
We scored ourselves 2 more little bonuses with the win in Munich though. Chelsea will now be participating in both the UEFA Super Cup and the FIFA Club World Cup. A loss in the Super Cup would result in a prize of about £1 million, a 4th place finish in the FIFA tourney (the lowest possible for the UEFA champion) results in an additional £1.3 million. That's a combined £2.3 million*, which brings our guaranteed earnings up to a whopping £22.9 million.
*Winning both competitions as we realistically should would result in about £4.5 million total.
So let's total everything up, shall we? After the miracle comeback against Napoli, we earned ourselves £19.3 million. We then managed to kick open the doors to next year's competition, in doing so earning ourselves at minimum £22.9 million more. Those two figures add up to a massive £42.2 million (at minimum) in additional earnings that we would not have made. That's a hefty figure that should go a long way this summer.
That figure is also, in all likelihood, considerably lower than it will actually be. Realistically, Chelsea will have a solid group showing and a round or two in the knockouts. It's not hard to picture another deep run and some success in the additional games which could see our earnings compare favorably to this past season. That would all be gravy at this point though, as just qualifying was a long shot.
There's also a number of factors I just couldn't account for here, so these numbers are extremely conservative. First and foremost, the TV pot for English teams of £68 million I used is taken from the 2010/11 Champions League. This year's tournament should see an increased pot, but the total numbers are not yet available. It would be safe to assume that the 2012/13 tournament will again see a larger pie to split, so in reality we'll probably see an extra chunk of change heading our way on both years' winnings. Prize money may well increase for next season as well, which would again be gravy.
Matchday revenue is also not factored into this piece at any point. While the size of Stamford Bridge doesn't let us maximize our potential here, European games still make us an awful lot of money at the gate. I did not have any sort of TV revenue or our share of any matchday revenue from either the Super Cup or Club World Cup available, so all that I figured into this was the actual prize money from the results. While neither of those are likely to amount to much, I'd imagine that there is a little money there as well. Once again, there is a good chance that the prize money for both of these competitions goes up slightly as well.
I'm also not going to speculate on the increased marketability of the club due to this win. Now that we've got that star above the badge, I'd assume we'll be seeing our advertising revenues increasing. Sponsors just saw their next contract get more expensive, and jersey sales will likely see a boost for a bit. This title should see in increase in the fan base, and that can only help the club in all of their financial endeavors. I have no idea what levels of additional revenue we'd be looking at though, so I'll just keep my eyes on the football money league in the future and watch what happens.
All told, Chelsea made out like bandits by finally winning the trophy this season. Had the AVB era continued until we were eliminated by Napoli, We know we'd have lost out on at least £42.2 million. It's easy to see that figure being closer to £50-£60 million. That type of loss would have buried our chances of complying with FFP had we spent large amounts of money this summer. It didn't though, so regardless of whether or not Roberto Di Matteo is kept on, we should all have him on our Christmas card list this year and for many years to come. Thanks Robbie...