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Earlier today, Chelsea announced its financial results for the most recent reporting period (July 2012 - June 2013). The club lost £49.4m, which is a marked difference from the £1.4m profit the club recorded during the 2011-2012 reporting period.
Understandably, in this new era of financial fair play, a £50m loss might look a bit scary. Fear not, however, as Chelsea will easily comply with the break-even requirement imposed by UEFA's Financial Play regulations. As I wrote in September, it is unlikely that Chelsea will ever have a problem complying with FFP. In fact, all the regulations do is cement Chelsea's place as one of the handful of clubs that are able to challenge for both domestic and European laurels year in and year out.
To briefly summarise, Chelsea will have around £48m in actual losses during the first UEFA monitoring period (2011-2012 and 2012-2013) - the £49.4m loss offset by the £1.4m profit during the previous reporting period.
Clubs are allowed around £38m in losses during the first monitoring period. If these were the only allowable losses, then Chelsea would still be around £10m shy of the break-even mark. However, there are a number of expenditures that will not count for the purposes of the UEFA accounting, such as expenditures on the youth system and infrastructure developments and the tax on image rights. There is also the small large matter of wages for player contracts signed before June 2010 potentially being excluded from the 2011-2012 books.
That said, a £50m loss is still a £50m loss, and Roman Abramovich will have to write a sizable check to cover the losses. If you're at all worried that the club will sell a David Luiz or a Juan Mata to help cover those losses, you shouldn't be. Abramovich has proven (literally a billion times over) that he is perfectly comfortable accruing massive personal losses in the pursuit of winning. If my words aren't enough, let's hear from the man himself -
"The goal is to win. It's not about making money. I have many much less risky ways of making money. I don't want to throw my money away, but it's really about having fun, and that means success and trophies."
- Roman Abramovich
In the coming days, we will take a much closer look at the financials, but for now, enjoy your New Year's Eve festivities with the assurance that Chelsea's financials are well in order for 2014 and beyond.
