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Demba Ba to Besiktas: what it means for Chelsea's finances

Clive Rose

Now that Demba Ba has been sold to Turkish club Besiktas, we turn our attention to how the deal affects Chelsea's finances.

Despite earlier reports from various outlets claiming that Chelsea received an £8 million transfer fee for Ba, it turns out that Chelsea will actually receive £4.75m (€6m) from Besiktas. The club is publicly traded, and as such, must disclose its transactions. Besiktas' filings with the Turkish government lay out the fee structure.

While the £4.75m fee will be paid to Chelsea over five installments over the next two years, Chelsea will record the entire sale on the 2014-15 books for accounting purposes.

Chelsea originally purchased Demba Ba from Newcastle in January 2013 for £7m. He was signed to a three and a half year deal at £80,000 per week.

When Ba signed the three and a half year deal,the £7m transfer fee was amortised over the life of the contract for accounting purposes. If you've been reading our various financial analyses on WAGNH, you're likely already well-aware of the concept of amortisation by now. However, for newcomers (welcome!), amortisation is the process by which an expenditure is paid off over time on the books, and it is a uniform accounting practise employed by football clubs (i.e. it's not just something Chelsea decided to do on its own to make the books look better).

Ba's transfer fee, then, was reduced to £2m annually (£7m spread evenly over three and a half years).

When a player is sold, however, his entire book value becomes due. Given that Ba had two years left on his contract, the remaining book value on his transfer fee was £4m.

So, the £4.75m transfer fee is partially offset by the £4m in remaining book value. As such, Chelsea's total profit on the Demba Ba sale is £750k.

While £750k may not seem like a lot, there's more to this deal. Ba carried an FFP hit of £6.16m in each of the next two seasons (£4.1m in wages in addition to the £2m amortised transfer fee). By using the transfer fee to pay off Ba's book value and getting his wages off the books, Chelsea is actually saving over £13m over the next two seasons.

For 2014-15, Chelsea saves £6.91m and in 2015-16, Chelsea will save £6.16m. This is a bit similar to the Michael Essien deal, where Chelsea allowed him to leave on a free, but saves £6.6m this season as a result of getting his costs off the books.

With the caveat that the two deals are entirely separate from a financial perspective, and Chelsea obviously didn't need to sell Demba Ba in order to absorb the cost of Diego Costa, the Costa deal rendered Ba surplus to requirements. The savings the club received from the Ba sale essentially reduces Costa's annual cost from £16m to under £10m in each of the next two seasons.

While Chelsea could easily afford a £6m-plus FFP hit for a third striker (or fourth, if you pencil Romelu Lukaku's name into the team sheet), it's not an ideal use of Chelsea's resources, and getting Ba off the books allows Chelsea to redistribute those resources in a better way.

Finances aside, I enjoyed having Demba Ba on the roster for the past year and a half, and while I expected more from him on the pitch based on what he did at Newcastle, he came through in a big way against Manchester United in the FA Cup in his first season, and ended his Chelsea career on a high note with key goals against Swansea, Liverpool, and of course, PSG.

Off the pitch, however, he's exactly the type of guy a club and its supporters should be proud to have had in the fold, if only for a brief period. A class act through and through, I wish him nothing but the best and wouldn't be at all surprised if he lights it up in the Turkish league.

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