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Fernando Torres to AC Milan: what it means for Chelsea's finances

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Charlie Crowhurst

My fellow Chelsea supporters, our long national nightmare is over.

Before turning the page on Fernando Torres' Chelsea career, let's take a look at what the Fernando Torres era has cost Chelsea and what effect his two-year loan deal to AC Milan will have on Chelsea's finances.

In terms of actual sterling pounds, Fernando Torres has cost Chelsea nearly £85m so far (£50m transfer fee plus almost £35m in wages). For perspective, this is an absurd £4.25m for each of his twenty Premier League goals over the past three and a half years. If you want to include the other twenty-five goals he scored in Europe and in domestic cup matches, it's a still-absurd £1.88m for every goal scored.

His FFP hit was a crushing £18m+ per year, which, prior to Angel Di Maria recently signing for Manchester United, was the highest in the Premier League. Up until this summer, that £18m per year could have brought in just about any player in the world not named Lionel Messi or Cristiano Ronaldo.

It's also important to note that Fernando Torres provided very little additional revenue in shirt sales. While his number nine has been a popular seller in the past (his shirt was number five seller in the Premier League during 2012-13), he was outside the top ten in the Premier League last season.

Chelsea sells around a million shirts per season, and likely receives around 10-15% of the wholesale price of each shirt sold. Let's assume that Torres accounted for 25% of Chelsea's total shirt sales since joining the club (which I think is generous), he's sold around 900,000 shirts.

However, as Allison Fradgley astutely pointed out on Twitter, this sort of analysis naively assumes that a would-be Chelsea shirt purchaser wouldn't just buy a shirt with another player's name on the back. Even if we do give Fernando Torres "credit" for 900,000 shirts sold, the total revenue generated from these shirt sales, based on an estimated £40 wholesale price, is somewhere between £3.6m and £5.4m total. This is a drop in the bucket.


When Torres came over from Liverpool for £50m in January 2011, he signed a five and a half year deal at £175k per week. His transfer fee was therefore amortised to £9.1m per year, and with two years left on his contract, he's carrying £18.2m in remaining book value.

When a player is sold, his entire book value comes due. Had the AC Milan deal been a permanent transfer, Chelsea would have been charged the entire £18.2m in 2014-15. This would have been ideal, as Torres already carries an £18.2m FFP hit (£9.1 per year in amortisation, £9.1m in wages). Chelsea would've been charged £18.2m plus whatever the club had to pay to make up for the reduced wages he'd likely be on at Milan. Next season, however, Torres would have been completely off the books.

As the deal is structured as a two-year loan, however, Torres will still cost Chelsea £18.2m per season, less whatever AC Milan contributes to Torres' wages.

Earlier reports suggested that AC Milan would be willing to pay the equivalent of £6m. Italian clubs report wages as annual net figures, as opposed to the English standard as gross weekly figures, and the £6m gross figure is the equivalent of the €4m net figure that was reported.

Assuming AC Milan pays £6m per year towards Torres' wages, Chelsea remains on the hook for £12.2m each year (the £9.1m in amortisation plus the remaining £3.1m of Torres' £9.1m annual wages).

However, Jason Burt reported that "it had been thought [Torres] was holding out for a payment on the £175,000-a-week contract he has with Chelsea but because his move to Milan is for two seasons, no pay-off has been forthcoming."

While there's a difference between 1) paying Torres a severance, and 2) splitting his wages with AC Milan (Chelsea would be responsible for around one-third based on the earlier reports already discussed), my interpretation of Burt's report is that Chelsea won't have to pay any portion of Torres' wages.

Assuming AC Milan becomes 100% responsible for Torres' wages, then Chelsea remains on the hook for £9.1m this year, as well as next year (the remaining £18.2m in book value remains amortised).

It would have looked better on the books for Chelsea to simply hand Torres a £6.2m severance, let him go for free on a permanent transfer, and have him cost £24.4m in 2014-15 (£18.2m in remaining book value plus the severance) and nothing in 2015-16, or alternatively, if Chelsea doesn't have to pay any of his wages, he'd cost £18.2m in 2014-15 (the remaining book value) and nothing in 2015-16.

While the total cost is the same, the club's 2015-16 FFP wage bill will likely be much higher than 2014-15, as the profit from selling David Luiz and Romelu Lukaku, among others, lowers this year's bill considerably (we'll roll out an updated version of the wage database after the transfer window closes, so you can see exactly what the difference is).

Essentially, loaning Torres to AC Milan likely saves Chelsea somewhere between £6m and £9.1m both this season and next season, but he remains on the books at a cost of somewhere between £9.1m and £12.2m per year.

On a personal note, while I appreciated Torres' hustle and certainly support whoever has the privilege of wearing a Chelsea shirt, there's not much I can point to that could even begin justifying his cost (besides allowing us to breathe for the final minute or two in the second leg of the Barcelona tie and doing an admittedly fantastic job of falling over Diego Contento to "win" what ended up being the most important corner kick in Chelsea history).

Chelsea has had an excellent run while Torres has been at the club, but imagine what the club could have achieved by getting even an average return on its enormous investment?

Fortunately, we never have to talk about it again, and I am very much looking forward to the future.

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