As Andre Schurrle has just been sold to Wolfsburg for £24.1m plus £3.75m in potential add-ons (or €32m + €5m), we now turn our attention to how this deal affects Chelsea off the pitch and on the books.
Chelsea originally bought Schurrle from Bayer Leverkusen for £19.5m in July 2013. When Schurrle signed a five-year deal, his transfer fee was amortised over the life of the contract for accounting purposes.* 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 every football club in Europe's top six leagues.
* Note that this is just an accounting practise. In reality, Chelsea likely paid Leverkusen the full £19.5m immediately. Similarly, Wolfsburg will likely be paying Chelsea the full £24m immediately or in a few installments over the next few months.
Schurrle's transfer fee, therefore, was reduced to £3.9m annually (£19.5m spread out evenly over the five-year deal).
When a player is sold, however, his entire book value becomes due. Put simply, book value is the remaining portion of the transfer fee that has not yet been accounted for on the books due to amortisation. Given that Schurrle had 3.5 years left on his contract, the remaining book value on his transfer fee was around £13.65m.
So, the £24.1m transfer fee from Wolfsburg is partially offset by the remaining £13.65m of Schurrle's book value (we take an conserivative approach to Chelsea's finances at WAGNH, so we'll disregard the add-ons for now and can always adjust up at a later date should we find that the add-on clauses have been met). This reduces the profit to £10.45m.
Chelsea also has to account for the wages paid to Schurrle during the 2014/15 season. He was earning around £78,000 per week at Chelsea, and a half-season's worth of wages adds up to around £2.03 million. Chelsea will have to account for these wages on the books, so it further reduces the overall profit on Schurrle to £8.42m. Note that we are only accounting for the wages paid this year, as wages previously paid have already been accounted for in previous years' financial statements. Chelsea will record the entire £8.42m profit from the sale on the 2014/15 financial statement.*
*Note that Chelsea will technically record £10.35m profit and include Schurrle's wages in a separate line item (the wage bill), but at WAGNH, we boil it down to one number for simplicity.
This sale also removes Schurrle's £8m "FFP hit" (£3.9m amortised fee, £4.1m in wages) in each of the next three years, wiping out £24m in future committments.
Make no mistake, turning a bench player into £24m is a very, very good piece of business on Chelsea's part, but on a personal note, I enjoyed watching Andre Schurrle over these past eighteen months. His reduced role this season was likely partly due to circumstances beyond his control, as he was battling an illness. He was also an underrated scorer, and leaves Chelsea with a very solid .56 goals per 90 minutes in the Premier League, despite coming off the bench more often than not. I'm confident that the Schurrle - De Bruyne tandem will be quite successful at Wolfsburg.
That said, under Jose Mourinho, especially this season, it was clear that he was, at best, an impact sub off the bench. This was a role he thrived in at Chelsea, but it's difficult to justify turning down £24m for a bench player, especially with Juan Cuadrado coming in, which would've had the effect of knocking Schurrle even further down the pecking order.
It should also be noted that Chelsea absolutely did not need to sell Schurrle to buy Cuadrado. Chelsea earned £18m profit last season and its "FFP profit" for breakeven purposes was, very conservatively, £30m+. Chelsea's relationship with financial fair play is not about compliance, but rather about maximising resources.
The money earned from the Schurrle sale can be put to much better use improving Jose Mourinho's starting eleven, and just like David Luiz, Juan Mata, Romelu Lukaku (and to a lesser extent, Kevin De Bruyne) before him, when Mourinho makes it clear that he doesn't need a player, Marina Granovskaia and Co. waste no time selling them for top dollar on the transfer market.