Expanding Stamford Bridge could see Chelsea earn an extra £50 million per year

Is there enough fan demand to fill a 60,000 seat stadium?

Absolutely.

Stamford Bridge has been operating at over 99% of capacity for years, and with a waiting list* for season tickets and fans willing to stump for the exorbitant prices unscrupulous touts sell tickets for, there are zero concerns about Chelsea's ability to fill the stadium.

*The waiting list is prioritised by the number of loyalty points each fan has accrued, not by the length of time since a fan registered interest in a season ticket.

How much additional revenue can Chelsea expect to see?

A lot.

Liverpool estimates that redeveloping Anfield to add 8,500 seats (4,500 corporate hospitality seats, 4,000 general admission) will see the club earn an additional £25 million per year (£20m in matchday revenue and a £5m for selling naming rights to the new stand).

Corporate hospitality will likely be a fundamental part of any redevelopment of Stamford Bridge. Put simply, corporate hospitality seating is far more profitable than general admission seating.

As an example, Manchester United's most expensive box for the upcoming 2015/16 season is a sixteen-seater and costs £125,000. In that section of Old Trafford, a season ticket costs £646 per year. Even assuming that you could fit three times as many general seats where the box is located, that amounts to "just" £31,000 per year, or less than 25% of the revenue generated from the box.

As such, expanding the capacity of Stamford Bridge by around 50% should see the club's matchday revenue increase by considerably more than 50%, assuming an increased focus on corporate hospitality.

Currently, Stamford Bridge has around 25,000 season tickets, 14,300 general tickets, and just 2,400 corporate hospitality and executive box tickets.

Chelsea hasn't raised season ticket prices since 2011/12 and with consistently deep runs in domestic and European cup competitions, matchday revenue has been largely stagnant, fluctuating between £67m £77m over the past several years (the fluctuation depends on how many matches are contested at Stamford Bridge each season).

If Chelsea's specific redevelopment plans (which we are not privy to at the moment, so this is just speculation) include 7,000 corporate seats and 13,000 general admission seats, revenues should increase from £71m in 2013/14 to at least £125m when the project is completed.

The £125m assumes zero increase in ticket prices (more on this in a bit) and a 4:1 price ratio between corporate and general seating. It also assumes the aforementioned 13:7 split between corporate and general seating and doesn't take into account any additional sponsorship money the club could see with regards to sponsorship opportunities and naming rights.

This represents an overall increase in matchday revenue of over 75% from 2013/14 to whenever construction is completed. This is a massive increase amounting to over £50m more per season, and as you can see from the numbers, this is a fairly conservative estimate.

How will a temporary move to Wembley or Twickenham affect matchday revenue?

This is tougher to pin down, and there are a lot of issues that need to be squared away before either venue becomes a reality -- most importantly, convincing the residents of Twickenham and the Brent Council that 50,000+ football fans stopping by the neighbourhood twenty-five to thirty times a year is a good thing (make no mistake, it is a good thing, as fans spend money with local businesses and the boost to the local economy will almost always outweigh the very temporary congestion issues)

For what it's worth, Wembley needs Chelsea a lot more than Twickenham does. Wembley is owned by the FA, and the FA is still liable for £263m in bank loans resulting from financing the construction of the stadium (the FA also carries £50m in liabilities related to St. George's Park).

The FA is committed to finding ways to increase the revenue generated from Wembley and has earned around £85m in gross revenue in each of the past two years (around £30m net, before including the debt servicing) from hosting sporting events, concerts, and National Football League games.

Conversely, Twickenham is owned by the Rugby Football Union, which is completely debt free.

(as an aside, my two cents - I've actually had meetings at Wembley and Twickenham on the same day, and for me, Wembley would be the better option, mostly because North London is simply easier to get to than Twickenham and it seems like there's a lot more going on around Wembley Stadium. At Twickenham, it's like they put a gigantic stadium right in the middle of a nice residential town that somehow magically transforms into rugby heaven twenty times a year. As far as the stadium experience goes, I've only seen them empty, but it doesn't seem like you could go wrong with either).

Depending on the terms of the lease, Chelsea would almost certainly see matchday revenue increase if and when the club temporarily plays at either stadium. Stamford Bridge can only accommodate 42,000 fans, whereas Twickenham and Wembley can host twice that number.

Would Chelsea sell 80,000 tickets for each match? They certainly would for big Premier League and Champions League matches. For a league cup match against Burton Albion on a Tuesday night? Probably not.

Keep in mind this is a very rough estimate, but if Chelsea signs a lease with either stadium for £14m per year plus 10% of the gate receipts (£500,000 plus 10% per game, assuming 28 fixtures) and sells an average of 65,000 tickets (55% more than they currently sell at Stamford Bridge), Chelsea would take home around £95m after paying the venue.

Keep in mind this is probably a fairly high estimate for the cost to lease Wembley or Twickenham and a low estimate on ticket sales (and doesn't take into account the additional hospitality seating Twickenham and Wembley can offer), but "worst case scenario," Chelsea would earn about £20m more than they currently do at Stamford Bridge.

What does this mean for ticket prices?

Ideally, not much, but historically, stadium projects have not been very kind to fans' wallets.

I've been advocating for clubs to reduce ticket prices for a while, not on moral grounds, but rather because it could prove to be good business.

The 40,000 fans at Stamford Bridge make up a tiny percentage of Chelsea's worldwide fanbase, but their importance cannot be understated. For the millions of fans watching matches around the world, the fans in the stadium are a large part of the Chelsea experience and serve as an extension of the club and its brand.

Therefore, it makes sense from a business perspective for clubs to keep their loyal match-going supporters happy. Banners like this, this, this, and this make sponsors nervous and are embarrassing images for clubs to project around the world. The PR boost any club would see by 1) cutting ticket prices and/or 2) offering substantially reduced packages for younger fans (who tend to bring a more enthusiastic brand of support to the stadium) would be well worth the hit a club would take on matchday revenues.

If Chelsea were to reduce season tickets by £15 per game across the board right now, it would cost the club around £7m per year. £7m is not an insignificant sum (in terms of player costs, Nemanja Matic costs around £7.4m per year) and represents nearly 10% of the club's current matchday revenue, but the investment in the core group of match-going supporters would likely pay off (happier fans equal louder fans and a bit more disposable income could see more fans making the trips on away days, making for a better atmosphere for the squad to play in). Chelsea and other major clubs are investing heavily in attempts to capture fans and market share in emerging markets all over the world right now, and I think it's only natural that clubs should invest a bit to ensure that their most visible and influential group of fans are happy.

With commercial and broadcasting revenue seeing incredible growth rates, matchday revenue is becoming an ever-smaller percentage of overall revenue, even with redevelopment projects at Etihad, Anfield, and elsewhere. Cutting ticket prices would be a bold move for a forward-thinking club and I think it would pay off in the long run.

That said, owners overwhelmingly tend to pass the cost of stadium development on to the fans in the form of higher ticket prices and even personal seat licenses (otherwise known as debenture).

For example, the cheapest season ticket for Arsenal, which has been paying off its debt from building Emirates, is over £1,000. This is more than the most expensive season ticket at all but three Premier League clubs (Spurs' most expensive ticket is £1,900, Manchester City's is £1,750, and Chelsea's is £1,250).

Of course, as mentioned, the way Chelsea does business is dramatically different from the way Arsenal does business, and unlike Arsenal, Roman Abramovich likely won't have to get loans to fund the projected £500m redevelopment costs and saddle the club with debt financing costs (more on this below).

How will a £500m stadium redevelopment project affect the FFP books?

It won't.

UEFA wants to encourage investment in infrastructure and community development, and including stadium costs as part of the break-even calculation would only serve to stifle that. Additionally, UEFA has comprehensive regulations with regards to stadium safety, and to force clubs to choose between upgrading its sanitation facilities or its striker situation is counterproductive.

The regulations -- specifically Annex 10(C)(1)(j) for those interested -- exclude stadium costs as part of the break-even calculation. If you're not interested in the specifics, UEFA has simplified things, simply stating "in order to promote investment in stadiums, training facilities and youth development, all such costs are excluded from the break-even calculation."