You might be displeased having to watch the likes of Tottenham Hospur and Leicester City trundle their way through midweek Champions League matches, but according to the official figures from UEFA for last season’s competition, the Chelsea financial team may be even more upset.
Should just be a one-year hit, but Chelsea is missing out on ~£65 million this season due to no Champions League football. https://t.co/R5FVbI12dS— Jake Cohen (@JakeFCohen) November 1, 2016
Chelsea didn’t even make it past the first knockout round in 2015-16, yet due to the way the market-share revenues and bonuses are paid out, the Blues still collected more money than all but five teams (Man City, Real Madrid, Juventus, PSG, Atlético). Chelsea made almost €5m more than semifinalists Bayern Munich!
Any way you look at it, that is a large pile of money. Imagine the player transfers and wages that it could supply! If the competitive and sporting reasons weren’t compelling enough to get back into the top four and the Champions League, this sort of revenue hit should be. On average, Chelsea have collected £50m/year from UEFA over the past five seasons.
(And it’s because of moneys like these that the idea of a “permanent” Champions League, with guaranteed places for certain teams, or some sort of pan-European super league gets brought up with increasing regularity.)
Fortunately, especially as just a temporary situation, the financial hit has not been felt too greatly. The Chelsea Board and front-office team have been doing their utmost to make up for part of that lost income and set the Blues on a smart financial path into the future. (Even as the stadium costs, which are not part of the accounting for FFP purposes, will start rolling in if and when the application is finally approved by the local council.)
Chelsea’s use of the loan system has not been without criticism, to say the least, but it is a profitable venture, both as a money-making operation (buy low, sell high) and as a money-saving operation, when players like Courtois and Moses end up with the first team eventually.
More significantly, Chelsea have added over £100m in new sponsorship deals over the past couple years.
Carabao – £10m per season
Yokohama – £40m per season
Nike – £60m per season (starting only next season)
That’s an extra £62m per season when compared to former deals with Samsung (£18m) and Adidas (£30m) — essentially making up for the loss of Champions League income.
Additionally, the television rights for Premier League football were sold for much, much more than last time around, and that deal kicked in this summer as well. While this doesn’t necessarily grant competitive advantage against other English teams (since everybody gets a boost), it does give the league much more money to spend, in general, than other teams in Europe. Of course, those other teams will exploit this situation by charging higher prices, but at the end of the day, more spending power is preferred to less spending power. The English Premier League produce is the most popular league around the world, and that’s a good thing.
A REMINDER:— footballreminder (@footballremind) July 29, 2016
Premier League TV Income has risen dramatically from £50.7m per year in 1992 to £2.9bn per year in 2016 pic.twitter.com/0GT1R5xL1M
Once the new stadium is built, Chelsea’s matchay revenue will increase as well. While the costs of building the new stadium will be covered by the owner, the revenues will flow back into the club and onto the balance sheets. They might not be as great as the broadcast and merchandising revenues (with these two income streams getting ever larger and more important), but every additional penny counts.
(Alternatively, it will allow for cheaper tickets, which is a tremendous boost to the sporting and fan engagement side of the operation with a very small hit to the business side of things.)
Despite the massive financial hit of failing to qualify for Europe this season — not to mention the loss of prestige over missing out — the future is bright for Chelsea. Here’s to getting back where we belong and then taking it to the next level.