Welcome to your one-stop shop for knowing what the club is capable of this summer in terms of transfer strategies. WAGNH had a database for the annual costs of players, made by Jake Cohen. The last version was updated in 2015. I have collated information from this as well as contract information from Wikipedia and transfermarkt.co.uk (thanks to Haz Mat and elliot.ofarrell for the recommendations) to update this database to the current day.
Using this updated database, I have used information on Chelsea's 2015/16 financial accounts, with help from analysis on The Swiss Ramble's blog, to estimate what Chelsea's revenues, expenses and total profits/losses were last season (2016/17) and project what they will be next season too. The goal of this is to then test what is possible for the club in terms of transfer strategy this summer.
As well as exploring our financial capabilities, I will also look at the squad capabilities in terms of satisfying the competition squad rules. I will be focusing on the Champions League squad rules, as they are more restrictive than those of the Premier League. The final results can be viewed in a Google Sheet that I created here, which I will analyse below.
First, let's take a look at which players are costing us the most annually. A player's cost is their wages as well as their amortisation cost. The amortisation cost is their transfer fee split over the length of their contract. When a player extends their contract, their amortisation cost then gets spread over the length of the new contract, effectively lowering the annual cost. For next season, the 18 players with the highest cost will be:
The colours, as can be seen in the key on the Google Sheet, refer to contracts signed within the last couple of seasons. As we can see from the top 18, there are 3 standout players: David Luiz, Baba Rahman and Loïc Rémy. David Luiz is a key member of the team but you may not expect him to be the most expensive. The main reason for this is his 3 year contract, which means his transfer cost is spread out over a smaller period. It may be advisable to give Luiz a one-year contract extension to spread his cost out some more. Baba Rahman and Loïc Rémy are placed 11th and 12th on the list, respectively. They are both on relatively high wages for their roles and are still on their original contracts. In their respective loans last season, Schalke and Crystal Palace paid their wages so their costs were not such a burden on Chelsea however Baba Rahman will have to stay with Chelsea next season to recover from injury. It would be advisable to sell Loïc Rémy now to get him off the books, even if the transfer fee may be small.
Turning our attentions to our total expenditure below, we can see that the total player wages are between £115m and £119m for the three-season period that we are focusing on. The 2015/16 financial accounts reported our total wages as £222.4m so it is assumed that our total non-playing staff wages are £106.73m. I will assume these are constant for the 16/17 and 17/18 seasons as well for two reasons: 1) there was a big bump in staff going into the 15/16 season so there is unlikely to be another one throughout the club and 2) although Conte came with a large team of staff, his wages are much lower than what José Mourinho's were.
Looking across to the club expenses section, the first row is the "club expenses" which cover general running costs such as travel, matchday costs, insurance, medical expenses, retail costs etc. I have estimated them to be slightly lower for last season as there were no European matches. I have not put them much lower because this number had taken an unexpected drop in 15/16 from around £80m. I have estimated that in 17/18 these costs will return to a more normal £82m as the club will partake in European competition again. The second row is for exceptional items, which include the cancellation fee of the adidas contract and paying off Jose Mourinho in 2015/16. It is not expected that there will be any exceptional costs in 16/17 or 17/18. The third row is other expenses which I have assumed to be relatively constant.
All in all, totalling the wages, amortisation costs and other expenses, the total estimated expenditure is around the £400m mark for 16/17 and 17/18.
Now turning our attention to revenues, we can see below the income from player sales on the left hand side. This includes the Bertrand Traoré transfer for €19m which is yet to officially go through, but the player is already on his way to Lyon. It also includes a £10m fee for Dominic Solanke, which is yet to be decided by the tribunal. There is also the sale of Ulises Davila in the 15/16 season but a price has not been reported.
Looking at the revenues section, the match day income was £2.8m per match in 2015/16 so I have applied that to the 16/17 season by our number of home matches, assuming slightly more revenue per match as there was a higher percentage of league games. I have also applied this to next season, assuming we reach the Quarter-Finals of the Champions League and have 3 domestic cup home matches. The new stadium would represent a very healthy increase in these numbers. Despite our lack of European competition in 2016/17, our broadcasting revenue has risen to £153.2m thanks to the new PL deal and the much improved PL finish. Assuming we match our CL revenue from the 15/16 season, our broadcasting revenue should rise to a massive £223.2m next season. Our commercial revenue rose by £10m last season due to the Carabao deal and it should rise by a further £30m next season thanks to the Nike kit deal, worth £60m a season. All in all, considering the expenses and incomes, we made a £70.6m loss in 2015/16. I expect to see that we have made a £35m profit in 2016/17 and that we will make around a massive £116m profit in 2017/18 if our squad situation remains as it is, mainly thanks to our return to the Champions League and player sales already made.
Before looking at what we can specifically do with this money, we will look at what we are allowed to do in terms of our squad.
According to UEFA's Champions League squad rules, a team that wishes to submit a squad of 25 has 17 slots allocated to non-homegrown players, otherwise known as List A, 4 slots to association-trained players (i.e. homegrown players but not at Chelsea) and 4 slots to club-trained players. Outside of this 25, there is an unlimited List B. A player will qualify for List B in next season's Champions League if they were born on or after 1st January 1996 and have been eligible to play for the team for at least two seasons. It is also important to note that if a team goes over 4 association-trained or club-trained players, the extras will spill over onto List A. Here is the situation for the players that are currently set to be in the squad next season:
This means that we have room for an extra 4 non-homegrown players, 1 association-trained player and 1 club-trained player.
Possible squad changes
Now we will take a look at possible changes that we can make to the squad this summer whilst staying within the squad rules and we will find out what effect certain changes will have on our finances.
Here is a shortlist of potential signings and their estimated financial impact:
All of the transfer fees, contract lengths and wages are my estimations.
We will consider a possible (but unlikely) scenario in which we go all out in the transfer market and buy a player for every position (GK, CB, RWB, CDM, CM, LWB, AM and ST) to see how much we can stretch our squad and our budget. As can be seen below, with the players chosen, it is estimated that their total wages and amortisation cost for 2017/18 would be around £130m. The squad status on the right shows that there are 20 players counting towards List A (19 plus 1 extra from Association-trained) so 3 players we currently have on List A would need to be moved.
It makes sense that Diego Costa is the first name on the list to go and I have estimated a £30m transfer fee. Getting Costa off the books will make us big savings. Given that in this scenario I have bought Bakayoko and Verratti, Matic is the most obvious sale to make next and I have estimated a £40m transfer fee. The signing of van Dijk would leave Zouma far down the depth chart and so I have sent him on loan with a £1m loan fee and the loan club paying 100% of his wages. After these changes the squad rules would be satisfied. Another alternative would be to bring Fernando Llorente in as a 3rd striker and not sign Alex Oxlade-Chamberlain, which wouldn't have an effect on the squad status because even though the Ox is Association-trained, bringing in Lukaku already takes us up to the allocation of 4 association-trained players and so he would count as a List A player anyway.
We will now look at how this gung-ho approach will affect our 2017/18 finances.
Despite the massive transfer market haul, we would still be left with a whopping £63m profit next season thanks to our return to CL football, the continuing massive PL broadcasting deal, our new Nike sponsorship and continuing the theme of large player sales. These figures do not even include possible sales that I have highlighted on the Squad Status tab of the Google Sheet, such as Tomáš Kalas, Lucas Piazón and Loïc Rémy. It is important to remember that these numbers are all my estimates so would not be exact. Despite that, we can feel very good about our financial position and depending on the board's ambitions and the owner's willingness to fund the new stadium himself, our transfer market potential this summer is gargantuan.
You now have a place to find how much each of our players are costing us in my new database. I have projected that we have made a £35m profit in 2016/17 and that, before any transfer dealings, we would make roughly a £116m profit in 2017/18.
With the current expected squad, we have 4 non-homegrown slots available as well as 1 association-trained slot and 1 club-trained slot.
In a test scenario that stretches the limit of our transfer market, we could potentially bring in a massive haul of players (and have some sales) that would still leave us with a huge £63m profit in 2017/18.
A reminder that all of these numbers (and formulae) can be viewed in full (and in higher resolution) on the Google Sheet that I created.