Chelsea spent at least £200m on players in both 2017-18 and 2018-19, but because we bought badly (with a few exceptions), and others were spending big as well, no one batted an eyelid.
After spending practically £0m last year — though we did manage to find a loophole in the transfer ban and keep Mateo Kovačić for £40m — we’re now back to spending big, but now everyone’s eyelids are working overtime. If and when Kai Havertz signs, we’ll once again be back over £200m for the season in incoming transfer expenditures.
So how can Chelsea afford to spend that much in the time of COVID-19? The answer to that question has multiple parts, most of which are obvious. And while others have taken a stab at explaining all of them, no one does such things quite like @SwissRamble.
His thread on Chelsea’s current financial status is required reading. I’m just going highlight the most interesting part, but the whole thread is well worth your time.
Despite the COVID-19 pandemic, Chelsea have been spending big in this summer’s transfer window with their estimated outlay well over £200m. This thread will look at the financial implications and explain how #CFC will still be able to meet the Financial Fair Play (FFP) targets.— Swiss Ramble (@SwissRamble) August 31, 2020
So, first part: we saved up. We might not have been able to sign new players in the summer of 2019, but we did sell one for £100m (and that’s before Eden Hazard’s Real Madrid triggered any add-ons), and one for £50m (Morata), and a few others, including David Luiz. Since most of those outgoing transfers were fully amortized (including Hazard), we got to book almost all of the incoming fees as net profit (nearly £175m total).
First part, bonus round: we shed wages (over £60m, annually). In addition to the aforementioned trio, letting the likes of Cesc Fàbregas, Gary Cahill, Willian, and Pedro go in the last couple years has kept the wage bill manageable.
Second part: we have a rich owner who spends. When it comes time to pay the bills, we can always turn to the “Bank of Roman”. The owner’s spending on Chelsea breached the £1 billion mark a few years ago, and it doesn’t look to be slowing down anytime soon (despite his visa status).
OK, enough fancy footwork in the accounts. Back in the real world someone will still have to pay the bill. Fortunately for #CFC, they can call on the “Bank of Roman”, as their owner has pumped in £1.3 bln since his arrival, including a chunky £247m in 2019. pic.twitter.com/1fNjoy7JjM— Swiss Ramble (@SwissRamble) August 31, 2020
And now the third part, the most interesting part: COVID-19 and FFP.
When UEFA announced in April that they would suspend FFP accounting for a season, we figured it would be the likes of Manchester City and PSG who would take the most advantage of it — more unchecked spending since they already flout FFP rules. And while City could still do that if they manage to sign Lionel Messi, it turns out that, actually, so far, we’ve been the biggest beneficiaries of this temporary change.
Basically, what the change means is that FFP accounting, which normally looks at a three-year rolling average, will only look at a two-year average in the upcoming monitoring period (ignoring this season) and then will be looking at a four-year period in the monitoring period after that. So any spending we do this year will only be looked at in combination with the following seasons (and any deficit halved to further compensate for COVID-19), allowing us to balance the books with further sales (as is our usual method) and/or performance bonuses (qualifying for the Champions League extra important, as usual).
The changes mean that the 2021 monitoring period will now only cover 2 years (2018 and 2019), thus excluding the COVID-19 impacted 2020. In addition, the 2022 monitoring period will cover 4 years, though 2020 and 2021 will be assessed as a single period. pic.twitter.com/hrFK2ZKfDV— Swiss Ramble (@SwissRamble) August 31, 2020
The details of all this can be found in the Twitter thread by @SwissRamble, which you’re certainly encouraged to check out, especially if you’re at all interested in the murky world of football finances and FFP accounting.
For the rest of us, let’s just say, thank you UEFA (weird!) and thank you, Roman (as always).
On that basis, #CFC will only have a small £5m (€6m) FFP break-even deficit for the 2022 monitoring period, as this will cover 2018 (£95m profit), 2019 (£73m loss) and the average of 2020 (£46m profit) and 2021 (£99m loss), i.e. £27m loss. In other words, they should be fine. pic.twitter.com/Nck0uFGdyX— Swiss Ramble (@SwissRamble) August 31, 2020