Chelsea transfers: How can Premier League club spend so much money while operating within Financial Fair Play rules? | Football News

With Chelsea spending £601.7m last season and already splashing £345.9m on new signings this summer, many football fans are asking the same question: how do they operate within the Financial Fair Play rules?

The £115m arrival of Moises Caicedo saw Chelsea break the British transfer record for the second time in six months and took the club’s spending under co-owner Todd Boehly to almost £900m, a figure which has increased since the confirmation of Romeo Lavia of £58m. movement.

So, with more arrivals at Stamford Bridge a distinct possibility before the end of the summer window, Sky Sports News spoke to the football finance expert Kieran Maguire to explain how the Premier League club appears to be staying within financial guidelines.

How have Chelsea squared this incredible spending spree since Boehly took over?

Chelsea decided to spread the cost of the players by signing them to long contracts.

For example, by signing Mykhailo Mudryk to an eight and a half year contract, in terms of accounting and FFP purposes, you take the £88.5m cost and you spread it over eight and a half years, and that works out to just over £10m a year.

This process is called amortization, which spreads the cost of the transfer fees over a longer period so that the annual cost is reduced.

That appears to be the strategy Chelsea have used in the last two windows.

So, is that the same with players like Romeo Lavia, who signed a seven-year deal at Stamford Bridge?

Absolutely. This could work both ways for Chelsea.

If the players really develop and are a big success it gives the club protection when other clubs come in and try to poach the players because they have years left on their contracts.

The downside is that if the player doesn’t perform then you have the complication of the fact that they are likely to be very high wages and you are committed to wages for the next six, seven or eight years.

So, when it works it’s amazing but when it doesn’t, it weighs the club down like an anchor that slows things down.

How long will this strategy last? Can Chelsea continue to do this, continue to offer long contracts and therefore still be okay in terms of FFP?

The issues is that you are limited to a 25-man squad as far as the Premier League and UEFA are concerned.

You can’t keep adding to the list of players and remember that each of these players is probably on a contract worth £7m, £8m or £9m-a-year.

All of a sudden you get a lot of players on these big contracts and then your wage bill goes up to £50m or £60m, and with UEFA’s new financial and sustainability rules, which come into effect from next summer, you are only allowed to spend 90 percent, then 80 percent and then 70 percent of your salary income, agents’ fees and your net transfer costs.

Now Chelsea haven’t qualified for the Champions League this season, will this affect their spending in the upcoming transfer windows?

It will be tight if Chelsea are out of the Champions League next season. It may catch up with them soon.

If we look at Chelsea when they won the Champions League in 2021, that generated around €120m (£106m) in prize money.

You’d normally expect to earn £3m to £4m for every home game at Stamford Bridge too, plus bonuses from sponsors.

Now, if you compare that to the Europa League, for every £1 you make in the Europa League you make about £4.50 in the Champions League.

Are you surprised by the spending spree since Boehly took over?

I was surprised to some extent given that Boehly’s background is in private equity where the main objective traditionally is to shed costs and try to make a business more attractive in the future who are the owners.

You will be surprised that it commits itself to such a big commitment in terms of cashflow, in terms of transfer costs and wages.

So, I think it surprised a lot of people compared to the greatness we saw under Roman Abramovich.

Remember, Chelsea lost £900,000-a-week under Abramovich during his 19-year ownership.

How important is FFP? Can clubs always find ways to bend FFP rules?

There’s an element of whack-a-mole in terms of every time we see a new series of rules come in, the accountants and the lawyers look at them from a forensic point of view. perspective and try to identify the stresses and weaknesses that exist within the rules.

Then what we’re seeing is that regulators are trying to address that.

In fact, looking at these rules I think there are opportunities for clubs that maybe what we can describe as a little creative in some ways that they recognize their costs, and therefore it is likely to lead to future conflicts between the administrators of the game and individual clubs, which may have a faster and looser approach to moral and ethical issues surrounding financial rules and sustainability.

UEFA rule change in response | Doesn’t this apply to Chelsea?

Chelsea’s strategy cannot be copied by rivals in the future, however, with UEFA moving to close the loophole to stretch transfer fees on long contracts. From the summer, clubs can only spread transfer fees over a five-year period.

However, these rules do not apply retrospectively, which benefits Chelsea.

The changes will not affect the club’s Financial Fair Play calculations after their extraordinary January transfer window.

So how did Chelsea manage to secure deals longer than five years this summer?

UEFA closed this loophole this summer by including a maximum five-year contract length, but the Premier League has yet to follow suit.

In addition, Chelsea used the fact that they did not qualify for UEFA competitions this season to their advantage. By finishing 12th last season, the Blues do not have to comply with the new UEFA regulations.

Selling players offsets the big costs

Chelsea spent nearly £600m last season, which averages out to £75m a year when you divide £600m by eight.

Chelsea have also been busy offloading high earners this summer, with the likes of Pierre-Emerick Aubameyang and Kalidou Koulibaly, recouping over £200m in player sales with Kai Havertz’s £65m transfer of Arsenal taking accounting profit.

Mason Mount and Ruben Loftus-Cheek – two academy graduates – sold for a combined £75m and appear to be net income on the books.

Follow the summer transfer window on Sky Sports

Who will be on the move this summer when the transfer window opens on June 14 and closes at 11pm on September 1 in England and midnight in Scotland?

Keep up to date with all the latest transfer news and rumors on our dedicated Transfer Center blog on Sky Sports’ digital platforms. You can also access the ins, outs and analysis of Sky Sports News.