The Premier League’s Profit and Sustainability Rules – or PSR – remain a major source of frustration for Chelsea. But new developments give them some hope of finding another way to bypass them.
Under PSR, Chelsea are allowed to lose £105m over a rolling three-year period as long as the bulk of those losses are underwritten by Todd Boehly, Behdad Eghbali and the rest of the ownership.
From next season, it is all but confirmed that the Premier League will move to a model similar to UEFA’s FFP system that will cap spending on wages, transfers and agent fees at 85 per cent of revenue.
For context, Chelsea’s current spend on wages and amortisation – which is how football clubs account for transfer fees over a period of time – is running at £605m, well over 100 per cent of turnover.
Projections from respected analytical firm Off The Pitch meanwhile project that their amortisation bill will be about £158m in their next set of annual accounts.
But for the time being at least, it is the £105m loss limit that Chelsea need to be most mindful.
Their losses in 2022-23, the last financial year on record, totalled £90m, giving them very little margin for error in the 2023-24 and 2024-25 seasons under the PSR system.
So far, Chelsea have escaped the clutches of the Premier League PSR enforcers who have handed points deductions to Everton and Nottingham Forest by virtue of a few accounting sleights of hands.
And there is potentially some good news on that front, direct from Premier League HQ.
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Premier League fail to outlaw PSR-busting move
The PSR trick that came most to public attention was Chelsea decision to hand players ultra-long contracts so as to reduce the amortisation burden on the club.
The Premier League has now banned this practice, limiting the duration over which a transfer can be amortised to five years.
But it appears that another practice used by Chelsea, the sale of assets to other companies controlled by the ownership, is still permitted by the Premier League.
As well as suggestions that Chelsea have sold a portion of their training ground to a company owned by Boehly, the club have also sold a stake of their women’s team in similar fashion.
What’s more, Chelsea’s owners have also effectively sold two on-site hotels at Stamford Bridge to themselves for £98m, although the amortised PSR value of the deal was £76m.
After many in the football world suggested that this transaction was against the spirit of PSR, it was reported that the Premier League were working to close the loophole.
However, The Times now report that because their legal firepower and time has been focused on Man City and their challenge to their associated party transaction rules, the issues has not yet been addressed.
The Premier League held a shareholder meeting last week, where there was an opportunity for clubs to vote on intra-company transactions.
But while the league have not ruled out another attempt to block the type of deal employed by Chelsea in future, it does not look likely in the short term.
If the powers that be at Stamford Bridge did want to repeat the trick with a different property asset, the situation at present would theoretically allow them to do so.
Can Chelsea avoid a PSR breach this season?
If Chelsea are to have any hope of dodging a fine or points deduction this season, then there are a few areas that they need to address – and urgently.
Most obvious is the continued absence of a front-of-shirt sponsors. A club’s front-of-shirt rights are typically the most valuable asset in their commercial inventory, with Chelsea’s likely worth £50m per year.
But for the second successive season, the club have begun the campaign without a front-of-shirt sponsor, baffling commercial analysts.
Granted, Chelsea are now in talks with Qatar Airways and a handful of other potential partners, but the fact that the kits have already been produced and 10 matches have elapsed will impact the value.
Meanwhile, Enzo Maresca appears to have been selected for the manager’s job on the basis that he can develop players, increase their value, and ultimately flip the for a profit.
Player trading is the single most important element of Chelsea’s strategy to comply with PSR, and it would be a major surprise if more players were not moved on in January.
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