With almost £1.5bn spent since Todd Boehly and Behdad Eghbali arrived at Stamford Bridge, Chelsea are feeling the pressure under Profit and Sustainability Rules (PSR).
PSR, which is the system that was formerly labelled Financial Fair Play or FFP, currently works on a profit-loss basis, with Premier League clubs like Chelsea allowed to lose no more than £105m over three years.
From next season, the Premier League is set to move to a model whose structure is closer to UEFA’s, which caps spending on wages, transfers and agent fees at a percentage of revenue.
As participants in the Conference League this term, Chelsea are subject to both UEFA and the Premier League’s spending rules – and the margins for compliance with both are razor thin.
Todd Boehly himself has insisted that Chelsea will not breach PSR, but the mood music within the football industry suggests that, based on current projections, that is an optimistic stance.
Chelsea have a greater chance of dodging a fine or points deduction under the domestic rules as they have been given approval for the sale proceeds of two hotels at Stamford Bridge to count towards PSR.
But UEFA do not recognise those intra-company transactions, meaning compliance with their system – which this season has an 80 per cent spending cap – is far trickier.
However, fresh developments from football’s financial sphere today will make good reading for Enzo Maresca and Chelsea’s team of accountants.
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Nick DeMarco to fight new Premier League PSR plan
Subject to a shareholder vote, the Premier League is widely expected introduce a new squad cost control rule that will limit spending on wages, transfers and agent fees to 85 per cent of revenue from 2025-26.
That cap is relatively uncontroversial, with most clubs in agreement that the Premier League needs to mirror the system that UEFA is currently phasing in.
However, the issue of financial ‘anchoring’ is far more divisive.
The Premier League has proposed to introduce an anchoring system whereby spending is tied to a multiple of the bottom-placed club’s annual media revenue.
It is is expected that the anchor will be set at a multiple five, which would have given Chelsea a £518m cap last season. They spent more than that.
The anchoring system was put to a vote at the Premier League’s AGM last summer but did not pass, with Chelsea abstaining from the vote and several others voting against.
When they eventually addressed the ongoing crisis instigated by Man City’s APT hearing, the Premier League are set to try and implement an anchoring system for a second time next summer.
But City AM’s Matt Hughes has now reported that the PFA have hired superstar lawyer Nick De Marco KC to challenge the anchoring plan.
That bodes well for Chelsea.
De Marco, sometimes referred to as the Lionel Messi of sports law, successfully represented Leicester City in their PSR hearing earlier this year and has also succeeded in striking down a salary cap in Leagues One and Two.
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Boehly vs Eghbali: The battle for control in the Chelsea boardroom and its impact on PSR
While American private equity billionaire Todd Boehly has routinely been cast as the ultimate decision maker at Chelsea since the takeover in May 2022, that is no longer the case.
Yes, the Los Angeles Dodgers benefactor went so far as to appoint himself interim sporting director in the early days of the new regime, but his influence behind the scenes has since dwindled.
In truth, that reflects his equity stake in the club.
Boehly’s owns less than 13 per cent of Chelsea’s shares, although the similar stakes of, James Pade and
Hansjörg Wyss – Boehly’s two biggest allies at the club – mean he remains a powerful force in SW6.
By all accounts, Behdad Eghbali is now the one who is steering the club, involving himself heavily in transfer strategy and the potential redevelopment of Stamford Bridge.
The ego clash between Eghbali and Boehly has reached a point where, although they maintain that things remain professional, each are trying to buy the other out.
Eghbali has more leverage given that his Clearlake Capital group own over half of the club’s equity, but the club’s constitution and the conditions of the initial takeover deal mean things could get messy.
Meanwhile, the club itself is in purgatory.
The lack of coherence at the highest level within the club hardly aligns itself well with Chelsea’s increasingly complex mission to comply with PSR.
What’s more, the nosedive in prize money that FIFA are offering for participation in the Club World Cup also means that Chelsea are already straining to make the numbers add up.
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