Chelsea could struggle to comply with UEFA’s financial rules, with the European governing body not allowing one practice that the Blues have been using to register income.
Chelsea came under scrutiny earlier this year after they sold two hotels to a sister company and the women’s team to the club’s parent company.
It has helped the Blues to comply with the Premier League’s PSR rules, but it does not look like Todd Boehly and Clearlake Capital will be able to use the same trick with UEFA.
GRV Media’s football finance expert Adam Williams has now spoken to The Chelsea Chronicle about the challenges that lie ahead for Chelsea.
UEFA’s rules on selling assets to sister companies
The Premier League are yet to forbid clubs from selling assets to sister companies, though you suspect that may change in the near future.
UEFA, on the other hand, do not allow clubs to do the above and then register it as income, with that now being confirmed, via The Times.
Unless that changes, Williams claims Chelsea will not comply with the European governing body’s rules.
“To say Chelsea are facing a challenge is perhaps the understatement of the century. Without the intra-group property sales and the sale of the women’s team, they haven’t got a chance of complying with UEFA’s PSR requirements, which are stricter than the Premier League’s,” Williams explained to TCC.
“Their amortisation bill — which is how transfer fees are accounted for over time — is set to run at around £250m and will remain that high for years to come.
“They have made a song and dance about getting their average weekly wage down to around £60,000, but that’s an absurdity.
“You can’t talk about the base rate in isolation of bonuses, and their overall wage bill in 2022-23, the last financial year on record, was £404m. Only Man City’s was higher by a few million. And they won the treble that year. So unless something drastic happens, I can’t see them escaping the clutches of PSR any time soon.”
What next for Chelsea?
Chelsea’s owners do not seem to be too concerned about things right now and have constantly found loopholes since buying the club.
It has been another busy transfer window for them, with the Blues forking out on the likes of Pedro Neto and Joao Felix.
More money could be spent, as Chelsea continue to target Victor Osimhen. But as clever as Boehly and Clearlake have been, Williams fears that they will breach UEFA’s rules before possibly facing a punishment in the 2025/26 season.
“Todd Boehly and Clearlake clearly see themselves as disruptors who are playing a higher game of chess, and maybe they have some trick up their sleeve,” Williams said. “But neither I nor anyone else in football can work out what it is.
“UEFA’s loss limit over three years stands at €60m and, while it can be increased for clubs shown to be in good financial health, Chelsea are miles over the threshold. Probably by more than £100m.
“Then there is the squad cost control element of the PSR system. UEFA is phasing in a rule that will eventually limit clubs to spending a maximum of 70 per cent of revenue on wages, transfers fees and agent fees. For the current season, the ratio is 80 per cent.
“In 2022-23, Chelsea’s squad cost ratio was almost 120 per cent. We haven’t got the 2023-24 figures yet, but I don’t expect the dial to have moved that much.
“In short, I would be stunned if they didn’t breach PSR. The punishment, whatever that might be, would likely be applied in 2025-26.”
It is Chelsea’s second consecutive season without Champions League football, which certainly has not helped their finances, with the club not receiving any money from the competition.
That has also impacted their search for a shirt sponsor. Just like last term, the Blues have started this campaign without another company’s logo on the front of their jersey.
Ultimately, without Championship League football and massive sponsorship money, Chelsea are not in the healthiest financial position, which is why they have had to sell assets to a sister company. But it does not look like that is going to float with UEFA.
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