What Todd Boehly said months ago proved spot on as £76.5m Chelsea boost is now ‘done deal’

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Todd Boehly was the public face of the Chelsea takeover in 2022 and has been a lightning rod for criticism of the new regime at Stamford Bridge ever since.

In reality, while Boehly is the club chairman and was certainly pulling the strings in the initial period post-takeover, it appears that Clearlake Capital are now in the driving seat in West London.

That reflects Clearlake’s much larger stake in the club, which has seen its CEO Behdad Eghbali unseat Boehly as the ultimate power at Chelsea – both on footballing and financial matters.

Boehly named himself interim sporting director before Paul Winstanley and Laurence Stewart assumed responsibility for the position in an unconventional joint capacity in February last year.

According to various accounts, Eghbali is now far more hands-on and has been instrumental in Chelsea’s transfer strategy over the last 18 months.

That transfer strategy is contingent on Chelsea’s Profit and Sustainability Rules (PSR) position.

Chelsea’s accounts for the last three recorded financial years – 2020-21, 2021-22, and 2022-23 – have shown astonishing combined losses of £364m.

The Blues will release their financials for 2023-24 by the end of March next year.

Most analysis suggests that their deficit for that season, in which they had no European football of any description, will be around the £100m mark.

Because of a number of quirks of the PSR system and a few tricks of the trade from their accountants, Chelsea are wholly confident that they continue to comply with PSR.

In fact, Todd Boehly wrote in their official annual accounts in April that they would continue to be in line with both the Premier League and UEFA’s spending rules.

Meanwhile, Enzo Maresca is delivering arguably the best results of the Boehly-Clearlake era and would appreciate his team’s momentum not to be upset by any stories about potential financial issues.

The latest financial news direct from SW6 will therefore be warmly welcomed by the Italian manager.

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Chelsea have received green light for PSR workaround

Particularly after both Everton and Nottingham Forest were docked points by the Premier League for breaching spending rules, there has been a great deal of scrutiny on Chelsea’s PSR status.

Many armchair accountants have observed, for instance, that the Blues are well over the Premier League’s £105m allowable loss threshold for the three-year assessment window.

But certain allowable costs and financial transactions have offset Chelsea’s astronomical spending on new signings and brought them under the limit.

However, some of these business matters have been highly contentious and – while they are in accordance with the letter of the law – have been deemed by some rivals to violate the spirit of PSR.

Chief among those have been the sales of the Chelsea women’s team and two hotels at Stamford Bridge.

That latter transaction, which saw the Millennium and Copthorne hotels sold to Boehly and Clearlake’s BlueCo 22 Properties Ltd, generated a £76.5m profit for Chelsea.

The sale was registered in Chelsea’s accounts for the 2022-23 season, reducing what would have been a £166m loss for the financial year to around £90m and seeing them avoid a PSR breach.

But it emerged this week that sale had only recently been filed with the Land Registry and has not yet been completed, although it is expected to do so by early January.

That raises the question, does that mean Chelsea are in fact missing the £76.5m raised from the sale in their 2022-23 financial year as it has materialised in the present financial year instead?

If so, that could mean they are in breach for the three-year window up to 30th June 2023.

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Kieran Maguire explains Chelsea’s 2022-23 PSR position

TCC spoke exclusively to Liverpool University football finance expert Kieran Maguire to gain some clarity on whether the hotel would count towards 2022-23 or the current financial year, 2024-25.

He said: “Given that it was reported in the financial statements in 2022-23, one would have to assume that it was approved by the auditors.

“It was a sizable transaction, after all. Sometimes in the world of finance we use the phrase ‘substance over form’.

“That means we ignore the legal position and we look at the fact that we have got two related parties involved in a transaction – that is significant.

“There is no tension in the sale of the hotel to BlueCo. It is effectively a done deal even if it hasn’t officially been recognised by the Land Registry yet.

“They aren’t going to turn around and call the deal off, simply because the transaction has effectively been agree with themselves.

“While the legal position from the Land Registry might be that it goes through in January, the substance of the transaction is that it was agreed in 2022-23, so you therefore can show it in the accounts for that year.“

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Will Chelsea be forced to sell players in January to meet PSR?

If Chelsea’s bullish rhetoric about PSR is to be believed, they won’t be ‘forced’ to do anything in January.

Supporters shouldn’t expect any Hollywood additions either, but the fact they clawed back their amortisation bill to an extent over the summer means sales aren’t a necessity.

However, that does not mean they won’t happen.

Boehly and Eghbali are at odds over their respective visions for Chelsea, but the capital outlay they have sanctioned since taking over suggests they agree on the player trading model being central to their plan.

To date, that has meant incomings have far outweighed sales but this won’t always be the case.

With Ben Chilwell surplus to requirements at Chelsea, as well several other members of the infamous ‘bomb squad’, there will be more exits in the winter window to help sales carry on at a healthy clip.