Seven senior signings and a reported outlay of close to £300m - it was a busy and expensive January transfer window for Chelsea.
The deadline day capture of Enzo Fernandez for a British record fee saw the club’s ownership again invest heavily in improving Graham Potter’s squad. With Raheem Sterling and Wesley Fofana among the costly commodities bought last summer, Chelsea’s spending under their new ownership has been significant.
But how can the club continue to spend so freely without falling foul of Uefa’s Financial Fair Play (FFP) Regulations?
The Independent explains...
What is FFP?
Implemented at the start of the 2011-12 season, Uefa’s Financial Fair Play Regulations are a measure designed to prevent football clubs recklessly spending more than they earn in pursuit of success. The regulations outline sanctions for clubs found to have overspent.
Uefa’s FFP rules allow only a £53m loss over a rolling three-year period, and the body has also introduced a soft wage cap, which also includes spending on agents fees and net transfer fees, at 90% of revenue for next season.
The Premier League’s FFP rules differ slightly - clubs are allowed a loss of £105m over a rolling three-year period.
What is amortisation?
A key aspect of Chelsea’s compliance with FFP rules is amortisation. Put simply, this means Chelsea spread the cost of a transfer across the length of the contract of the signed player, to prevent significant single-year expenditure.
You may have noticed that many of the club’s new recruits have agreed long-term deals. Mykhailo Mudryk signed terms to an eight-year deal that will run to 2031 - that enables Chelsea to spread the transfer fee they paid Shakthar Donetsk for the Ukrainian across that period in their accounts. There is an inherent risk to offering such long contracts if the purchased player fails to peform, but it is a favoured tactic of Chelsea’s new owners, with Fernandez and Fofana among the other players to have agreed to extended deals.
Additionally, transfer fees received are not amortised - the reported £12m Arsenal paid Chelsea for Jorginho enters the accounts immediately, offsetting the amortised costs of the club’s signings. Uefa are set to change the amortisation rules in the summer, limiting clubs to only a five-year spread of transfer costs.
Are Chelsea in any danger?
The Independent understands the club are confident that they have complied with all FFP regulations. Chelsea’s accounts for 2021-22 have not yet been made public, but it is thought that the club made a pre-tax profit for the second time in a three-year period. The 2020-21 season, however, saw Chelsea invest heavily under previous owner Roman Abramovich, purchasing Kai Havertz, Timo Werner, Ben Chilwell, Edouard Mendy and Hakim Ziyech and reporting a loss of £156m.
Ordinarily, this might place Chelsea in danger of sanction. However, understanding the significant impact of the Covid-19 pandemic on clubs’ revenues, Uefa has softened their stance on excessive spending.
Chelsea (along with fellow Premier League clubs Manchester City, Leicester and West Ham) were one of 19 clubs that were “able to technically fulfil the break-even requirement thanks to the application of the Covid-19 emergency measures and/or because they benefited from historical positive break-even results” - though Uefa warned all 19 in September that from this financial year onwards, the accommodations made during the pandemic no longer apply.
Has a club ever been sanctioned under FFP?
Yes. Uefa fined a number of clubs - including Paris Saint Germain and Juventus - in September, some of which were suspended on the condition of future compliance with the regulations.
Will Chelsea’s spending continue?
The level of Chelsea’s future spending may hinge on whether they are able to qualify for Europe this season. As Champions League regulars, the club has traditionally had the assurance of the significant financial boost that competing in the marquee continental competition brings, but a place in the Europa League, or missing out entirely, would mean Chelsea’s revenues take a hit and thus limit any further transfer business. Manchester United currently occupy fourth spot with a ten-point advantage on Potter’s side, who sit in tenth after 20 games of the Premier League season.
