Chelsea achieve record turnover and reduce losses

By David Gold

February 1 – Chelsea have reduced their annual losses to £67.7 million (€80 million/$106 million) for the year ending June 30, 2011, largely thanks to record turnover of £222 million (€266 million/$357 million).

The club brought in more money from television revenue from both their participation in the Champions League and the overseas rights deal for Premier League football.

That helped increase turnover from £206 million (€247 million/$330 million) last year to £222 million (€266 million/$357 million), but losses were reduced by just £3 million (€3.6 million/$4.7 million) compared to the previous financial year.

The losses mean that Chelsea are at a real risk of failing to meet UEFA’s Financial Fair Play (FFP) regulations, which come into effect for the 2013-14 season, and will analyse the financial results from the year ending 2012.

That means that while the latest results will not be taken into consideration under the first FFP analysis of their accounts, it means Chelsea must find a way to reduce their outgoings.

The most obvious way to do that would be through cutting player costs – a number of Chelsea’s highest earners, such as Didier Drogba and Frank Lampard, have been linked with moves away from the club, while Nicolas Anelka has already left for China.

The 2011 results may also have seen the club post a profit had owner Roman Abramovich not indulged in a £70 million (€84 million/$109 million) transfer deadline day spree last January for Fernando Torres and David Luiz.

With an ageing squad, Chelsea will either have to rebuild on the cheap, or continue their previous levels of spending on players, and thus risk their participation in the Champions League and other UEFA competitions.

UEFA allow teams to record losses of up to €45 million (£38 million/$59 million) over the first three financial years analysed, which will reduce over time and eventually require clubs to break even.

Chelsea continue to insist they remain committed to the regulations, and in a statement on their website say they expect 2012’s results to be a significant improvement.

“The club is focused on complying with the requirements of UEFA’s financial fair play regulations while maintaining its ability to challenge for major trophies,” chairman Bruce Buck (pictured left) said.

That ability to challenge is already under threat though, and Chelsea are currently in a battle for fourth place in the Premier League, and the access to the Champions League that grants, with Arsenal and Liverpool.

Should they lose that on the pitch battle, their off the field financial efforts will be seriously undermined.

The club’s chief executive Ron Gourlay (pictured right) added: “Achieving a record level of turnover is satisfying given the economic background against which we are operating.”

UEFA last week warned that 13 clubs currently participating in the Champions League and Europa League were at risk of failing to meet the FFP tests, including several from England, and the organisation’s general secretary Gianni Infantino said that it was “the last wake up call for everyone”.

Alasdair Bell, UEFA’s director of legal affairs, also insisted last week that the FFP tests were legally enforceable and would stand up in the Court of Arbitration for Sport (CAS) if necessary.

“The system is not going to have much credibility if a big club that is in serious breach of the rules is not punished in an effective way,” he told reporters in Nyon.

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