By Andrew Warshaw
January 2 – UEFA’s financial fair play rules have been brought into sharp focus with the news that Chelsea, one of the world’s most affluent foreign-owned clubs, made a loss of £49.4 million for the year ended 30 June 2013.
The club’s group turnover of £255.8 million for the same 12-month period is a record but elimination from last season’s Champions League in the group stages saw a drop in income.
Chelsea insist the figures fall well within the criteria set by FFP under which clubs cannot repeatedly spend more than their earn. But the deficit will likely curtail any more extravagant moves in the transfer market, at least in the short term, for a club which, under the ownership of Russian billionaire Roman Abramovich, has been accustomed to virtually limitless spending.
The losses for the 2012-13 season are in stark contrast to the small yet significant £1.4 million profit the previous year which represented the first time Chelsea have been in profit during the Abramovich era.
That ensured Chelsea met UEFA rules during the first formal monitoring period. UEFA allows for sliding scale losses and encourages spending on youth development and infrastructure. As a result, Chelsea expect European football’s governing body to calculate a combined loss for 2011-12 and 2012-13 of £33 million which falls within the allowed limit of losses.
UEFA will spend the next few months assessing each club’s finances over the last two seasons before announcing in the spring which clubs have failed to comply with its regulations.
Crucially, maximum permitted losses gradually decline under FFP and to keep complying, Chelsea must not lose more than about £4.5 million in the current financial year and get closer to balancing the books over the next three seasons.
UEFA President Michel Platini has insisted no club is safe from sanctions but also looks sympathetically on those that make a genuine effort to control spending and invest in youth development, which Chelsea maintain is one of their priorities.
Also in Chelsea’s favour are growing revenues and strong commercial sustainability. New deals with Adidas are reportedly worth £300 million over the next 10 years.
“To achieve a record level of turnover despite our first group-stage elimination from the Champions League shows we have structured our business and are growing in the correct way for long-term stability,” said Ron Gourlay, Chelsea’s chief executive.
“Our philosophy is that we build upon success on the pitch – and although in these financial results we haven’t repeated the sizeable profits made the previous year from player transfers, we believe the age profile of the existing squad means we will benefit from that investment for many years to come.”
Chairman Bruce Buck added: “From the beginning of the current ownership, a long-term objective was financial sustainability, and the implementation of Financial Fair Play brought that to the top of the agenda. We are pleased that we will meet the stipulations set down by UEFA in their first assessment period.”
Contact the writer of this story at moc.l1734801088labto1734801088ofdlr1734801088owedi1734801088sni@w1734801088ahsra1734801088w.wer1734801088dna1734801088