Chelsea Football Club has recorded a net loss of £121.3 million for the year, but the club insists that it remains compliant with financial regulations. The loss has been attributed to the
extraordinary expenses and loss of revenue that occurred after former owner Roman Abramovich was sanctioned by the UK Government. The club was required to operate under a special licence granted by the government between March 10 to May 30 last year, which led to significant losses. The licence was granted after Abramovich was sanctioned for his alleged links to Russian President Vladimir Putin following the invasion of Ukraine.
According to a statement by the club, during this period, Chelsea was restricted in several areas, including its ability to sell matchday and season tickets, sell merchandise, accept event bookings, as well as sign contracts with players and commercial sponsorship partners. These restrictions collectively resulted in extraordinary expenses and loss of revenue. Furthermore, some of these limitations are also expected to have an impact on the financials in the following years due to the long-term impact from restrictions on entering into new contractual arrangements.
However, Chelsea's turnover increased to £481.3 million from £434.9 million the previous year, despite the restrictions, while commercial revenue rose to £177.1 million. The club confirmed an overall net loss of £121.3 million, which was attributed to increased operating expenses including matchday and non-matchday costs.
The Blues had previously recorded losses of £153.4 million in accounts for the year ending 2021 but were given allowances by the Premier League due to the impact of the Covid-19 pandemic on their finances. Under Premier League FFP rules, clubs are allowed to lose £105m over a rolling three-year period, but there are adjustments for virtue spending areas such as infrastructure spend, women's teams, academies, and community projects.
Chelsea insists it remains compliant with both UEFA and Premier League financial regulations. The club had to invest £118 million in the playing squad during the 2021/22 financial year, including existing player contract renegotiations, and made a profit of £123.2 million in player trading, due to the sales of Tammy Abraham, Marc Guehi, Fikayo Tomori, and Kurt Zouma.
Premier League chief executive Richard Masters suggested earlier this month that Chelsea will have to sell players to balance their books following their outlay. The Blues splashed out £323m in the January transfer window on the likes of Enzo Fernandez, Mykhailo Mudryk, and Benoit Badiashile, adding to big money purchases of Wesley Fofana, Marc Cucurella, and Raheem Sterling last summer.
The financial year did not include last summer and the January 2023 transfer windows, which saw the club spend £500 million on new signings. The new UEFA FFP rules dictate that, from next season, the amount a club spends on net player acquisitions (spending minus income), plus wages, plus agents fees, must not exceed 90% of any club’s income.
The club has warned that the impact of the sanctions is expected to be felt in the coming years. Towards the end of the sanctioned period, the Club was permitted to sell certain matchday tickets, with the Premier League committing to donate all revenue from these sales to charity. Despite the loss, the club's return of fans to matches boosted turnover, but matchday operating costs increased. Photo by thearcticblues from United States of America, Wikimedia commons.