Investigation: Is Chelsea breaching the Financial Fair Play rules?

Chelsea have spent a whopping £445 million on transfers since the new ownership came in last summer.

The Blues’ astonishing transfer outlay has infuriated rival fans as they accuse Chelsea of violating Financial Fair Play rules.

How is Chelsea doing it without getting sanctioned by UEFA? Is the European football regulatory body turning a blind eye to Chelsea’s outrageous spending? Or are the Londoners genuinely playing by the book?

Chelsea now hold the record for spending the highest amount of money across a season by eclipsing Manchester City’s £328 million splash in 2017/18.

Ukrainian winger Mykhailo Mudryk has been the latest addition to Chelsea’s armoury.

The former Shakhtar Donetsk star cost the club an upfront fee of £62m, which would rise beyond £90m if certain add-on conditions come to fruition.

Financial Fair Play in the Premier League is calculated over a three year period.

Clubs can make a maximum loss of £105 million throughout this time. However, infrastructural expenditure and investments in youth and women’s football are not taken into account. Clubs can also spend as much as they want on community development projects.

Clubs have also been given financial leeway to compensate for their pandemic losses.

The FA have allowed the injection of owner money to recoup the losses incurred due to reduced TV and matchday revenues during the covid era.

UEFA’s FFP rules are much stricter.

The loss ceiling for clubs is €60m (£53m), and there are no concessions for infrastructural, academy, women’s team, and community development investments.

But under the previous ownership, Chelsea were a financially well-run club, which reflects in their financial statement.

Their financial record for the 2020/2 season shows a £32.5m profit, despite a significant revenue loss due to covid.

The club has generated £688 million over the last 10 years, which is higher than any other club in the Premier League. Their nearest competitor in this regard are Liverpool whose player sales profit was only £357m within the same period.

As of this season, Chelsea have been breaking up the transfer fee and wages over lengthy contract durations.

Amortization has allowed the club to show a far more modest amount on their balance sheet.

Mudryk’s contract, for example, is eight and a half years long. Benoît Badiashile, another Chelsea January acquisition, was tied down to a seven and a half years contract.

Chelsea’s current recruitment team, headed by Paul Winstanley and Christopher Vivell, has come up with this strategy to work around FFP restrictions. For this reason, Chelsea can show an annual expense of £70 million in their balance sheets for their transfer spending this season.

Of course, it’s not a risk-free policy.

Handing out such lengthy contracts means the club is making a huge gamble on the players.

If the player’s form drops drastically, the club might find it difficult to ship them out.

However, if the player performs well or even beyond expectations, the length of the contract should ward off potential suitors.

Also, Chelsea have been avoiding extraordinary wage offers with these lengthy contracts so that players don’t get complacent and wait for the pay cheque to arrive week in, week out.