Chelsea’s new era starts with another big loss

CHELSEA are constantly in the news for one reason or another, from managerial changes, player acquisitions and finances to their below-par performances on the field of play. The club has even changed hands, but the constant scrutiny of the club’s spending behaviour has dominated this new era at Stamford Bridge. 

The 2021-22 season saw the club pass from Roman Abramovich to the consortium fronted by US investor Todd Boehly. The club made a pre-tax loss of £ 121.4 million, taking the accumulated losses since 2003-04 (RA year one) to well over £ 1 billion. In three of the last four seasons, Chelsea have run-up losses of well over £ 100 million. According to football finance expert Kieran Maguire, the club has lost £ 900,000 per week for 19 years.

Chelsea generated record revenues of £ 481.3 million, a rise of 10% on 2020-21’s £ 436 million. Broadcasting, inevitably, was the highest source, the £ 235 million derived from this stream, contributing 49% of total income. Commercial revenues, thanks to increased sponsorship and the renewal of existing deals, were up by 14% to £ 177.1 million, representing 37% of turnover.

With stadiums free of covid restrictions in 2021-22, Chelsea’s matchday earnings were £ 69.2 million, the highest since 2018 and a massive increase on the £ 7.7 million earned in 2020-21. Chelsea’s average attendance fell by 6.8%  to 37,810 and was the 10th best in the Premier League. The club has a clear disadvantage in its relatively small capacity at Stamford Bridge, but the new regime is looking to revisit the new stadium project.

Chelsea’s player trading profits rose substantially from £ 27.9 million to £ 123.2 million, the second highest profit the club has recorded after the £ 143 million posted in 2019-20. Chelsea signed Romelu Lukaku from Inter Milan for £ 97.5 million, but they also received around £ 115 million from the sale of Tammy Abraham (Roma), Kurt Zouma (West Ham), Marc Guéhi (Crystal Palace) and Fikayo Tomori (AC Milan).

The club’s wage bill for 2021-22 was a record £ 340.2 million, equating to 71% of income. It will be interesting to see how the wage situation looks in 2022-23 with all the big money signings now on board.

Chelsea’s wages compared to the other members of the Premier’s “big six” places the club fourth highest after Manchester United (£373 million), Liverpool (£366 million) and Manchester City (£354 million). They’re also fourth when it comes to revenues behind the same three clubs. In the transfer market, Chelsea’s 2021-22 activity resulted in a net positive of £ 7 million but they were also among the biggest spenders. The biggest net spenders were Arsenal and Newcastle United. Of course, Chelsea have broken all records in 2022-23 with their £ 500 million spending spree, the outcome of which has yet to reveal itself.

The willingness to invest in new talent demonstrated some level of ambition, but it will have downsides. A trend has developed in the form of longer-term contracts, which helps deal with financial fair play concerns. However, Chelsea may find they have a top heavy squad in the near future which will need some pruning. Furthermore, the lack of stability in the manager’s chair, a feature of the Abramovich era, appears to be continuing under Boehly. The sacking of Graham Potter was the second such dismissal since the US consortium took over. Abramovich’s aides could at least point to a long run of success to justify the continual  churning of the team management, but the first Boehly sacking, Thomas Tuchel, has just been appointed coach at Bayern Munich, which serves to highlight the flaw in their current thinking. The answer may have been there all along. It just needed a little patience, perhaps?

At present, Chelsea look like a club that has – temporarily – lost its way despite the influx of players. The return of Frank Lampard as stand-in, a popular figure considered unsuitable for the job in his first stint in the role, appears to be something of a desperate move to win favour from the Chelsea faithful. After all the spending this season, it would seem unlikely that anywhere near the same amount of cash will be made available in 2023-24. Whoever gets the job full-time may have to work with a pre-assembled squad of random players. The short-term, at least, looks a little tricky.

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