How Chelsea have stayed within FFP rules despite £500m transfer assault
A British-record deal to bring in Enzo Fernandez for more than £106million takes Todd Boehly and Clearlake Capital’s spending past £500m in just two windows.
Here Telegraph Sport explores why Chelsea are safe from financial fair play penalties for now - but Champions League qualification is imperative.
Why splashing the cash is not as risky as it might appear for Chelsea
The club accounted for around a quarter of total expenditure across English football in recent months, with co-controlling owner Behdad Egbhali and director of global talent and transfers Paul Winstanley clinching final deals on Tuesday.
Yet despite blowing their rivals out of the water, there is a detailed strategy at the club to ensure there is no danger of the club immediately breaching financial fair play rules. Spreading payments on incoming transfers and keen interest in their academy graduates have convinced the club they can keep the Uefa number crunchers at bay.
Lengthy contracts and staggered payments
Chelsea have been smart in exploiting Uefa rules still allowing total fees to be spread across contracts. Fernandez will not be declared as a £106m-plus one-off buy. The club had been in negotiations with Benfica around staggering the deal across one large payment and five later payments.
However, in terms of FFP, it is more important the payments can be declared across the contract that is handed to Fernandez. It could be safely assumed, therefore, that he would be announced on a lengthy deal. This is in line with a strategy Chelsea have employed throughout an incredible January transfer window, having signed Mykhailo Mudryk for £88m, Joao Felix on loan, Benoit Badiashile and Noni Madueke, plus a host of promising youngsters.
Mudryk signed an eight-and-a-half year contract while France defender Badiashile penned a seven-and-a-half year deal after his £35m move from Monaco. Amortisation allows the Mudryk fee to be divided over the eight years of his deal, working out as roughly £10m a year.
Success in recent years and a changing FFP system
Recent on-field success - the Champions League in 2021 and the European Super Cup - represented a healthy cushion against losses ahead of the Boehly consortium takeover. Effectively, those two trophies gave the club an additional £119m over the current system assessing losses over a three year period.
With that initial security, Chelsea are now spending heavily while Uefa's new Financial Sustainability and Club Licensing Regulations (FSCLR) are introduced in a staggered format. A new “squad cost control” limit where clubs will be limited to spending 70 per cent of their revenue in a calendar year on player wages, transfers and agents’ fees will eventually be introduced.
But for this year, the limit is a relatively generous 90 per cent. Timing is key. The loophole allowing those deals to be secured over such long contracts is also likely to be slammed shut in the summer. European football’s governing body looks set to fix a five-year maximum for the length of time over which a player’s transfer fee can be spread by the next transfer window.
The world-leading academy producing ‘pure profit’
The current ownership inherited one of football's finest academies. Selling on graduates can then be declared as pure profit under sustainability rules. Tammy Abraham and Fikayo Tomori brought in fees of more than £60milllion combined as they were sold to Serie A clubs in recent sales.
Kieran Maguire, a lecturer in football finance at Liverpool University, says upcoming sales of homegrown talent will play a major part if Chelsea want to continue spending at their current rate. "Abraham, Tomori are pure profit on sales," he told Telegraph Sport. "Conor Gallagher, Loftus-Cheek and Hudson-Odoi could be potentially the same. Crucially, you can take all the profit in the year of sale but spread purchases over the life of contract via amortisation."
The potential sale of Gallagher for £40m would effectively match "£280m spending on players with seven year deals", Maguire adds.
The huge gamble on Champions League qualification
Chelsea's plan is not without risk. Having done such big business, failing to qualify for the Champions League this summer would be devastating and potentially prompt a rethink. Chelsea secured around £106million for winning their most recent Champions League, and the smaller European competitions are worth around a fifth of that potential revenue. "There is a significant knock-on effect if you don't qualify," Maguire adds.
Regardless of where Chelsea finish, Boehly has made good on a promise he issued to fans as his protracted takeover finally completed in May last year.
The deal to buy the club was worth a total £4.25bn, factoring in investments the new owners had promised to deliver. The same big spending approach he had delivered with success at the LA Dodgers had been a key part in him winning the race to buy the club. Boehly then told fans investment in talent would be maintained to "build on Chelsea's remarkable history of success."