Not mine....but posted on CFCnet
Shamelessly stolen from Reddit , I found this very interesting and hope you do.
A lot has been said in recent days about FFP and that Chelsea Football Club is breaching the rules or at least in danger of falling into noncompliance. Plenty of our own fans are worried and uneasy about the situation (as well as the salt coming from other clubs' fans (*cough* Liverpool *cough*)) so I decided to write a couple of things about why it is unlikely to be a problem.
Financial Fair Play is a set of regulations that has been brought in to stop clubs from spending virtually unlimited amounts of money. Is it successful? Partially, yes. The Saudis cannot take over Newcastle and pump in a billion quid a year just because they want to. On the other hand, it failed to stop big clubs from spending big money. Then again, the idea was never for City and Burnley to have the same 'transfer cap', but to stop clubs being so overstretched financially that they might collapse with a couple of bad decisions.
From this year on, the FFP rules have changed. Previously, we were operating on the assumption of maximum allowable loss over any three year period. Now that has changed to a cap on transfers and wages equivalent to a percentage of club revenue. This year it's 90%, next year it will be 80% and from 25/26 in it will be at 70% revenue.
What does it mean for Chelsea Football Club? According to Deloitte Football Money League, our revenue has totalled €568.000.000,00 last year. This means that no more than €511 million can be spent on transfer amortisation and wages this season.
Next year will be much more problematic. Looking at revenues of clubs that miss out on playing in the Champions League, the revenue drop is consistent at around 10-15%. For my very simple calculations I have assumed a 20% fall. That would mean that our maximum transfer and wage spend for 2024/25 will be around €360 million.
So... what is the actual spend? Well, we've all already learnt that spending €100 million on a player doesn't mean that the club accounts are charged with that amount. The transfer fee is divided by contract length, which has been restricted to a maximum of 5 years starting this summer. (It's very important to note that this restriction applies only in UEFA. The Premier League imposed no such regulations.)
What does the numbers look like? Not counting in Caicedo as it remains unconfirmed, we spent a total of around €750.000.000,00. It's an astronomical amount, sure, but the yearly financial outlay comes in at slightly above €120.000.000,00. This is the number we're looking at against the max allowable spend. There is also an outstanding €40.000.000,00 from the transfers of Romelu Lukaku (€22.5 pa), Kepa (€11.50 pa) and Chilwell (€6m pa). The total comes in at €160.000.000,00 per annum spent on transfers.
At the same time we have drastically reduced our wage bill. In the season 2022/23, we spent €265 million on wages. This year it will come in at around €175 million. Slightly higher than Liverpool, €20 million lower than Arsenal and a whopping €65 million lower than City and United.
This means that our total financial outlay on transfers and wages comes in at around €340 million. €150 million below what we can spend this season, but only slightly below what will be available for 2024/25. The biggest problem is Lukaku, which costs us €40 million every single year. Finding a transfer away here is an absolute priority.
This however, is before we take any note of the outgoings. We have sold players for a total of €314 million and made a profit of €200.50 million on those transfers. As I have said many times before, selling one or two players per window makes absolutely no sense from an accounting perspective. UEFA rules stipulate that for accounting purposes transfer income is calculated as the highest profit made in the past three seasons. This means that those sales, or the €200.50 million to be exact, will add value to our books for the next *three years*. Another sign of just how well thought out the strategy of Boehly and Eghbali actually is.
The new FFP regulations are actually very beneficial for us. Clubs like Newcastle have a simple problem. They have a wealthy owner, but they had very limited revenues in the past few years which means that they can actually spend relatively little. Chelsea on the other hand has been one of the biggest clubs in the world for the past two decades and we have the revenues to prove it. AND this is even with just how badly mismanaged the commercial side was under Abramovich. (For comparison, the sponsorship income of CFC last year was €210 million. This is Spurs/Juventus/Dortmund region. United brought in €310m, Liverpool €275m and City €373m.)
Why then, do we negotiate for two months to sign a player for £80 million instead of 100 and end up paying £115m. There are two simple reasons here. Just because we are safe doesn't mean that we should be paying anything and everything. Being safe today doesn't mean being safe tomorrow and it's prudent to be careful. The second, and much worse, is cash in hand. No club in the world (and a handful of companies in general) can generate enough cashflow to spend €750.000.000,00 in cash. We could go to third parties (like we did with Enzo since Benfica wanted cash up front), but that adds extra costs.
TLDR - The FFP problems that Chelsea might be facing are way overblown by people who have no clue what the numbers and regulations actually are. At this point there is no real risk of falling into noncompliance with FFP rules.
EDIT. As suggested by one of you lovely people below, the sources...
Deloitte Football Money League (Revenues) - https://www2.deloitte.com/uk/en/pages/sports-business-group/articles/deloitte-football-money-league.html
Capology (Wage bills) - https://www.capology.com/
TransferMarkt (Transfer spend) - https://www.transfermarkt.com/fc-Chelsea/transfers/verein/631