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How did Chelsea stay compliant with PSR?

https://www.nytimes.com/athletic/6060778/2025/01/14/Chelsea-psr-breach-avoid-how/

On Tuesday morning, it became clear that Chelsea’s house was in order and they were compliant with the Premier League’s profit and sustainability rules (PSR) for the three-year cycle ending 2023-24.

Chelsea have long maintained their confidence that they would not breach the regulations — which would likely result in a points deduction — and that has proven to be true.

This comes despite them not playing in the Champions League in 2023-24 and having a poor season in the Premier League, where they finished sixth.

The Athletic explains how they stayed on the right side of the Premier League’s rules.

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How much money have Chelsea lost in recent years?

Looking solely at the relevant three-year PSR cycle (2021-22, 2022-23 and 2023-24), Chelsea posted a pre-tax loss of £121.4million ($148m) in 2021-22 and followed that up with a £90.1m pre-tax loss in 2022-23, totalling £211.5m over the two years.

We will not know whether they have made a profit or loss in 2023-24 until their full accounts are published. They had to submit their filing to the Premier League before December 31, but the numbers will remain confidential until the club posts them on Companies House.

The Premier League’s financial rules allow clubs to lose £105m over a three-year reporting cycle, with spending on youth football, infrastructure and community projects.

Despite the losses, Kieran Maguire, a football finance expert and co-host of the Price of Football podcast, was not surprised that Chelsea remained compliant with the Premier League’s financial rules.

“I always felt Chelsea would be fine because of player sales and real estate sales,” Maguire told The Athletic. “I don’t think they ever have been that close because they took the amortisation route in terms of player recruitment.”

Chelsea took advantage of a loophole that enabled them to offer extra-long contracts to new signings and amortise the transfer fee over the length of that deal. Enzo Fernandez’s £106million move to Stamford Bridge, for example, will be amortised over eight years (the length of his contract).

 

Fernandez signed from Benfica in January 2023 (Julian Finney/Getty Images)

However, Premier League clubs closed that clever tactic by voting to limit the number of years a club can spread the cost of a transfer fee in relation to a player’s contract to five years, meaning if a player signs an eight-year deal now, then they could only amortise the fee for the first five years of that contract.

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Has their spending continued this season?

Since Clearlake Capital and Todd Boehly acquired the club in May 2022, they have spent more than £1billion on new recruits, which is more than any other Premier League team in the same timeframe.

According to the respected data website Transfermarkt, Chelsea spent £219m — more than any other top-flight side — in the summer transfer window, signing players such as Pedro Neto from Wolves for £51.4m, Joao Felix from Atletico Madrid in a £44.5m deal, and Kiernan Dewsbury-Hall from Leicester City for £30m.

This was largely offset by player trading, meaning Chelsea ended the window with a net spend of £72m.

Ian Maatsen (£37.5m), Conor Gallagher (£35.8m), Lewis Hall (£28m), Romelu Lukaku (£22.5m) and Omari Hutchinson (up to £22.5m), among others, were sold for notable fees, easing the burden on the money being spent on new signings.

“Chelsea, by far, are the best club when it comes to the trading market and player sales,” adds Maguire.

“They have generated five times as much money from player sales of the last decade, in terms of profits, as Manchester United. And it is that particular aspect of the club, which tends to fly under the radar and probably not get the credit it deserves.”

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So, how have they remained compliant with PSR?

Chelsea’s accounts for 2023-24 will not be publicly available until later this year, with the last two sets of results being posted on Companies House in April 2023 and April 2024, so that means we will not have the finer details until then.

Their accounts for the financial year ended June 2023 revealed they had sold the Copthorne and Millennium hotels outside Stamford Bridge to BlueCo 22 Properties Ltd, a subsidiary of BlueCo 22 Ltd, which is the holding company that also owns the football club, for a combined £76.5m.

Following the Premier League’s fair market value process, the £76.5m has been adjusted, although neither party confirmed the amount. Either way, without this sale, their loss for 2022-23 would have been significantly higher, therefore making it much more difficult to comply with the fiscal rules.

On June 28, a filing on Companies House indicated Chelsea had sold the women’s team to the club’s parent company, which was confirmed via a separate filing on July 11.

 

Guro Reiten of Chelsea FC Women (Florencia Tan Jun/Getty Images)

The June 28 date appeared to be significant because it is just before the cut-off point for year-end accounts, meaning any sale could, in theory, be recorded in the 2023-24 filing.

Chelsea, however, insisted that even though the sale of the women’s team was registered on June 28, the transaction took place after June 30. The Athletic previously reported that the club’s ownership valued the women’s team at around £160m.

The Press Association reported in July that the Premier League was assessing this sale from a fair market value perspective. The Athletic asked the Premier League whether the probe was ongoing, but they declined to comment, noting they do not discuss individual club matters.

“The women’s team sale was a curious one because nobody knows how much it was sold for, but I think it would have been an intriguing amount of profit,” Maguire says. “It does seem strange that even though the club lodged documents on June 28 the sale took place after that date. But in the world of accountancy — especially creative accountancy, which is legal — anything and everything is possible.”

Chelsea were also able to complete the sales of Maatsen and Hutchinson for a combined £50m before June 30, meaning they could be added to 2023-24’s accounting period for PSR purposes.

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Is this sustainable?

There is only so much furniture to sell, and Chelsea have already taken advantage of selling the hotels and women’s team to its parent company, so they are unable to do that again.

One asset they can still cash in on, however, is their front-of-shirt sponsorship. The Athletic detailed in December that they are closing in on a deal, with advanced discussions taking place with airline companies, as well as tech firms.

This, Chelsea hope, will net them around £60m a year, although that remains hopeful and speculative until a deal is signed. The Premier League side are confident that a contract will be struck before the end of this season, meaning their finances should be boosted before the June 30 cut-off for PSR.

It looked at one stage that Chelsea may be challenging for the title — though it was not something those inside the club ever thought was possible at this stage of their project. Their form over the first half of the season has given them a great shot at qualifying for the Champions League, which would be hugely beneficial from a financial perspective.

Their 2022-23 involvement in the competition, where they reached the quarter-final stage, was estimated to be worth more than €90m, according to Kieron O’Connor, the person behind the award-winning Swiss Ramble blog.

Should they return to Europe’s elite club competition, then that will also be beneficial for their finances going forward, as will this summer’s Club World Cup, which takes place in the United States.

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Do other Premier League clubs have PSR concerns?

No Premier League side was charged with breaching PSR, although Leicester are still at risk of being sanctioned.

A Premier League statement on Tuesday morning read: “Issues as to the jurisdiction of the Premier League over Leicester City Football Club in relation to PSR compliance are currently the subject of confidential arbitration proceedings.

“Accordingly, neither the league nor the club will make any further comment at this stage about any aspect of the club’s compliance or otherwise with any of the PSR or related rules, save to say that no complaint has been brought against Leicester by the league for any breach of the PSRs for the period ending season 2023-24.”

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