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[Vesper 29,473]

Premier League’s failure to prevent Chelsea’s latest accounting tricks shows it can’t regulate its clubs

https://www.nytimes.com/athletic/6269885/2025/04/11/premier-league-Chelsea-regulator/

At various points over the past few years, people have stopped and asked how on earth Chelsea could afford to spend such enormous sums in the transfer market without falling foul to the Premier League’s financial regulations.

The responses at the time, gleaned from people inside Stamford Bridge as well as various financial experts, usually pointed to the way the club had structured many of these deals: not just spreading transfer payments over several years, but protecting players’ value on the balance sheet by signing them to eight-, nine- or even 10-year contracts.

Chelsea, it was always stated, were confident they would comply with the league’s profit and sustainability regulations (PSR), even if some of us struggled to see how a staggering — and, as it transpired, staggeringly ineffective — £745.2million ($967m) transfer outlay over the course of the 2022-23 season could be accounted for.

In the event, PSR compliance was met in the summer of 2023 thanks to a series of sales just before the PSR deadline at the end of June: Edouard Mendy and Kalidou Koulibaly to Al Ahli for a combined £33m, Mateo Kovacic to Manchester City for £25m, Ruben Loftus-Cheek to Milan for £15m, Kai Havertz to Arsenal for £65m and… a couple of hotels adjacent to Stamford Bridge, plus car parking, to BlueCo 22 Properties Ltd, a subsidiary of the club’s holding company, for £76.5m.

The hotel sale caused anger among some of Chelsea’s rivals amid questions about both the valuation and its legitimacy within the context of PSR. The Premier League analysed the hotel sales for fair market value, making a slight adjustment to Chelsea’s profit in terms of the PSR calculation. But no rules had been broken.

Significantly, though, the league agreed to hold a vote to decide whether to remove clubs’ ability to include asset sales — stadiums, training grounds, hotels, office buildings etc — in future PSR calculations. The loophole, it seemed, was about to be closed.

 

Chelsea’s highly successful women’s team has been sold within the existing ownership (Nathan Stirk/Getty Images)

But when it came to a vote at the Premier League’s annual meeting in Harrogate last June, only 11 of the 20 clubs backed the motion, well short of the two-thirds majority required for rule changes.

There followed another period of frantic trading just before last summer’s PSR deadline (Ian Maatsen to Aston Villa for £37.5m, Omari Hutchinson to Ipswich Town for £20m), which went a long way towards a huge £152m transfer profit for the season.

But Chelsea still needed another lever to pull. Sure enough, their latest accounts, released last week, detailed the “repositioning” sale of their women’s team to BlueCo 22 Midco Limited, another subsidiary of BlueCo 22 Limited, for £200m. Another big loss became a pre-tax profit of £128.4m and, at a stroke, another PSR headache seemed to be cured.

Once again, there is consternation among some of their rivals, asking how on earth Chelsea’s WSL team, which declared revenues of just over £11m last season, could be valued at £200m. The Premier League are still to assess that deal for fair market value, but internally there is a feeling that — unlike UEFA, European football’s governing body, who do not allow such asset sales to sister companies to count towards their financial fair play (FFP) calculations — their authority on the matter was effectively eliminated by that lost vote in Harrogate last June.

Among the clubs who voted against closing the loophole, or abstained, some felt the wording of the proposed change was too vague, failing to distinguish between the type of non-football revenues they felt they should be allowed to exploit (such as building hotels or entertainment venues) and apparent tricks of accountancy.

Others felt that even if they disagreed with the principle, they would be wrong to vote for something that might constrain them if they needed to address a cash shortfall at a later date.

That sums up the whole mess. You have financial regulations designed to keep spending under control, but from the start, they have been less stringent than their UEFA equivalent. You have clubs racking up huge losses but nonetheless able to comply with spending regulations after finding and exploiting loopholes in the rulebook. You have a league that does not have the authority to regulate itself because the rulebook is determined by the clubs. You have clubs that instinctively object to a certain loophole but feel unable to vote against it because self-interest tells them they might just need it in future.

This week, The Athletic revealed that Bournemouth would have been in breach of PSR in at least one of the past two seasons had the Premier League not approved a £71.4m loan write-off when Bill Foley’s Black Knight Football Club bought the club from Maxim Demin in December 2022.

In normal circumstances, a shareholder loan would not be allowed to be written off from a PSR perspective. The Premier League allowed it in the Bournemouth case because it was linked to the takeover rather than “ordinary business”.

But without that write-off, the club would have recorded pre-tax losses of £148.6m over a three-year cycle, against a permitted PSR limit of £83m  — and, if you support Everton or Nottingham Forest, both of whom were hit with points deduction last season, it might reopen old wounds and frustrations regarding the fairness or otherwise of the PSR regime.

Shareholder loans have become a big issue in the PSR debate, with Everton, Arsenal and Brighton & Hove Albion all benefiting from interest-free loans in excess of £250m. Manchester City’s latest challenge to the PSR rules suggested that, if certain commercial deals with “related parties” can be scrutinised or even vetoed by the Premier League if they are felt to be at more favourable rates than market value, then the benefits derived from interest-free loans from a shareholder should fall into the same category.

 

Manchester City’s stance on that issue seems entirely reasonable. But there will be no crackdown on interest-free loans unless a) there is a vote on the matter and b) at least 14 of the 20 Premier League clubs side with them. Once again, self-interest would be likely to hold sway.

The Premier League is going from one regulatory crisis to another. Any hopes of possible “closure” after the eventual resolution of their case against Manchester City — relating to more than 100 alleged breaches of the competition’s financial rules between 2009 and 2016, which the club deny — have been replaced by concerns of further legal actions and further attacks on the league’s attempts to regulate itself and its member clubs.

It is a grim situation and it divides opinion hugely between those who feel the league has got involved in things it shouldn’t have done and those who feel the league should have been far more stringent far earlier to stop things spiralling so far beyond its control.

Equally, the very notion of financial regulation divides opinion between those who consider the rules too restrictive (the ones who feel Everton and Forest were punished for “showing ambition” last season) and those who consider the rules too permissive (those of us who feel that the Merseyside club would have been far better served had the Premier League stepped in much earlier and much more assertively to avert the threat of financial meltdown under Farhad Moshiri’s ownership).

Chelsea’s is a different situation, but it comes back to the same concern about the dangers — both to the competition and to the club itself — of unsustainable spending. Concerns about the impact on the competition have been quelled by the fact that the two biggest single-season transfer outlays in football history have so far brought mediocre results on the pitch, but that is hardly the point when they are playing against clubs who stay well within the very loose spending limits that the regulations allow.

Among some top-flight clubs, there is an admiration for the way Chelsea have operated under the ownership of a consortium led by Todd Boehly and Clearlake Capital: the amortisation trick with those staggeringly long contracts; the vast accumulation of younger players with resale value in mind; the willingness to exploit loopholes by selling the hotels and the women’s team to ensure that they remain PSR-compliant even while running up another huge operating loss.

But the difficulty in praising Chelsea’s owners for their ingenuity is that, just as signing Mykhailo Mudryk and numerous others on eight-year contracts looks rather less than inspired two years in, selling assets to a sister company is the type of move that tends to set alarm bells ringing in English football.

Derby County turned a loss into a profit when they sold their stadium to a company owned by their then-owner, Mel Morris, two days before their accounting deadline in June 2018; Sheffield Wednesday did likewise by selling their Hillsborough stadium to their owner, Dejphon Chansiri, a year later.

 

Stamford Bridge is protected from sale by the CPO (Nicolas Economou/NurPhoto via Getty Images)

In these cases and others, such as at Reading and the previous ownership regime at Birmingham City, these are looked back upon as regrettable moves, born of desperation, rather than a template for sensible club ownership. The EFL, feeling their rulebook was being abused and that heritage and vital assets were being traded with little consideration for long-term consequences, closed that loophole.

Aston Villa sold Villa Park to NSWE Stadium Limited, a company controlled by their co-owners, Nassef Sawiris and Wes Edens — again at a time of financial difficulty in the final weeks before an accounting deadline at the end of the 2018-19 season. Without that sale, Villa would have been in breach of the EFL’s financial regulations in the season that brought promotion.

There are no regrets in Villa’s case given the heights they have reached since, but perhaps there has also been a recognition, amid the club’s continuing PSR challenges of the past few seasons, that you can only sell the family silver once.

But should it ever be an option to sell a stadium, a training ground or even one of the club’s teams — in Chelsea’s case, the women’s team — to address a headache brought about by wild spending?

It is the type of action that would be discouraged, if not totally outlawed, under the UK government’s plans for an independent regulator for English football. One proposal in the Football Government Bill is that the regulator would listen to supporters’ views before deciding whether to approve any plan to sell a club’s key assets, such as a stadium or, presumably, a team.

The very notion of an independent regulator is anathema to those at Premier League HQ as well as to most of the clubs. One of the phrases we keep hearing is about the danger of “unintended consequences”.

But the story of English football in the 21st century has been full of unintended consequences, unsuitable owners and unforeseen problems. A laissez-faire approach led to a climate in which nothing was off-limits. The more the Premier League has tried to address its regulatory challenges over the past few years, the harder its life has become.

The repercussions of the Manchester City case, whatever the verdict, will inevitably be resounding and damaging one way or the other. And yet, as the league’s chief executive Richard Masters said in an interview with the Financial Times last month, “there is no happy alternative to enforcing the rules” — or at least trying to.

In an ideal world, self-regulation would preclude self-interest. But the interests of the game have been overtaken by the financial, commercial or indeed political objectives of club owners. The Premier League, as a body, has been powerless to stop that. The Football Association, still commonly described as English football’s governing body, has become content to be a mere bystander. But battles are raging left, right and centre. Every week seems to throw up another question of what is — or should be — permissible.

By coincidence, one of the few stadiums in English football that is already protected is Stamford Bridge, the freehold for which has been owned since 1997 by Chelsea Pitch Owners (CPO) plc, a group of more than 13,000 shareholders that, as well as supporters, includes former players such as John Terry, Frank Lampard and Marcel Desailly.

The purpose behind the venture was to ensure that Stamford Bridge could not be sold to property developers, as very nearly happened during the 1980s. In the early 2010s, then-owner Roman Abramovich tried to buy the freehold back from CPO to facilitate a move to a new stadium. Despite the widespread goodwill towards Abramovich’s ownership, he fell some way short of the 75 per cent threshold he needed.

At some point in future, once their future plans have become clearer, Chelsea’s current ownership are likely to go back to CPO with a new proposal to buy the leasehold, whether with a view to redeveloping Stamford Bridge or relocating to a new stadium. What Chelsea cannot do is sell the stadium to a sister company simply to resolve a PSR headache.

If that option had been available to them, you suspect they might have done it by now.

Edited yesterday at 19:27 by Vesper