Todd Boehly could spark yet another PSR battle as Chelsea set for £502m budget
Today at 01:30 PM
Since their takeover, Todd Boehly and Clearlake Capital have sanctioned the kind of spending that would have made Roman Abramovich blush. And yet, the Chelsea have managed to comply with PSR.
The American owners, whose boardroom ‘civil war’ seems to have been put on the backburner for now, are extraordinarily ambitious and have approached the Premier League with a US franchise sport mindset.
Chelsea have burned well in excess of £1bn on new signings and, despite what they appear to have briefed to a handful of journalists, the wage bill has gone up, not down.
But they have escaped the clutches of the Premier League’s Profit and Sustainability Rules (PSR) enforcers through a combination of various accounting sleights of hand.
First, the Blues signed players to extraordinarily long contracts. At one point last summer, the club had almost 200 years worth of contracts on the books.
As well as being part of a broader strategy to retain value and increase buy-in among the squad, this also meant transfer fees were amortised over longer periods, reducing the PSR burden in the short term.
The Premier League have since closed this loophole. Chelsea are free to give their players contracts as long as they please, but for PSR purposes the amortisation period is now five years.
Chelsea have also used intra-company asset trading to ease their PSR liability.
BlueCo generated £76m worth of PSR profit through the sales of two Stamford Bridge hotels to another company owned by Todd Boehy and Clearlake, for example.
The sale of the women’s team via a similar route meanwhile is believed to have generated around £150m, although this is unconfirmed.
Unlike the amortisation case, the Premier League has not closed this particular loophole.
That, presumably, is why the league has confirmed that Chelsea have not been charged with a PSR breach for 2023-24. In fact, no club has.
Today, reports suggest that the West Londoners are in talks to negotiate a financial settlement with the Premier League over PSR-busting secret payments to players in the Roman Abramovich era.
As football finance expert and former Manchester City adviser Stefan Borson put it, that would be a “fantastic outcome” for Chelsea, who most had presumed would be subject to a points deduction.
So while Chelsea certainly need to improve their cost control and aren’t out of the lion’s den yet when it comes to PSR, the situation is far better than once feared.
However, a new set of rules are set to be implemented from next season, so how will free-spending Chelsea fare under the new system?
Chelsea’s position under new Premier League PSR system
Currently, the Premier League PSR system – which used to be known as FFP or financial fair play – works on a profit-loss basis.
Chelsea are allowed to lose up to £105m over a rolling three-year period, as long as the bulk of those losses is covered by Todd Boehly and Clearlake.
However, the league is trialling a new system on a shadow basis this term which is expected to be introduced from the start of next system.
Mirroring UEFA’s approach, the new system will instead focus on revenue, limiting clubs to spending 85 per cent of their turnover on wages, transfers and agent fees.
Chelsea’s revenue in the last financial year was £591m, which would theoretically give them a cap of £502m under the new system.
There will likely be a transitionary period and other nuances to the new system, but that is well over what Chelsea spent on wages and amortisation alone based on their last set of accounts at £609m.
Because it is revenue-based, the new system will also not allow Chelsea to make use of intra-company sales and other non cash-based loopholes.
Chelsea’s astronomical spending on agent fees
Chelsea need to taper their spending across transfers and amortisation, but if agent fees are included in the calculation as well – which there is every indication they will be – there is work to do there too.
Per official data from the FA, Chelsea spent £75m on intermediaries in 2023-24. That was comfortably the most in the Premier League.
As well as the revised PSR system, the Premier League are also proposing to introduce a new anchoring system that would limit expenditure to a multiple (around 4.5x) of the lowest-earning club’s media revenue.
That would likely be fought on the basis of competition law, but it could be a problem for Chelsea too, who would have been the only club to have breached the threshold last season.
