Chelsea have reported a pre-tax loss of £90.1million ($114.8m) in their accounts for the 12-month period ending on June 30, 2023.
The loss, down from £121.4m in the previous financial year, raises fresh questions about Chelsea’s ability to remain compliant with the Premier League and UEFA’s financial regulations, though the club insist they will do so.
Chelsea’s overall turnover for the year actually rose to a club-record high of £512.5m, buoyed by commercial revenue increasing to £210.1m and matchday income rising to £76.5m with the club once again being allowed to operate freely after the sanctions imposed by the UK government to force Roman Abramovich to sell in 2022.
Broadcast revenue, however, fell to £225.9m from £235m in 2021-22 despite Chelsea reaching the Champions League quarter-finals last season, due primarily to a significantly lower payment from the club’s 12th-placed finish in the Premier League.
What was announced on Thursday?
BlueCo 22 Limited, the parent company set up by the ownership group led by Todd Boehly and Clearlake Capital after their takeover of Chelsea in May 2022, reported a massive pre-tax loss of £678.2m for the year ending June 30, 2023 “driven by investment in Chelsea men’s and women’s playing squads”.
The number that has more direct implications for Chelsea is £90.1m: that is the pre-tax loss on the club’s accounts for 2022-23, announced on the club’s official channels.
What does this all mean?
Chelsea have now made huge pre-tax losses in each of the last three years: £156m in 2020-21, £121m in 2021-22 and £90.1m in 2022-23.
Those figures suggest things are moving in the right direction, but the structural challenges that confronted the club’s old ownership — a relatively small, aging stadium that heavily restricts matchday income and commercial revenue that remains significantly lower than Manchester City, Manchester United, Liverpool and Tottenham — are going nowhere.
This means Chelsea are still heavily reliant on profit from player sales to offset their operating losses and create the wiggle room for transfer spending within football’s financial rules. The club generated profits on disposal of player registrations and fixed assets of £142.2m for the year ending June 30, 2023.
Chelsea’s ownership have spent heavily on players (Darren Walsh/Chelsea FC via Getty Images)
Do these numbers put Chelsea at risk of breaching PSR?
Chelsea reiterated their insistence that they are compliant with the Premier League’s profit and sustainability rules, which allow clubs to lose up to £105m over a three-year monitoring period. At first glance, the figures above would seem to make that claim impossible.
In reality, clubs can make deductions for healthy expenditure such as on their women’s team and academy. There are also allowances for the impact of the COVID pandemic that apply to the 2020-21 accounts, and Chelsea may also argue for further adjustments for revenue lost when operating under UK government sanctions in 2021-22.
Respected football finance analyst Swiss Ramble estimates that once the necessary deductions and adjustments are made, Chelsea are compliant with PSR for 2022-23.
What are the implications for next year’s figures?
Next year looks much more challenging for Chelsea with broadcast, matchday and commercial revenue all expected to fall substantially in the absence of European football this season.
Boehly and Clearlake believe their overhaul of the first-team squad has lowered the overall wage bill by tens of millions of pounds, but next year’s accounts will also include more than £400m in transfer fees committed to acquire 11 players including Moises Caicedo, Romeo Lavia, Cole Palmer and Axel Disasi.
Significant money has also been raised through player departures, most notably the sale of Mason Mount to Manchester United for an initial £50m. But despite the denials of club officials, many outside Chelsea believe the club need to raise more money before June 30 in order to stay on the right side of PSR.
GO DEEPER
Chelsea, Strasbourg, BlueCo and a multi-club model yet to convince a sceptical fanbase
(Mike Hewitt/Getty Images)
