CHELSEA FC THE BUSINESS OF FOOTBALL

Chelsea FC has an annual turnover is £210 million.  That is a drop in the ocean compared to that of their rivals, Real Madrid FC (£359 million), FC Barcelona (£326 million), Manchester United (£286 million) and Bayern Munich FC (£265million), although we are within striking distance of Arsenal FC 
(£224 million).

Many loyal Chelsea FC supporters would like the club to spend during the summer transfer window. Considering that this is Chelsea, this may be a blessing and a curse? 
I would call it a blessing because I believe that this ageing squad could do with a minor facelift.


And a curse because the UEFA Financial Fair Play rules, 2010/11 season accounting figures is the last 

year where the figures are excluded from UEFA break-even calculations.

Two years ago in the Chelsea FC Financial Report of 2009 our club reported a £27 millon loss. And in the latest Chelsea FC Financial Report 2010 the club reported a £71 million loss. This could have been a lot higher, considering the fact that Mr Abramovich clamped down on expenditure by (a) reducing the size of the squad by offloading what the Russian believes to be experienced, but yet expensive players and (b) cutting back on support staff.

So, why did the loss increase? And especially in a season when Chelsea FC secured their historic first FAPL and FA Cup double?

It’s mainly due to costs, as revenue is virtually unchanged, with wages being the main culprit, increasing by £20 million, though this was partially off-set by costs including £13 million severance payments to Luiz Felipe Scolari and his assistants. 







Last year Chelsea FC made a £29 million profit on player sales, ironically mainly due to the delayed payments for the transfers of Wayne Bridge and Tal Ben Haim to Manchester City (the “new Chelsea”) and Steve Sidwell to Aston Villa amongst other players and by taking these players off the books helped to reduce the wage bill by £11 million.

The players salaries has now reached an enormous £173 million, the highest ever reported by a FAPL club, which is £40 million more than Manchester United and Manchester City and £60 million more than Arsenal FC.

If it makes you feel any better there are two clubs with a higher payroll than our club which are the Spanish giants, Real Madrid and FC Barcelona, but their revenue is also considerably higher.

The 13% increase in wages, which includes a mysterious £8 million rise in pension costs, does not exactly seem to support Ronald Gourlay’s previous assertion that “we are reducing our costs by controlling expenses, including salaries and wages.”

Nor does the important wages to turnover ratio, which has worsened from 70% to 82% in the previous two years.


This is considerably higher than all but one of our rival UEFA Champions League rivals, the exception being Manchester City with a staggering 107%. It is nearly double the ratio of Manchester United and Arsenal FC.

To get back to UEFA’s recommended maximum limit of 70%, Chelsea FC would have to cut the wage bill by £26 million – or grow revenue by £37 million.


That might seem a hard task, given that there have been very little signs of revenue growth in the last couple of seasons.

In conclusion our club's turnover has fallen by £4 million since 2008, which should be addressed as this is a major weakness in our current business model if we are to compete against our UEFA rivals.