Chelsea reveal £90m pre-tax losses

hello,

Close to the wind, the when club the ownership took over was an elite level top 4 club.

It financial model was based upon that.

Due to the ownerships decision to first focus on building assets through acquiring talented prospects, on long term amortization and wage contracts and then take pot luck where the clubs league position will fall, the club finds itself as mid table club, saddled with significant fixed costs, & little head room to continue to develop the squad.

The aprx fixed cost's:

25 man wage bill - 160m/70m, down - 30% 80m

5 yr Amortization ( required for entry into all european competition) - 200m - long term 6-8 yr - 25/30m

Operating costs aprx ? 130/ 150m?

Taking the lower end costs the club needs aprx 500m to break even and be FFP/PSR compliant .

If the squad was ready to compete at a top 6 level and confident to push to a top 4 level, none of this would be such an issue as the clubs income streams would be stronger.

Impairment? i understand that this may be discounted due the Covid impact, i doubt it will be due to Lukaku as the club has a history of Amortizing over the full contract and Lukaku's contract is a 5 year contract.

You might be right about Europe 5 years amortisation rule:

Yes this rule is to be met as part of the requirements to enter European football competition.

Going forward,imo the club needs to improve it ability to compete through the playing assets it has and think very carefully about the next/ future signings. ? is Poch able to do this ?

Player trading to meet FFP & continue squad development will only last for so long before it becomes counter productive, whilst the club is mid table.

Hopefully improved TV rights will help, the club will continue to trim the operating and wage bill.

But mid table wages will result in a mid table club imo.

The covid allowance was nothing to do with an impairment... there was no covid related asset to impair.

https://theathletic.com/4394846/2023/04/10/chelsea-accounts-explained-ffp/
Another contributory factor in the losses were the impairment of player registrations of almost £77million, which amounts to Chelsea accepting a reduction in value of a company asset. That will almost certainly include Lukaku, whose return to Stamford Bridge proved disastrous last season.

Yes , this may well have had an effect on the players as an asset value and the associated amortization payments for Lukaku, it would be nice not to loose money on him.

Does he have buy out value with Roma ? 30/35m?

I understand he has taken a wage reduction.

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Hi Chopper.

Yes , you are correct about the plan A & then plan B.

Personally I think that in the first year when they lost C/L football they at that point lost control.

They were not prepared for that eventuality.

It is correct that the first raft of signings indicated the Plan A strategy 👍

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Based on that , it illustrates how ill suited they were to running the club.

I think that they could see the finance opportunities related to operating such an activity as a premiership club, and in particular CFC with a turnover in the region of 500m.

But i think that they totally by passed the football bit and assumed that as they had experience with American sporting franchises they had it sussed

Well clearly they did not.

At this point i wonder what it will take for them to change their thinking enough to put the whole project on an even keel?

It looks like they are going all out to clone the Brighton model?

Im not convinced that will work considering the issues they have created?

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I think the magnitude of their arrogance is astounding.

They have metaphorically been caught with their pants down.

This debacle will not be a good look for their investment fund.

Lets be realistic, would you give these guys your money to invest

I think that they will double down and try to tough it out.

But imo until they change their approach they are on a hiding to nowhere.

In that time i simply hope we have enough to stay in the league whilst they work it out.

Basically imo they simply need to take it on the chin & bring in the right footballing advisers & the guts to say , ok, we got it wrong, now we are going to do it differently.

The sooner they do that , the sooner they will be on the road to recovering the situation.

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