Analysing Chelsea’s latest accounts: What £205m amortisation figure, wages increase mean for PSR

Chelsea face a battle to comply with the Premier League’s profit and sustainability rules (PSR) and could be forced to sell players before June 30 after their financial state was laid bare in a sobering set of accounts.

The club’s accounts for the year ending June 30, 2023 saw them post a pre-tax loss of £90.1million ($112m), while wages climbed from £340.2m (2022) to £404m in 2023.

Only Manchester City’s annual wage bill (£423m) is higher than Chelsea’s. Last season, City won the Premier League, Champions League and FA Cup. Chelsea men’s team finished 12th in the league, though the women’s side won the Women’s Super League and the women’s FA Cup.

Chelsea’s accounts also show that between July 1, 2022 and June 30, 2023, they spent a total of £745.2m on new players. Their accounts note that a further £454.1m has been spent on players since June 30, 2023. They raised £203m from player sales and made a net profit of £62.9m on player trading overall, thanks to the sales of Timo Werner to RB Leipzig, Kalidou Koulibaly to Al Hilal and Jorginho and Kai Havertz to Arsenal.

Since a consortium led by Todd Boehly and Clearlake Capital bought the club in May 2022, Chelsea have splurged a combined £1.2bn on new signings.

This has resulted in their amortisation — how transfers are accounted for in club’s financial reports, with the cost of acquiring players, including fee and salary, spread out over the length of their contracts — soaring to £205m, up form £162.5m in 2022.

Due to the £454.1m spent on players after June 30, 2023 — such as Moises Caicedo, Cole Palmer and Axel Disasi — Chelsea’s amortisation figure for the 2023-24 period will likely have increased further. The club’s £205m figure is already a Premier League high, with Manchester United in second on £152m. Manchester City’s stands at £145.4m.

GO DEEPER

Chelsea may have spent £1bn – but how much of that have they seen on the pitch?

Enzo Fernandez’s £105m arrival from Benfica in February 2023 counts towards this set of accounts (Darren Walsh/Chelsea FC via Getty Images)

What does this all mean for Chelsea’s PSR calculations?

Analysis from football finance expert Kieran Maguire

Chelsea need to start selling again, but if you have got a £400m wage bill, then that means you have players on very big wages and there are a limited number of clubs willing to take those players off your hands, or a limited number of clubs a player would be willing to transfer to.

They are still good at selling players, and that is the one thing they have always had in their favour. Mason Mount will grab back £60million, but Chelsea are under more pressure now regarding June 30, especially as we have seen the PSR commissions say, with respect to Nottingham Forest, that if you sell later in the year, tough, you know what the rules are.

My concern is more for the three-year reporting period ending in this season because they have not had the benefits of European football. We had all been told that the wage bill will go down under Clearlake Capital, but the fact it shot up has taken me back.

It will drop this season because they will not be paying European bonuses, for example. The amortisation charge is completely out of control and that is with their eight-year contracts applied. It is £50million more than Manchester City. They are going to have to work extremely hard to keep within PSR by June 30.

When asked by The Athletic about their accounts, Chelsea maintained confidence that they will remain compliant with the Premier League’s PSR for the period ending in 2023-24 season. Chelsea added that they expect their wage bill to be different in the 2023-24 accounts after moving players out last summer.

How does it look going forward?

Analysis from football finance expert Kieran Maguire

The main issue is that these accounts are worse than everyone expected. I can’t see any positives. They can’t grow matchday revenue this season because Stamford Bridge is full. TV income will be down around £70million because of not playing in Europe and unless they win every match until the end of the season, then finishing eighth or ninth is £3million per place, so they may get a little bit more.

Qualifying for the Europa League and Conference League does not make money, it is only the Champions League that puts plusses on the bottom line. If you get to the final of the Europa League or the semi-final, then that is about OK, but you aren’t making much money before that.

There must be a lot of pressure on the club. The fact there was a £90million loss and that was after selling the hotel to themselves. Under EFL rules, you are not allowed to put that (hotel sale) into your PSR calculations.

If they can’t do that for the Premier League, then it will make a bad situation even worse.

GO DEEPER

Confused, drifting, a mess: What next for the Chelsea ‘project’?

Chelsea face a battle to qualify for Europe this season (George Wood/Getty Images)

What else do the accounts tell us?

The accounts show that Chelsea borrowed £428.5m interest-free, although no information is given regarding who lent the money.

Chelsea also sold a hotel to BlueCo for £76.3m, which would have gone towards reducing the £90.1m loss. BlueCo, as described by Chelsea’s website, is “the parent company of Chelsea Football Club”.

It is unclear whether the Premier League will allow for money generated from the hotel sale to another company associated with the club to be used towards the PSR numbers. Chelsea say this was done in line with Premier League rules and was run past the league. The Premier League has been contacted for comment.

The accounts also reveal that the club considers Blues Investment Holdings to be its ultimate parent company. Blues Investment Holdings is incorporated in the Cayman Islands, which is a British-owned territory that is best known for its status as a tax haven. Manchester United’s parent company is also registered there.

Chelsea’s overall revenue increased from £481.3m in 2022 to £512.5m in 2023, with the majority of this rise coming from their commercial department.
Their commercial income grew to £210.1m for the year ended June 30, 2023, having totalled £177.1m in the previous year.

These figures come off the back of it being revealed on Friday that Chelsea spent £75.1m on agent fees between February 1, 2023 and February 2, 2024. This was more than any other Premier League side, with Manchester City spending £60m during the same period.

(Clive Brunskill/Getty Images)