How Chelsea has complied with FFP regulations despite possible £300 million in January transfer buying spree
Chelsea’s extravagant spending during the transfer period is nothing new. Once Roman Abramovich was forced to sell, it predicted that their financial ferocity might wane. Todd Boehly, however, has responded with a resounding affirmation.
At Stamford Bridge, American businessman Boehly rose to the top position. He has, however, caused a stir in the Premier League because of his extravagant spending, which some rival fans have compared to Monopoly.
Boehly has spent a staggering £476 million on 16 new players since purchasing the team in May 2022. Mykhailo Mudryk received £88 million (plus add-ons), Wesley Fofana received £72 million, and Raheem Sterling received £50 million.
It leaves many supporters wondering how Chelsea has bypassed Financial Fair Play (FFP) regulations to finance deals as a result.
Chelsea has acquired David Fofana, Benoit Badiashile, Noni Madueke, Mudryk, and Andrey Santos just during this transfer window.
However, Chelsea has signed Malo Gusto to a contract that will bring him to the club from Lyon at the end of the current campaign and brought in Joao Felix on loan.
In light of Boehly’s most recent rampage, many believe that FFP is no longer having the desired effect on the game.
Furthermore, Chelsea has now resumed negotiations to acquire Benfica midfielder Enzo Fernandez to complete the transfer before tomorrow at 11 p.m. Chelsea is attempting to take advantage of a gap in contract length regulations before UEFA tightens its belt.
Chelsea is attempting to pay the necessary £105 million in installments. However, this would then enable the Blues to sign the Argentine to a longer contract to spread the cost. To take advantage of the decision, they have already given Mudryk a long-term contract.
How does Chelsea manage to function within FFP?
Well, it’s because of how the accountants handle player trading. When you sell a player, it immediately calculates the entire profit. Chelsea has had success selling players, though.
They made a sizable profit when they sold Hazard toward the end of his contract. Additionally, Tomori and Abraham were both pure profits who graduated from the academy.
When you sell a player, they carry out instant accounting for the entire profit in your FFP calculation. However, when you purchase a player, the price is divided over the length of the contract. Chelsea has recently been bringing in players with six- and seven-year contracts, but Mudryk now has an eight-and-a-half-year deal.
Therefore, if you purchase him for £88 million and his contract is for eight and a half years. Just £10 million is required in the accounts for FFP purposes in a single year.
However, if you had signed him to a four-year contract, the amount would have been £22 million, while an eight-and-a-half-year contract would have reduced it to £10 million.
Cucurella and Fofana received similar treatment from Chelsea, and Sterling reportedly has a five-year contract.
Chelsea has adopted this strategy, which has enabled them to lower their player acquisition costs for FFP. However, since you immediately take all of the sales profits, their sales have not been impacted.