Chelsea not Ready for Financial Fair Play with a $107 million Loss

Hi everyone,
A couple of days ago, I was questioning whether or not the UEFA Financial Fair Play will be a success or failure. Will big clubs be facing sanctions from the governing body because of bad financials. Chelsea reported a record turnover of $325 million for the past financial year, but also a loss $107 million. Not a good sign.

The loss of $107 (£67.7 million) for the year ending June 30, 2011 represented a small reduction on the previous year’s figure of $112 million (£70.9 million); however they were still higher than the two years before that.

This was largely due to the Barclays Premier League club’s owner Roman Abramovich funding the signing of Liverpool forward Fernando Torres for a British record $70 million (£50 million) on the last day of the January transfer window in 2011.

UEFA’s FFP rules are set to come into play in 2013-14 and will analyse clubs’ accounts for the previous three years, starting with the current 2011-12 financial year. Clubs competing in European competition will be permitted to lose just $59 million (€45 million) over these three years.

However, UEFA general secretary Gianni Infantino last week stated 13 clubs currently playing in the Champions League and Europa League, including several from England, would have failed the break-even tests required from the 2013-14 season.

Clubs that flout UEFA’s rules could be banned from fielding new players, be deducted points or face limits on squad sizes in European competition, as well as fines and exclusion from competitions. However, Chelsea maintains it is “well aware of our obligations” concerning FFP and is making progress towards compliance.

“The club is focused on complying with the requirements of UEFA’s financial fair play regulations while maintaining its ability to challenge for major trophies,” said chairman Bruce Buck. “We would expect this to be reflected in our results for the current financial year.”

Meanwhile, Chelsea stated the increase in revenues from the previous year’s level of $326 million (£205.8 million) was in the main due to higher receipts from the UEFA Champions League together with a rise in income from the Premier League’s overseas broadcast contract.

Chief executive Ron Gourlay added: “Achieving a record level of turnover is satisfying given the economic background against which we are operating.” [Source: Sport Business]

Karl Lusbec