June 30, this Friday, is the deadline for Chelsea to balance their books for the past annual year.
The Blues have spent over £600million in the past couple of transfer windows under the ownership of Todd Boehly and Clearlake Capital and this summer presents an opportunity for a multitude of unwanted players to be moved on from the club. So far, N'Golo Kante and Kalidou Koulibaly have both left Stamford Bridge to join the Saudi Pro League, but Chelsea are aiming to offload over ten players this summer.
So over the course of the next few days, Chelsea will continue in their mission to offload as many unwanted players as possible. The likes of Ruben Loftus-Cheek is close to moving to AC Milan, football.london understands, with talks progressing really well ahead of an £18m move to Italy.
Hakim Ziyech and Edouard Mendy are also expected to leave Chelsea for decent fees, respectively, while Christian Pulisic is also on the lookout for a new club. Plenty is going on behind the scenes to try and ensure Chelsea can balance the books as much as possible.
From player sales over the last 12 months, Chelsea have recorded a profit of £123m. However, an increase in wages, a lower income from the Champions League and the ongoing impact from the Covid-19 pandemic, has seen such profits essentially wiped out. football.london caught up with football finance expert Kieran Maguire to talk about the looming June 30 deadline and what it means for Chelsea Football Club going forward.
"For Financial Fair Play purposes, football clubs are assessed on the three most recent seasons as far as their financial reports are concerned," Maguire explained in an exclusive interview with football.london. "Most clubs, this includes Chelsea, have a financial year end of June 30, this means they will be assessed on the year ending 30 June 2021 to 30 June 2022 and 30 June 2023 by the Premier League.
READ MORE: Chelsea news and transfers LIVE: All of the latest updates coming out of Stamford Bridge
"Under the Premier League, you are allowed to lose a maximum of £105m over that period. If we take a look at Chelsea's results, they made a loss of £277m in the two years ended the 30th June 2022. They have a bit of a challenge here.
"Having said that, you are allowed to adjust the accounts for Covid, academy investment, for the women's team, for infrastructure commitments and for community activities, so that helps to reduce your losses. Chelsea, probably - but we don't know, this has not yet been disclosed - will be allowed some form of allowance by the Premier League for the period where the club had its assets frozen as far as the period under which Roman Abramovich's ending of ownership and the starting of ownership by the Clearlake group took place. But we don't know the exact details.
"Also, we don't know if the close on £50m earned by Bruce Buck and Marina Granovskaia will be an allowable cost for FFP purposes or whether it will be excluded, so there are quite a few unknowns. The reason why June 30 is important is because when you buy a player, you spread the cost of the player over the life of the contract.
"So if you sign a player for £100m on a five-year contract, then that works out at a £20m cost per-year for FFP purposes. That's through the method we refer to as amortisation. But when you sell a player, all of the profits from the player sale goes immediately into your account and are offset against your FFP losses.
"In the case of Chelsea, they've done spectacularly well in recent years. Chelsea have made more profits from player sales over the last decade than any other club in the Premier League. You only have to look at the likes of Oscar, Ramires, Hazard, Abraham and Tomori and so on, leaving Chelsea at the peak of their fees.
"If you have a player who is sold; the way that the profit is calculated, it's the sales price, as far as the transfer is concerned, less the book value of the player. Again, this is very useful for Chelsea because if the player has come through the academy then the book value is zero and that's why we saw quite spectacular profits in 2022.
"Chelsea made player sale profits of £123m – that's almost twice the amount they generated through ticket sales throughout the whole season. This is because Tomori, Abraham, etc, all came through the academy and they were all sold and the club made pure profit. If a player has been purchased by the club then things tend to decrease a bit.
"Therefore if Chelsea are close to the limit as far as FFP calculations are concerned for the year ending June 30 2023, selling players, especially academy players, would represent pure profit. This would allow Chelsea to be well within the limits as far as the FFP calculations are concerned."
READ NEXT:
Mason Mount to Man United latest as Chelsea agree big part of Moises Caicedo transfer
Moises Caicedo breakthrough, multiple exits and £18m windfall – Chelsea's dream transfer week
