Over the course of the past 12 months the arrival of Todd Boehly and Clearlake Capital as owners of Chelsea has provided great disruption to the transfer market.
Between acquiring the club in May 2022 following the forced sale due to UK sanctions placed upon former owner Roman Abramovich, and the end of the January transfer window, Chelsea have spent more than £500m on acquiring some of the most sought after talents in world football.
Enzo Fernandez, Benoit Badiashile, Mykhailo Mudryk, Wesley Fofana and Noni Madueke, among many others, have all arrived at Stamford Bridge during the past year, although a 12th-placed finish meant that the first year project for the new owners woefully underachieved.
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Chelsea co-owner Behdad Eghbali had spoken of his admiration for Liverpool owners Fenway Sports Group when addressing the Sportico Invest In Sports Conference in New York in October 2022, where the ECHO were present.
“These [Premier League] teams generally, in our view, are not well managed. Fenway Sports Group with Liverpool have done it well but for the most part these opportunities have not been optimised,” said the Clearlake Capital co-founder.
A club owned by an investment fund is one that needs success on the pitch to grow the efforts off it and increase the value of the club for which a £2.5bn premium was paid last year. There will need to be a yield further down the line for investors, although the best chance of that happening is to attempt to grow the value of the club and realise a profit at sale.
But the heavy spend was viewed as being a long-term investment, although missing out on the Champions League for 2023/24 was not part of the plan and will complicate matters from a financial perspective given the liabilities that exist on the clubs balance sheet through both wages and amortisation costs for the acquisition of players.
It is a philosophy that is at odds with the kind that Liverpool have adopted under FSG, where the club has been run on a far stricter business model, spending in line with what it earns and bucking the trend in football of repeated loss-making businesses. The lack of the loosening of purse strings has been cause for much chagrin among some elements of the Reds fan base over time.
The ability for Chelsea to lessen the financial impact on the balance sheet of their spend was borne from the adoption of the tactic of offering extended deals of seven, eight and nine years in some cases, thus spreading the amortisation cost attributed to the transfer fee across a longer period of time, allowing the club more financial flexibility. A £100m transfer fee over a five-year contract, for example, would be amortised as £20m per year in club accounts, but by offering a nine-year deal to a player the amortised cost would be £11.1m on the balance sheet.
The use of such contracts forced UEFA to act and put a block on deals of more than five years being offered to players from this summer, with a number of European clubs understood to have been unhappy at Chelsea’s use of longer contracts.
But it is understood that some clubs remain concerned at potential ways around the five-year rule that was introduced.
Chelsea had been seeking to conclude a deal for Uruguayan midfielder Manuel Ugarte from Portuguese side Sporting CP. Ugarte had been a player heavily linked with Liverpool earlier this year.
It now appears as if Paris Saint-Germain are to win the race for the 22-year-old, with it reported in the Mirror that Chelsea had been ready to offer an eight-year deal to Ugarte and had been looking to circumvent any regulation by including any additional years above and beyond the five-year limit as options in the club’s favour that they would be able to trigger.
Chelsea have had a major impact on the transfer market due to their approach over the last year to the extent where European football’s governing body has had to rewrite the rule book to try and head off a potential problem further down the road.
With new regulations having arrived other European clubs will be keeping a close eye on how any attempts to find a workaround land with UEFA.
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