Explained: How Chelsea have avoided Financial Fair Play sanctions despite January transfer spending spree

31.01.2023, 15:27 skysports.com

Chelsea will have splashed over £322m in this January transfer window if they complete a British record deal for Benfica's Enzo Fernandez - so how are they able to spend such huge sums and stay within Financial Fair Play rules? The UEFA FFP regulations are designed to limit excessive spending and there are also Premier League rules which put a cap on the losses a club can suffer over a three-year period. Large fines or points deductions can be dished out as punishment to clubs which don't adhere to the rules. But with the Blues close to agreeing a £105.6m transfer for Fernandez, new Chelsea co-owner Todd Boehly will have overseen a spend of more than £600m since the takeover in May 2022 - and they appear to have stayed within the guidelines. Football finance expert Kieran Maguire spoke to Sky Sports News to explain... "What Chelsea have decided to do is to spread the cost of the players by signing them on very long contracts. "So, by signing Mykhailo Mudryk on an eight-and-a-half-year contract, the way it is dealt with for accounting and FFP purposes is you take that £88m cost and you divide that over eight-and-a-half-years, and it works out as just over £10m-a-year. "That appears to be the Chelsea strategy that they have employed over the last couple of windows." Transfer Centre LIVE! Premier League ins and outs Download the Sky Sports App Get Sky Sports "Absolutely. It can work both ways for Chelsea. "If the players really develop and are a huge success it gives the club protection for when other potential clubs come in and try to poach those players because they will still have many years left on their contracts. "The downside is if the player doesn't perform then you've got the complication of they are likely to be on very high wages and you are committed to those wages for the next six, seven or eight years. "Therefore, if it works it is fantastic but if not, it is weighing the club down a bit like an anchor slowing things down." "The issues will be that you are restricted to a 25-man squad as far as both the Premier League and UEFA are concerned. "You can't just keep adding to the player roster and remember that each of these players is likely to be on a contract that is worth £7m, £8m or £9m-a-year. "All of a sudden you've got more players on these big contracts and then your wage bill goes up by £50m or £60m, and with the new UEFA financial and sustainability rules, which are starting to come into effect from next summer, you are only allowed to spend 90 per cent, then 80 per cent and then 70 per cent on your income on wages, agents fees and your net transfer costs." "Yes, it would be restrictive if Chelsea are not in the Champions League next season. "If we take a look at Chelsea when they won the Champions League in 2021, that generated around about €120m (£106m) in prize money. "You'd normally expect to make £3m to £4m for each home game that is taking place at Stamford Bridge as well, and there will be bonuses from sponsors. "Now, if you then compare that to the Europa League, for every £1 you make in the Europa League you are making around about £4.50 in the Champions League. "So, there is a significant knock-on effect if you don't qualify." "It has surprised me to a certain extent because given that Boehly's background is that of private equity where the main aim traditionally is to hollow out the costs and to try to make a business more attractive to future owners. "You would be surprised that it is committing itself to such a large commitment in terms of cashflow, in terms of both transfer spend and wages. "So, I think it has taken a lot of people by surprise compared to the largesse we saw under Roman Abramovich. "Remember, Chelsea lost £900,000-a-week under Abramovich over his 19-year period of ownership." "There is an element of whack-a-mole in terms of every time we see a new series of rules come in, the accountants and the lawyers look at them from a forensic point of view and try to identify the stresses and weaknesses contained within those rules. "Then what we tend to see is that the regulators try to respond to that. "Certainly, looking at these rules I think there are opportunities for clubs to perhaps be what we might describe as a little bit creative with some of the ways that they acknowledge their costs, and therefore this is likely to lead to future conflict between the administrators of the game and individual clubs, who perhaps have a more fast and loose approach to the moral and ethical issues surrounding financial and sustainability rules." Chelsea's strategy won't be able to be copied by rivals in the future, though, with UEFA moving to close the loophole around stretching transfer fees over long contracts. From the summer, clubs will only be able to spread transfer fees over a five-year period. However, these rules will not be applied retrospectively, which benefits Chelsea. Boehly will have spent over £600m on players since taking ownership of Chelsea if Fernandez signs - but what is the masterplan behind the huge transfer spending? Co-owner and chairman Boehly has overseen the acquisition of 17 players so far since he took charge ahead of the summer 2022 transfer window, with Noni Madueke and Malo Gusto the latest arrivals. Among those incomings, there have been six teenagers and five more players aged 20-22, with Chelsea signing up some of Europe's top young talent, while also bringing in more experienced players such as Pierre-Emerick Aubameyang (age 33), Kalidou Koulibaly (31) and Raheem Sterling (28). Their approach has been criticised in some quarters. Sky Sports pundit Jamie Carragher recently said Chelsea are further away from success than they were before the past two transfer windows, with Graham Potter's side currently languishing in mid-table in the Premier League and out of both cup competitions. So what is the masterplan behind their big transfer outlay? "They've got a twin-track policy," explains Sky Sports News chief reporter Kaveh Solhekol. "They go around the world buying up the best young players and they're going to carry on doing that but they want to buy ready-made players as well. "Since Roman Abramovich left the strategy has been open to criticism. I'm not criticising it myself but there's plenty of people out there who criticise how they do business because it seems like any player that is offered, they're having a look at. "Some of the signings have worked out, some haven't. Has Aubameyang worked out? Has Koulibaly? I'm not sure. It's been a little bit hit and miss and a lot of people say it may have been a mistake to dismantle the structure Abramovich had in place, with (former director) Marina Granovskaia, (former technical and performance advisor) Petr Cech... "A lot of key people have left the club very quickly and it's going to take the new people time to get used to working at Chelsea and working with each other. There seems to be more people with a voice and different points of view. Add in a young, relatively inexperienced manager, and you can see why Chelsea are underperforming at the moment." European football expert Kevin Hatchard told the Transfer Show:"Mudryk is extremely talented but he's not played a great deal of football. When Roberto Di Zerbi was at Shakhtar, he was the one that really pushed him in terms of his first-team chances. He saw his ability and saw his potential. Since then, he's really taken off."The real eye-catching moments have come in the Champions League. They shouldn't have been anywhere near qualifying for the knockouts given the disruption the team have had."The eight-and-a-half-year contract fits in with the policy Chelsea have of paying big fees for young talent but spreading it over a long period of time."With the style of play Graham Potter likes to play, there is no reason why he can't be successful."What I don't understand with Chelsea in general is that when Todd Boehly came in, he didn't say the club were going to sign young players and that this is the strategy."There's this unusual situation where they brought in Raheem Sterling, Kalidou Koulibaly for big money."Yes, they are proven talents, but if you then wanted to bring young talent into the first team, I'm not sure where the joined-up thinking is.“The Mudryk deal again reflects that Chelsea are willing to get to a certain level financially and then offset for FFP over the course of a long contract.” SUMMER 2022 (including current ages) Marc Cucurella - Brighton, £60m - age 24 While Man City baulked at the price, Chelsea were prepared to pay the record-equalling fee for a full-back to bring Cucurella from Brighton on a six-year deal. The Spain international - who worked with Potter on the South Coast - was signed to provide competition at left-back and left wing-back with Ben Chilwell, who has been struggling with injuries, although 18-year-old Lewis Hall has also been used in those positions. Raheem Sterling - Man City, £47.5m - age 28 The first men's signing of the Todd Boehly era, Sterling was described by Thomas Tuchel as Chelsea's "number one priority" when he joined on a five-year contract with an option for a further 12 months. The four-time Premier League champion has managed to score just four times in 15 Premier League appearances this season, though, and was surprisingly used in a wing-back role by Potter prior to the World Cup break. Eddie Beach - Southampton, undisclosed - age 19 Young goalkeeper Beach joined Chelsea in June and has gone into their development squad. Kalidou Koulibaly - Napoli, £33m - age 31 A long-term target for many Premier League clubs, Koulibaly joined Chelsea on a four-year contract and was seen as a ready-made solution after centre-backs Antonio Rudiger and Andreas Christensen both left the club on free transfers in the summer. He has been a first-choice for much of this season. Omari Hutchinson - Arsenal, free - 19 Highly-rated attacking midfielder Hutchinson was a Chelsea youth player before spending seven y