Chelsea have announced a profit of £1.4 million for last year. The first time the club has finished in the black in the Roman Abramovich era.
Winning the Champions League plus a £28.8m profit in the transfer market, saw the club turn a previous year’s loss of £67.7 million into a £1.4m on record turnover of £255.7 million, up from £225.6 million.
A Chelsea statement said:
‘Chelsea Football Club has also recorded a record group turnover of £255.7million, making Chelsea the fifth largest club in Europe in terms of revenue.’
‘The £1.4m profit contrasts with a loss of £67.7m in the previous financial year and puts the club in a strong position to comply with UEFA financial fair play criteria for the coming seasons.
‘The club also enjoyed an uplift in revenues from commercial activities including new partners and merchandising.’
The statement added that debt of £166.6m was turned into equity during the course of the year ‘making Chelsea FC plc debt free’.
The debt free comment alludes to the fact that Abramovich converted his £800m-plus investment in the club into equity, which wiped the debt off the club’s books.
Chelsea chief executive Ron Gourlay added:
‘Our club philosophy is built on success. We had that success on the field this year, as we were the first London team to win the UEFA Champions League, and we enjoyed it off the field as well and this helps us inject financial investment into the team.
‘The big challenge is always to have a successful team on the field that wins trophies and to make a profit at the same time.
‘The objectives have been set across the whole business, from the Academy to Under-21s and all the way through to the first team.’
To how did Chelsea make a profit despite buying the likes of Oscar and Hazard? The answer is amortization. If Chelsea spend £30 million on a player and he signs a five-year contract, the financial hit is £6 million a year for five years. When he is sold, the “profit” is the difference between the transfer fee Chelsea received and what is left on the amortization of the contract.
So when they sold the likes of Deco, Carvalho, Di Santo, Sinclair, Alex the value of their contracts were very low, thus the big profit.
Chelsea have yet to reveal the details behind the numbers and that will give me a clearer picture of whether they have been able to trim their wage bill after letting the likes of Drogba and Anelka go.