Interesting that Chelsea announced their financial figures on the day that they are set to sign Fernando Torres for around £48m.
Chelsea are spinning it that for the financial year end June 30, 2010 that the club was cash positive for the first time since being bought by Roman Abramovich.
Chelsea says that it had a positive cash inflow of £3.8m in the year compared to a net outflow of £16.9m in the previous year. That positive cash flow meant that the club was able to reduce the operating loss to £68.6m. The total loss for the financial year was £70.9m. Amortisation of player transfer fees constitutes the largest component of the difference between the positive cash flow and the operating loss.
The main figures were:
- Group turnover was up from £203.3m to £205.8m
- Operating Loss for the financial year reduced from £72.3m to £68.6m
- Net capital expenditure reduced from £4.2m to (£15.5m) due to player sales
- Cash inflow of £3.8m against an outflow of £16.9m in 2008/09.
Hopefully Chelsea will release more details behind the numbers because at first glance Chelsea have to be disappointed in the numbers. For turnover to increase only about £2.5m in a year that Chelsea won the league and FA Cup is disappointing. If Chelsea can barely increase revenues when they are winning, how will it be if they don’t win a trophy?
Hopefully the details will also explain how Chelsea can have an operating loss of £68.6m and still be cash flow positive. How is that possible?
But the results begs the question, how can Chelsea afford Torres and still stay within the UEFA financial fair play rules. As far as I can tell the UEFA financial fair play rules state:
- Clubs must break even over a three-year period – ie not repeatedly spend more than they earn.
- Club owners will be allowed to put in up to 15million euro a year but only as equity, not a loan. This figure will then drop to 10million euro annually.
Chelsea are probably claiming then that because they were cash flow positive in 2010 that that meet the first criteria. But to add the Torres transfer fee into this years numbers, I cannot see anyway that Chelsea offsets that expense by increasing revenues by £48m.