Back in November, Chelsea announced, to great fanfare, a profit of £1.4 million for last year. The first time the club has finished in the black in the Roman Abramovich era.
Well today Chelsea released the actual details behind the numbers and they are not as good as what Chelsea were trumpeting.
The £1.4m profit was only attained because the cancellation of preferred shares that were owned by British Sky Broadcasting Group Plc.
This cancellation (not mentioned in the original press release) allowed Chelsea to book an exceptional profit of £18.4m, which turned a £17m loss into a £1.4m profit.
Still, even a £17m loss is a big improvement over the £67.7m loss Chelsea had in the 2010-11 season.
Some of the highlights from Chelsea’s financial report:
- Turnover increased to £257.5m from £225.6m due to Chelsea winning the Champions League and FA Cup
- Chelsea’s wage bill rose 4.5% in 2012 from £168m to £176m, putting it just below Man City’s £178.1m wage bill.
- Chelsea made a profit of £28.8m on player sales (veruss £184.m in 2011) due to the sales of Zhirkov, Rajkovic, Da Costa and Anelka. Remember that teams depreciate the transfer fee over the cost of the contract, which is why you can buy a player for £20m and sell them 2 years later for £10m and still report a profit!
- Actual cash transfer spending in 2011/12 shows a different picture as Chelsea spent £83.9m on purchases while recouping £38.3m through sales for a net cash spend £45.6m
- Transfer spend since year end (June 2012) has been £43m with sales of £2m, for a net cash spend of £41m.
From a Uefa Financial Fair Play perspective, Chelsea moved in the right direction last year as they reduced their loss from £67.7m to a £1.4m “profit”. But, that Chelsea profit was on the back of the club winning the Champions League and FA Cup.
With Chelsea out of the Champions League already, that revenue stream will be significantly lower this season, versus last season. So I would anticipate that Chelsea will announce another loss in 2013.
But looking forward, Chelsea is working hard to lower its wage bill, as Frank Lampard and Ashley Cole can attest too.
Add in the increased revenue from the new TV contract coming into play next season and I expect that Chelsea should be profitable in the 2013-14 season, keeping them compliant with FFP.