The details behind Chelsea’s £68.6m loss for last season are starting to come out an they don’t make pretty reading.
Chelsea’s annual wage bill soared last season to £172.5million, which is almost £40million more the next highest payers Manchester City paid.
In 2009, Chelsea spent £165.6million on wages but that sum included pay-offs worth £12.6million to sacked manager Luiz Felipe Scolari and his assistants. Excluding the pay-offs, the rise in wages is £19.5million and represents a 12.7% increase.
The Chelsea wage bill is not sustainable at 82% of turnover. While that is better than Man City 106%, it is a long way from what United (46%) and Arsenal (49%). The only way to stay profitable in the long run is to get the wage bill to be less than 50% of turnover. In order to do that, Chelsea would have to slash their wage bill by about £70million!!
The figures also confirm that Chelsea reported losses of £70.9million compared to £44.4million the previous year. The club indicated earlier this week that they believe they will halve their losses in the next financial year.
The latest accounts also reveal that Chelsea will be liable for £3.8million extra in National Insurance contributions if HM Revenue and Customs succeed in their legal case that image rights payments should be taxed as income. If that is proved, the players themselves would be liable to pay any tax individually in relation to image rights.
When Chelsea released their numbers last week, Chairman Bruce Buck was patting himself on the back about how Chelsea were cash-flow positive and how Chelsea’s financial situation is improving. Looking a these numbers I cannot see why he thinks that.
And remember that these numbers are for last season, when Chelsea won the double and did not spend £75m in the transfer market. I cannot see how next season’s numbers can improve on these, and that has to have ramifications with the UEFA Fair Play rules coming into effect soon.