The Memo: Blue in the face: how Chelsea’s January spending could send the team south

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Blue in the face: how Chelsea’s January spending could send the team south

Amy Howe – 6 February 2023

While January was a pretty chilly month for most, things were heating up for football fans. To kick off the year, Chelsea Football Club dropped over £323 million on eight player transfers over the course of a month. Argentinian starlet Enzo Fernandez alone accounted for £106.8 million of the team’s expenses. Over the course of transfer windows since last summer, the west London team has spent a net total of £530.7 million, putting them top of the table for expenditure across Premier League clubs. To put the figure in perspective, Manchester United sits in second with a net spend of £200.9 million.

So, what’s the issue here? Enter UEFA’s Financial Fair Play (FFP) rules. In simple terms, FFP was introduced to prevent clubs from spending more than they can foot. Clubs within the Premier League are also subject to further rules which state that teams can suffer a loss of no more than £105 million over a three-year course. If found to be in breach of the rules, clubs could suffer a number of penalties including fines, transfer bans, points deductions, and game bans. Chelsea could find themselves in a sticky situation if they fail to qualify for next season’s Champions League which comes with prize money and opportunities to increase revenue through ticket and merchandise sales.

But how have Chelsea managed to play within the FFP lines thus far? It comes down to the use of amoritisation and unusually long player employment contracts to balance the club’s sheets. Spreading a player’s transfer fees over the length of their contract reduces the total expenditure in any one season, allowing the club to stay within the cost caps. If the club fails to make it to the Champions League, we could see them make moves to increase revenue, including selling players. Cue the employment lawyers who will be called upon to negotiate and draft new contracts if that bridge is crossed…

Interested in finding out more about sports law? Take a look at our sports practice area guide here.