Why Chelsea Have to Finish in the Top Four

Chelsea’s latest financial results, announced
during the final hours of 2019, went beyond merely confirming a lean year at Stamford
Bridge. They underlined that the club are not sustainable at the elite level without
the benefits of regular Champions League participation. There was heavy spending in 2018-19 to acquire
Kepa Arrizabalaga, Jorginho and Christian Pulisic, but the accounts reveal that Roman
Abramovich poured in a staggering £247 million of his personal wealth to enable them to do
so, via his holding company Fordstam Ltd. In one sense that is hugely encouraging; it
confirms Abramovich’s continued commitment to Chelsea at a time when his interest was
becoming tenuous and rumours suggested he was looking to sell. On the other hand, the level of Abramovich’s
financial support sits uneasily with Chelsea’s sustainability drive since UEFA introduced
its Financial Fair Play (FFP) regulations in 2012. An eye-watering pre-tax loss of £101.8 million
is the largest recorded by the club since 2005 (£140 million), when Abramovich was
bankrolling the construction of Jose Mourinho’s dominant Premier League title winners. Were
it not for a £60.4 million profit on player trading thanks in part to the sale of Thibaut
Courtois to Real Madrid, the bottom line would have been even uglier. There is also nothing in the numbers to hint
that Chelsea won a major European trophy in 2018-19. Overall broadcast revenue actually
fell from £204.1 million in 2018 to £200.2 million in 2019, while match-day income dropped
from £73.9 million in 2018 to £66.6 million the following year, despite Stamford Bridge
hosting two more games across all competitions. In financial terms, the Europa League triumph
with Maurizio Sarri was significantly less valuable to Chelsea than elimination from
the Champions League round of 16 under Antonio Conte. That unforgiving reality underlines
why, even in what is widely regarded as a transition season, the pressure on Frank Lampard
to deliver a top-four finish in the Premier League is considerable. “The stakes are high,” confirmed Dr Rob
Wilson, football finance expert at Sheffield Hallam University. “You get into a very
difficult space if you have a couple of seasons out of the Champions League, because your
closest rivals are the ones taking the spots. You have around a £60 million drop in your
revenue while they get a £60 million boost to theirs, so the net effect is around £120
million.” Clubs are permitted to lose only a total of
€30 million (about £25.5 million) over the course of any three-year monitoring period.
Chelsea’s pre-tax profits of £16 million in 2017 and a club-record £67 million in
2018 ensure there is no immediate danger of failing to comply, but the picture gets more
complicated if 2020 yields another significant loss. The early signs on that front are positive,
Chelsea have already banked £115.4 million from player sales for the next financial year,
headlined by the sale of Eden Hazard to Real Madrid, and a FIFA-imposed transfer ban limited
their summer spending to just the £40 million required to sign Mateo Kovacic permanently.
They are also back in the Champions League and have qualified for the knockout stage. Lampard is unlikely to be sacked anytime soon
and even if he were, such a divorce would be nothing like as costly as the £26.6 million
it took to get rid of Conte and his large backroom team. Chelsea’s decision to battle
the Italian in the courts for more than a year proved an expensive failed gamble, and
it’s easy to see why they subsequently sought about £5 million in compensation from Juventus
to release Sarri. Conte’s severance package — the most lucrative
in the Abramovich era — takes the cumulative amount the Russian has spent to get rid of
managers since arriving at Stamford Bridge in 2003 beyond £100 million. Given the FFP
considerations governing the rest of Chelsea’s football decisions, he has every reason to
give Lampard time and patience to carry out his rebuild. Chelsea fought hard for the ability to be
able to sign players this January, and there is scope in the current FFP equation to strengthen
Lampard’s squad. It is clear, though, that any investment on the level that it would
take to bring Jadon Sancho from Borussia Dortmund, or to convince Leicester to part with Ben
Chilwell, would be far simpler to balance in the summer. Just as important in the next two transfer
windows will be the task of trimming what has become a bloated wage bill — up to £285.6
million from £244.1 million in 2018, a worrying 63.9 per cent of the club’s turnover. The
loss of Hazard will help ease the strain, but Olivier Giroud, Ross Barkley and Marcos
Alonso are just three examples of players on the first-team fringe currently earning
six-figure weekly salaries. Lampard’s youth movement looks certain to
save Chelsea millions in the transfer market over the years to come, if not in terms of
the wage bill. Mason Mount, Fikayo Tomori and Ruben Loftus-Cheek are all paid Premier
League wages after signing long-term extensions this season, while Callum Hudson-Odoi’s
bumper new deal — which starts on a £120,000 per week basic wage — has set the bar high
for the upcoming negotiations with Tammy Abraham and Reece James. Marina Granovskaia’s talent for extracting
maximum value from unwanted players will continue to be crucial to Chelsea’s overall business
model. They have generated £397.4 million profit from player sales since 2013, a staggering
figure that dwarfs any of their Premier League rivals and makes the five major trophies won
during the past six years look even more impressive. We can also expect Chelsea to remain aggressive
in pursuing the best possible commercial agreements. Speaking to the Financial Times in 2017, the
commercial director Chris Townsend signalled his intention to more than double the number
of Chelsea’s sponsors from 12 to between 30 and 35 — but this, like anything else,
becomes harder if the club is not in the Champions League. Chelsea are in the final year of their £40
million-a-year shirt sponsorship agreement with Yokohama, and The Athletic reported in
September that they were testing the market for a new partner. It wouldn’t be surprising
if the club opted to wait until nearer the end of the season in the hope that Lampard’s
team delivers Champions League qualification, strengthening their hand. Ultimately though, the only truly game-changing
avenue open to Chelsea is the project Abramovich has shelved. Planning approval for the redevelopment
of Stamford Bridge expires in March and, as yet, there has been no indication as to whether
it will be revived. Match-day revenue has been virtually stagnant in the club’s accounts
for years, affected only by Champions League participation. “There’s no appetite across the entire
division to do anything with ticket prices,” Wilson adds. “That ship has sailed and clubs
also know that a change in ticket prices not only gives you pretty bad press with your
fanbase, but also doesn’t actually generate a huge amount of additional revenue. “The gains are very marginal, so the only
tangible way of growing match-day revenue is to get more fans through the door. Chelsea
sell out pretty much every week, so they need a new stadium.” With no guarantee that a new Stamford Bridge
will ever be built, keeping Chelsea winning at the highest level on the pitch will continue
to require a delicate balancing act in the accounts — with Champions League qualification
this season and beyond the top priority.

100 thoughts on “Why Chelsea Have to Finish in the Top Four

  1. The script for this video was originally featured on The Athletic, the best place to read about football online. Not subscribed? https://www.theathletic.co.uk/tifofootball – for your 7-day free trial and 50% off an annual subscription.

  2. Chelsea really are in a bad position at the moment, this is from a chelsea fan before anyone says im hating lol. Manager who isnt experienced and squad full of over priced, overpaid , past it footballers. Could be half a decade before we compete again imo

  3. Chelsea have just made '3' their new shirt sponsor. Incredible how quickly news can become outdated in football, but in all walks of life.

  4. The small stadium is really holding Chelsea back. This is why after everything they’ve won they are still not seen as a big club, yet Leeds and Nottingham forest still are

  5. This channel is like taking an economics class.
    Also the timing of this video couldn't have been more perfect since Chelsea just announced a new shirt sponsor.

  6. Great video and analysis! I think though that you guys should make your animations and infographics more dynamic, with less text, because there's too much information on the screen for the eye to focus. Good work tho!

  7. As a chelsea fan I have to say we are awful. The fact 4th spot is so close shows how far all Chelsea, United, spurs and Arsenal have fallen. If we do not finish top 4 we will be stuck with the same team next season which force us into a mid table team

  8. TIFO: Chelsea will probably wait for a shirt sponsor till later in the season to strengthen their ha-
    Chelsea: T H R E E

  9. This isn't the problem of Chelsea, the Europa League winners only earned 40m Euros while participants in Champions League group stage earn almost as much as that just for playing during the group stage. The only bigger signing was Pulisic recently and even that was fine due to the sale of Hazard.

  10. This would explain why Real Madrid signed Courtois for such a cheap price. I know his first year was terrible, but back when he was signed for €35m, he was arguably the best keeper in the world certainly one of the top 3, signed in a market Alisson and Ederson who were both worse or at least less proven at the time went for more and Kepa, who's flaws are being exposed, was a £72m signing. That made little sense to me. If Chelsea were losing money at the rate they did, it makes sense that Courtois was so cheap because it wasn't about getting the right price it was about getting money. So Real Madrid had good negotiating power due to Chelsea's financial dire straits and used that effectively.

  11. Chelsea have been in the top 4 all season pretty much. They've had bad patches all year, as have the teams below them. I think they'll do fine in that respect. Big game vs Leicester this week though.

  12. Chelsea have a load of players eating up salaries and are useless like, drinkwater, Barkley, Alonso, Giroud, Pedro and a CB as well as just terrible players like
    Emerson, Willian, Kepa,

  13. It's obvious we need a new Stadium.
    It's been a subject years ago.
    And since 2017, we've been talking about this project, and I don't know what the heck we are waiting for.
    Tottenham already build their Stadium almost an year ago.
    I don't knos what are we waiting to build ours and go to Wembley.

  14. "Why Chelsea have to finish in the top four."

    With all the oil money and Russian oligarchy, they SHOULD finish first. But they are trash and we all know they would easily be crushed by a Borussia Mönchengladbach or RB Leipzig. Gotta love how all they can really aspire to is 4th place, picking up scraps in a shit league. No mention of Champions League or Euro League ambitions.

    The fuck is a Chelsea? Oh that one team that got lucky and beat Bayern in the CL on penalties, never to be heard of again?

  15. Just not true. The accounts don't take into account the sale of Hazard, Morata or potentially Bakayoko. Add the £170m Chelsea will receive from Hazard and Morata and it is certainly sustainable.

  16. Some years ago the consensus was that premier league clubs didn't really need the champions league, since premier league money provided a good enough source of revenue on its own. Then they started handling out princely contracts to fringe players and all of a sudden champions league money is paramount. Modern football is not static I guess.

  17. How do these teams make money like the nfl is very profitable for owners and soccer in Europe is just as popular as football in the states so I don’t understand what’s up with this terrible business model at Uefa ever heard of a Salary cap?

  18. 40m for ake and 20m for a proper backup striker would pretty much guarantee us a top 4 finish the board must spend something

  19. I think Man United are more desperate for a top 4 place given their high wage bill, need for quality recruitment and debt. Furthermore, sponsors like Adidas and Chevrolet pay upto 25% less for every occasion of them missing out of the Champions League. In addition, these sponsors pay lesser than half their annual deal if the club is out of the CL for two successive seasons.

  20. The Frank Lampard good news: you got your dream job at 40 after only one season as a manager
    The Frank Lampard bad news: Uhh…watch the video

  21. Surely this video just applies to any of the top teams..? Is the meaning of this video meant to pressure Chelsea in the public eye instead of other teams?

  22. Have you make a video creating your dream team?
    Example: You create your youth academy to produce players that can fit your tactic.
    Or you can train them.

  23. Very informative, thanks. Now I see why the club hasn't made any Jan signings. I guess we will have to be patient and rely on the youth.

  24. The plans were extension of the stadium not a complete rebuild.Other than that great informative video…thank you

  25. This is disgusting, especially when you think about that Dortmund, who have to pay everything out of their own pocket, had to let Pulisic go to that shit club.

  26. Hudson Odoi on 120k a week is a joke. He's a liability at times and can't cross to save himself. So much dead weight at the club that needs to go. We always seem to overpay when it comes to transfers and can't land the players we need. I dunno how the fuck we ended up signing Drinkwater. Bakayoko was a complete failure too.

  27. The Athletic originally appeared on Athletic. After a while this channel became The Athletic so there was no need for that anymore.

  28. I was under the impression that Player sales and purchases do not impact revenue statement.

    If you are acquiring capital, it goes into the balance sheet, not revenue statement.
    The entire amount paid for acquiring a player including cost of acquisition of a player is amortized over a period which is equal to the duration of the contract signed. Leo's signed a 7 year contract. Which is long enough to amortize the record fees paid. In contrast, a lot of players sold by Chelsea including Hazard were sold over and above their book value. Such amount is absorbed in revenue over the remaining period of the contract.

    It doesn't impact immediately.

    Our lack of revenue is down to a small stadium and "anti-Sarri" movement that journalists like Liam twome fuled. Plus ofcourse Conte's severance package and legal battle cost.

    I doubt your research.

  29. They've been lucky to have the funding, as they were always a small club attendance wise- lower premiership, higher championship.

  30. The problem with Chelsea is that it’s stadium is too small, they aren’t a global generational supported team like Man Utd & Liverpool and the price Abramovich would want to sell will be exorbitant.

  31. Tifo is the best channel for football on youtube…well rounded analysis that normal youtubers cant do…KUDOS to your work tifo….
    And if you can….can you make a sensible tranfers video for fc barcelona as there is a new manager…and certainly there are problems…so can you make a video about the problems and the solutions?..

  32. Rated ur channel until this vid. Chelsea have the second most amount of income after city, most successful team in the PL era, only city are more popular than chelsea, ppl forget liverpool have only just arrived on the seen in my lifetime

  33. Everton must be fucked then. Same size stadium, less fan base, less income, no trophies, no champions league and they spend as much as anyone. Can anyone explain why its chelsea always gettin stick, can anyone explain how everton and west ham get away with it??

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