Chelsea transfer news: How can the Blues keep spending and stay within financial rules?

In Chelsea transfer news, the deal for the Ecuador international could rise to a British club record of £115m, breaking a record the Blues set themselves just six months ago when they spent £107m on another midfielder, Argentina World Cup winner Enzo Fernandez.

According to Transfermarkt, Chelsea have spent just over £800m on new players since Boehly's takeover last summer, around £430m more than the next-highest spenders Manchester United.

And with probable deals for Southampton's Romeo Lavia at £53m and Crystal Palace's Michael Olise for £35m, that figure is likely to rise to around £900m by the end of the transfer window on 1 September.

in other Chelsea transfer news, many fans, both of the Blues and of rivals, are asking how the club can keep afford to keep buying new players and without falling foul of Financial Fair Play rules.

Read More: https://sportzpoint.com/football/moises-caicedo-what-does-this-ecuadorian-prodigy-brings-to-stamford-bridge-for-chelsea/

How much have Chelsea spent during Todd Boehly's ownership?

In Chelsea transfer news, the Blues have spent around £270m on seven players so far this transfer window, more than any other side in Europe, and look certain to break the record for the highest summer spend by any club in the world, eclipsing Real Madrid's £292m in 2019.

That figure is already more than the £260m they spent last summer and is just shy of the £288m spent in January 2023.

They have spent around £175m on Brighton players alone, not including the reported £21m compensation paid to the Seagulls for manager Graham Potter and his coaching staff in September 2022, or the cost of sacking him seven months later.

The expense for new players has been offset to some degree by income made from sales, with around £280m brought in across the three most recent transfer windows.

A significant number of older players earning high wages, such as Kalidou Koulibaly, Mateo Kovacic and Cesar Azpilicueta, are among the squad members to have moved on, while the players who have been signed by the Blues have an average age of just over 21.

Summer 2022

Incomings: Marc Cucurella (Brighton, £60m), Raheem Sterling (Man City, £50m) Kalidou Koulibaly (Napoli, £33m), Carney Chukwuemeka (Aston Villa, £20m), Cesare Casadei (Inter Milan, £12m), Wesley Fofana (Leicester, £70m), Pierre-Emerick Aubameyang (Barcelona, £10.3m), Gabriel Slonina (Chicago Fire, £8m), Denis Zakaria (Juventus, loan).

Outgoings: Timo Werner (RB Leipzig, 25m), Emerson Palmieri (West Ham, £13m), Billy Gilmour (Brighton, £7.5m), Michy Batshuayi (Fenerbahce, £2.5m), Kenedy (Real Valladolid, undisclosed), Andreas Christensen (Barcelona, free), Antonio Rudiger (Real Madrid, free) Marcos Alonso (Barcelona, free).

Total 'net' spend: £215.3m

Winter 2023

Incomings: Enzo Fernandez (Benfica, £107m), Benoit Badiashile (Monaco, £35m) Andrey Santos (Vasco da Gama, £10m), Joao Felix (Atletico Madrid, £9.7m loan fee), Mykhailo Mudryk (Shakhtar Donetsk, £89m), Noni Madueke (PSV Eindhoven, £30.7m), Malo Gusto (Lyon, £30.7m).

Outgoings: Jorginho (Arsenal, £12m)

Total 'net' spend: £301.1m

Summer 2023 (up to 15 August)

Incomings: Moises Caicedo (Brighton, £100m), Christopher Nkunku (RB Leipzig, £52m), Axel Disasi (Monaco, £35.8m), Nicolas Jackson (Villarreal, £32m), Lesley Ugochukwu (Rennes, £23.2m), Robert Sanchez (Brighton, £25m), Angelo (Santos, £13m).

Outgoings: Kai Havertz (Arsenal, £65m), Mason Mount (Man Utd, £55m), Mateo Kovacic (Man City, £25m), Kalidou Koulibaly (Al-Hilal, £19.8m), Christian Pulisic (AC Milan, £20m), Edouard Mendy (Al-Ahli, £15.9m), Ruben Loftus-Cheek (AC Milan, £15m), Ethan Ampadu (Leeds, £7m), N'Golo Kante (Al-Ittihad, free), Cesar Azpilicueta (Atletico Madrid, free), Pierre-Emerick Aubameyang (Marseille, free), Abdul Rahman (PAOK Salonika, free).

Total 'net' spend: £58.3m

What are the rules on spending?

Chelsea have to adhere to the Premier League's profit and sustainability rules, which allow for total losses of £105m over a three-year period. Any club that posts losses in excess of that figure could face penalties, including large fines or even a points deduction.

If Chelsea qualify for Europe this season, then they will also have to meet Uefa's sustainability rules, which limit clubs' spending on wages, transfers and agents' fees to 70% of their revenue over a three-year period, with permitted losses of 60m euros (£51.6m).

The new rules replaced Uefa's Financial Fair Play (FFP) regulations in June 2022 and clubs will have three years to implement them.

Uefa has a wide-ranging list of potential punishments for clubs which break these rules, including warnings, fines, removal from competitions or even the loss of European titles.

Juventus were kicked out of this season's Europa Conference League for breaching FFP rules between 2012 and 2019, while Chelsea were fined £8.57m for breaches that took place during previous owner Roman Abramovich's time at the club. Manchester United were also fined 300,000 euros (£257,000) by Uefa for a "minor" breach of its rules in July.

How are Chelsea trying to avoid breaking the rules?

Heard of the term 'amortisation'? The transfer of Mykhailo Mudryk is often used as the example to explain that.

In Chelsea Transfer News, the Blues have signed many of their players under the Boehly era on long contracts, with Mudryk's £89m fee spread across an eight-and-a-half-year contract, meaning he only costs around £10m a year on the club's annual accounts.

While Uefa tightened its rules this summer to limit spreading a transfer fee across a maximum five years, Chelsea are not in Europe this season, so don't have to worry about it yet. The Premier League does not yet have the same limits.

When a team sell a player, all of the profits go on to the accounts straight away.

To use another example, Kai Havertz cost Chelsea £71m in 2020, which that equates to £14m a year over his five-year contract. But when he was sold to Arsenal this summer for around £65m he had around £28.4m of value left on the books for the final two years of his contract, meaning the Blues could bank around £36.6m of 'profit'.

In Chelsea transfer news. when you sell an academy graduate, the entire amount can go on the books as they did not cost a fee. So when Chelsea sold Mason Mount to Manchester United for £55m this summer, that entire amount goes down as pure profit in the accounts.

Will it work?

Clubs' accounts are published almost a year after the relevant deals take place, meaning up to date figures are an estimation. But we do know that last year's accounts saw Chelsea post a £121m loss for season 2021-22, before Boehly took over. The season before that was a £156m loss.

Chelsea will need to keep raising funds, either through player sales, increased commercial deals or prize money, to keep balancing the books over the length of their new signings' long contracts.

"I can see how they are doing it in terms of accountancy, I don't see how they are doing it in terms of cash flow," journalist Rory Smith told BBC Radio 5's Monday Night Club.

"They have found this ingenious loophole by offering players long-term contracts. That's a brilliant accounting trick. But that is not how they pay the clubs. They are not paying Brighton in nine instalments for Moises Caicedo, they will probably pay them in three, maybe two.

"That's real money and my guess is there is some sort of loan facility that they have access to. That is not a great way to run things long term."

There is also the risk of tying players down to long-term deals who may suffer serious injury or loss of form, but will prove hard to sell because they still have several years left on their contracts.

The return of European football, particularly the more lucrative Champions League, is also likely to be important to Chelsea's strategy - as is lowering their wage structure.

"Chelsea as of this moment think they are compliant with the financial regulations that are placed on them," said BBC Sport football reporter Alex Howell.

"When the new owners took over it is believed that there was a 'Chelsea wage' where players' salaries were inflated and that was something the new owners were looking to tackle.

"A lot of the new signings are younger players and it can be assumed that their wages are lower than the experienced players who have left the club.

"They have sold academy players such as Mason Mount and Ruben Loftus-Cheek, and that is a significant way to balance the books. There's also been interest in Conor Gallagher, another academy graduate, so if he was to be sold that would also greatly help Chelsea stay within the stipulated rules."