Chelsea have spent nearly a billion euros in one year. How?

We all have our moments. For me, it was probably when Chelsea signed Mykhaylo Mudryk for a fee that could reach €100 million ($108m) from Shakhtar Donetsk in January.

I’d just written an article outlining how Chelsea’s new ownership group — Todd Boehly and Clearlake Capital — had signed 12 new players over the previous six months. It was an absurd overhaul that saw one of the best teams in Europe suddenly drop to the bottom half of the Premier League. They couldn’t keep going on like this, could they?

After the piece was published, Chelsea beat Arsenal to the signing of Mudryk, a 22-year-old winger with limited high-level professional experience whose transfer fee was an initial €70m with €30m add-ons. OK, fine. One more. Now you’re done … right … guys?

Later that month, in came Enzo Fernández from Benfica for €121m — the fifth-biggest transfer fee, for a player who had only moved to Benfica from River Plate for around €12m just six months previous. That wasn’t it, either. Since Enzo, Chelsea have added nine players officially — with Southampton’s Romeo Lavia (€62m) the latest to be added to the list.

If you’ve been following the transfer market, then you’ve no doubt had the experience at some point, too: you see another new Chelsea signing, you think to yourself, Fine, this is ridiculous, but this has to be the last one, and then they go out and sign four or five or six more super-expensive players.

This, of course, raises a question that seemingly just about everyone outside of West London is wondering. How the heck do they keep getting away with this? Aren’t there, you know, rules?

You’re not wrong: We’ve never seen this before

Let’s just list them, shall we? These are all of the signings from last season, with costs provided by the site Transfermarkt:

And then this summer:

And given how things are going — they just tried to sign Crystal Palace‘s Michael Olise, too, but he signed a new contract to remain with the Eagles — these probably won’t be the last names to join this season, or even this summer. But for now, we’ll work off those above.

According to data from the consultancy Twenty First Group, the average Premier League team since 2015-16 has turned over about 7.5 players from season to season. In other words, seven or eight new players will make an appearance for each team, year on year. Chelsea, per Twenty First Group, currently have 15 first-team players (which includes some loanees who returned to the club) who didn’t make an appearance for the club. Throw in Lavia and maybe another guy in the Olise slot, and Chelsea could about double the typical Premier League offseason turnover — for the second season in a row.

It’s not just the number of players, either. After Lavia, Chelsea have spent three of the nine highest-ever transfer fees on defensive midfielders — all over the past seven months.

Per Twenty First Group’s database, Chelsea have spent €930m on player transfers since last summer. That’s €36m more than Real Madrid, Barcelona … and the rest of LaLiga, combined. It also accounts for about 18% of all of the Premier League’s transfer spending over the same period. They probably won’t catch any of the other Big Five leagues, but they’re not too far away, either: Serie ALigue 1 and the Bundesliga have all spent somewhere between €1.2 billion and €1.6bn since last summer.

Put another way, Tottenham, who have qualified for the Champions League in half of the previous 10 seasons, have spent about €1bn on transfers — over the past 10 years; Bayern Munich, who won the Champions League just a couple years ago, have spent €880m across that same stretch. Chelsea have spent more in just over 12 months.

But is it legal?

If you’re wondering what happened to financial fair play (FFP), it’s dead. But Chelsea’s spending isn’t what killed it.

No, UEFA did. In response to the fundamentals of the game being upended by the COVID-19 pandemic, the governing body replaced FFP with updated financial regulations, now called the Financial and Sustainability Regulations. (Guess we’ll call it “FSR” or something?)

Anyway, the regulations are similar and the goal is — broadly — to prevent clubs across Europe from overspending and then going under. Once again, those regulations have perhaps somewhat unintended consequences for the biggest clubs in the world that aren’t really realistically in danger of ever going bankrupt.

As far as Chelsea are concerned, they basically need to satisfy two financial requirements. The first is that the maximum allowable loss over a three-year period is €60m, although that number can be increased by investment in certain areas and various accounting tricks. The second is that squad costs can only equate to 70% of a combination of operating revenue and profit from player exits. However, the 70% number doesn’t kick in until 2025-26; it’s 90% for the upcoming season and 80% the season after that.

Football finances are purposefully opaque and the accounting basically seems fake to a lowly journalist like me: these things are assessed retroactively, and we don’t know the full costs of running a given club until after the season. Plus, we don’t know how many more players Chelsea will sign or part ways. So, I can’t say for sure what’s going to happen, but I can say that it’s not as bad as it looks.

There are three elements of player costs: salaries, amortized transfer fees and player exits.

For last season, Chelsea’s wage bill was around £320m, which would’ve been fourth highest in the Premier League after the Manchester clubs and Liverpool. And despite all of the new signings, that number might not even go up this season.

“Chances are that the majority of the players will have clauses in their contracts, which state that if the club fails to qualify for the Champions League, there will be pay reductions or there’ll be no bonuses paid because the Champions League is so lucrative,” said Kieran Maguire, a professor at the University of Liverpool and co-host of the “Price of Football” podcast. “We’ve seen that in the case of Manchester United, where the wage bill has fallen by around £40m to £50m.”

On top of potential wage reductions for the handful of remaining players, a number of high-earning performers have left Chelsea this summer. Maguire estimates that the average player was roughly making £150,000-a-week for Chelsea last season. Per FBref’s estimates, the now-departed Christian Pulisic, Pierre-Emerick Aubameyang, Kepa ArrizabalagaCésar Azpilicueta, Joao Felix, Kai HavertzN’Golo Kanté and Kalidou Koulibaly were all at least on that salary level, if not significantly above it.

“There will be substantial wage reductions,” Maguire said. “We then have an unknown, which is in relation to the new players who have been recruited and how much their wages cost. If the stories that are circulating in the media are correct, then [many of the new players] are on significantly less than £150,000-a-week. So, effectively you can probably get three players in for two players out and so on in terms of the impact on the wage cost.”

Then there’s the long length of the contracts, which explains why Chelsea are able to acquire these players for below-market annual contracts and why they can keep spending so much money on transfer fees. According to Twenty First Group, the average Chelsea player currently has 4.6 years left on his contract, which is 76% higher than the average in the Premier League (2.61) and 90% higher than the average across the Big Five leagues (2.42).

To put an even finer point on it, Chelsea currently have 10 players under contract through at least 2030. Mudryk, Enzo, Caicedo, and Jackson are all signed through 2031, while Sanchez, Badiashile, Madueke, Gusto, Ughochukwu, and Santos are all signed through the end of the 2029-30 season. (Yes, the numbers 2029-30 look as weird to me as they look to you.)

Meanwhile, across the rest of the clubs in all of Europe’s Big Five leagues, there are just two other players — Athletic Bilbao’s Oihan Sancet and Osasuna‘s Jon Moncayola — with contracts that extend into the next decade.

The way these transfer fees get accounted for is through amortization. For example, Caicedo was signed for a total €116m fee including add-ons. Had he signed a standard four- or five-year deal, the cost of the transfer would appear in the club’s accounts as between €23m and €30m per year, plus whatever his annual contract cost. However, he signed an eight-year deal, so it’s going to show up as an annual cost of around €14.5m. Essentially, by offering all of these players contracts that are twice the typical length, they’re cutting the effective cost of all of these transfers by half.

In response to Chelsea’s moves, UEFA ruled earlier this year that, from this summer onward, contracts will no longer be allowed to be amortized over any length of time of more than five years, and the Premier League seems likely to eventually adopt a similar rule. However, Chelsea aren’t in European competition this year, so the UEFA regs don’t currently apply.

“There are legacy issues if the player turns out to be of not very good quality and you can’t shift the player. There’s legacy issues if the player perhaps sustains a career-reducing or ending injuries”, Maguire said. “There are issues, but it certainly reduces the cost. They’ve applied long contracts, which has effectively allowed them to sign more players than they would’ve been able to under a shorter contract period.”

And then, lastly, there are player departures. These guys have all left since last summer for a transfer fee of at least €8m each:

Since last summer, that’s over €300m in transfer income, which is not amortized and is simply booked as an immediate profit. Plus, Chelsea no longer have to pay wages to any of those players.

When you add all of that up, sources in Europe say, Chelsea are confident that they’ll get away with it. And even if they are punished, it might just be a sizable fine, which the new ownership seems totally content paying if it means they get to keep building this new type of team. Maguire also says that there are a number of other write-offs that Chelsea can use, related both to the pandemic and the sale of the club, to lower the accounted-for costs.

Will it work on the field?

I have no clue — mainly because we’ve never seen something like this before. Essentially, a club was bought by a venture capital fund with lots of upfront money to spend and a new idea for how to spend more of it within the financial regulations of European soccer. Except, this is not soft power or a billionaire’s plaything; this is a VC fund that expects to see a long-term profit from all this investment.

The upside is that if lots of these young players are a hit, Chelsea suddenly have a team of superstars locked down on reduced salaries throughout their entire primes. The current average age of the squad is 23.8 years, and outside of Thiago Silva and Sterling, no key players are older than 26. With so many potentially talented young players, they at least have the opportunity for a kind of supercharged version of what we saw at Arsenal last season, when a number of key players all get significantly better at the same time.

While I have been really critical of the new Chelsea approach in the past, something seems to have changed this summer. They’re at least targeting the kind of high-upside youngsters that they weren’t last year, when the likes of Sterling, Cucurella and Koulibaly all arrived for large fees.

The downside is that recruiting talent is really hard and players don’t develop for all kinds of reasons even within the perfect atmosphere, which this certainly doesn’t seem like yet. Chelsea also don’t seem to have much of the humility I typically associate with the best team builders across all sports. If you end up missing on too many of these guys, then you’re stuck with a bunch of players who aren’t good enough for the next seven or eight years.

Many of these players seem intrigued by the security of these outlier long-term deals, and if that’s true, it seems unlikely that all of them will be willing to give that up just because they’re not getting any playing time. On top of that, will any of these players be happy about their eight-year deals if they do become superstars and realize how much more money some of their contemporaries are making?

Oh, and if the team doesn’t get better, then it won’t be qualifying for the Champions League, and Chelsea won’t have as much money to pay all of these players they’ve agreed to pay into the next decade, or to acquire more players who might move the needle.

At the very least, it all seems incredibly risky. I’m sure Chelsea think they’ll be able to keep moving players to Saudi Arabia, where they won’t have to take pay cuts, or they’ll be able to send them over to their partner-club in France, Strasbourg, for some temporary wage relief or whatever kind of fair value transfer can be arranged.

Or maybe they’re banking on something totally different: the wider uncertainty of the world.

We’re not too far removed from most of the biggest clubs in Europe trying to break away and form a Super League that would massively boost and protect their revenues. Next year, we’re likely to see the Premier League get a fifth spot in the Champions League. In 2030? Would it surprise you if the landscape of the sport looked significantly different to what we see today? Perhaps, then, the plan is to figure out how to spend as much as you can through various accounting loopholes in the short-term, lock up a ton of talent for the long-term and then figure out the specifics whenever you’re finally forced to.

If Chelsea don’t even know what the rules will be in 2030, then why should they care about whether or not they’re breaking them?

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