Chelsea are top club for making money on player sales

Chelsea's accounts came out last week and the authoritative Swiss Ramble has reviewed them from his fastness in Zurich,

The club swung from £102m loss before tax to £36m profit, despite revenue dropping £40m (9%) from club record £447m to £407m, as profit on player sales surged £82m to £143m and expenses fell by a hefty £90m. After tax, results improved from a £97m loss to £32m profit. The £36m profit is the best result to date of Premier League clubs that have published 2019/20 accounts. It is likely that others will report substantial losses, due to the pandemic.

It may surprise some that Chelsea have now posted profits in three of the last four years, though the one loss was a hefty £102m in 2018/19. This represents something of a turnaround for Chelsea, who have reported almost half (nine) of the top 20 losses in Premier League history.

All revenue streams decreased, impacted by COVID, though the damage was limited by the return to the Champions League. Broadcasting was down £18m (9%) to £183m, while there were falls in match day, down £12m (18%) to £54m, and commercial, down £10m (5%) to £170m

Chelsea earned (estimated) £72m (€81m) for reaching the Champions League last 16, more than prior season’s £41m for winning the Europa League, comprising €15m participation fee, €20m prize money, €31m UEFA coefficient and €15m TV pool. This is before a 16% COVID rebate.

The difference between the European competitions is vividly seen in the new UEFA coefficient payment (based on performances in Europe over 10 years). Chelsea were the highest ranked English team in the Champions League, receiving €31m, while they only got €3m in the Europa League. Despite not qualifying for Europe in 2016/17, the club have earned an impressive €262m from Europe in the last five years, though a fair way behind Manchester City €390m, Liverpool €310m and Spurs €299m.

Revenue has grown by £78m (24%) since 2016 from £329m to £407m, driven by commercial £54m and broadcasting £40m. Chairman Bruce Buck said, “Despite the impact of COVID, the revenue streams remained strong.”

That said, £78m revenue growth in the past four years has been significantly outpaced by Liverpool £188m and Spurs £182m, and is also below Manchester City £90m. On the other hand, both Arsenal and Manchester United have seen their revenue fall in this period, by £10m and £6m respectively. Chelsea did overtake Tottenham in 2019/20 to once again claim the title of highest revenue in London.

The £170m commercial revenue is still the fourth highest in the Premier League, though a long way below the top 3 clubs: Manchester United £279m, Manchester City £250m and Liverpool £214m.

The importance of player sales

The bottom line was significantly boosted by £143m profit on player sales, up from prior year £60m, mainly due to the sales of Eden Hazard to Real Madrid, Alvaro Morata to Atletico Madrid and Mario Pasalic to Atalanta. This is the highest by far in the Premier League

The £143m 2019/20 profit on player sales is the highest ever reported in the Premier League. To underline the importance of player trading to Chelsea’s strategy, six of the 20 largest profits in England from this activity have been generated by the Blues

The club’s business model is far more reliant on player sales than any other major English club. In the last six years, they have made nearly half a billion from this activity with only Liverpool anywhere near them. From 2014 their annual profit here has averaged £77m.

The 2019/20 improvement was partly because the prior year was hit by £27m for the exit of Antonio Conte and his coaching team (including legal costs), though there is no mention of reported £4m compensation paid to Derby County for Frank Lampard. The club has paid £96m in the last 13 years for sacked managers. Chelsea are to pay Frank Lampard £1.8m between now and June unless he takes another job as a manager.

The wage bill fell slightly (£2m) to £283m. There had been talk of a 10% cut in player salaries for four months, due to the COVID crisis, but this was ultimately rejected. Wages were up £61m (27%) since 2016, which is lower than the growth at Manchester City, Liverpool and Spurs.

Average attendance is only 9^th highest in the Premier League. This is why the club were looking to upgrade their stadium to 60,000 capacity, but the £1bn development been put on hold, officially “due to the current unfavourable investment climate”. The club will however look at the significant uplift to Tottenham Hotspur’s revenue from their new stadium.

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The Political Economy of Football V2

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