Chelsea's business model relies on player sales

Chelsea’s pre-tax loss reduced from £156m to £122m, as revenue increased by £46m (11%) from £436m to a club record £481m. The loss would have been even higher without the benefit of £123m profit from player sales, up £95m from the previous season’s £28m.

Chelsea’s £121m pre-tax loss is the second highest in the Premier League, only surpassed by Manchester United’s £150m, though plenty of big losses were reported elsewhere, e.g. Leicester City £92m, Newcastle United £73m and Tottenham £61m.

Chelsea’s business model is far more reliant on player sales than any other major English club. In the last five years, Chelsea made nearly half a billion pounds from this activity, including good money from Academy graduates, who represent pure profit in the books. This included three years when they generated more than £100m, so 2021/22 was no fluke.  Chelsea’s £467m profit from player sales is over £200m more than the next highest clubs in the Premier League, namely Liverpool £263m and Manchester City £254m.

One challenge for the Blues in future is that they now have a huge squad and clearly need to offload players. Other clubs will surely use this to their advantage and look to pick up players for low fees. It is even possible that Chelsea might have to pay players to leave, as Arsenal had to do with Ozil and Aubameyang.

Broadcasting is Chelsea’s most important revenue stream, accounting for 49% of total revenue, ahead of commercial 37% and match day 14%.

Chelsea’s £35m revenue growth in the past three years has been outpaced by Manchester City £78m and Liverpool £61m. On the other hand, the other three members of the Big Six have seen their revenue fall in this period, so Chelsea have not done too badly.

Chelsea’s £481m revenue is the fourth highest in the Premier League, though the gap to the top three clubs is at least £100m. Manchester City lead the way with £613m, followed by Liverpool £594m and Manchester United £583m.

Chelsea have earned an impressive €402m from Europe in the last five years, though this is still a fair way behind Liverpool and Manchester City, who both received €480m. On the other hand, this is a lot higher than Manchester United €322m, Tottenham €256m and Arsenal €125m.    This year they have already earned €94m for reaching the quarter-finals. If they manage to get past Real Madrid, they would receive another €12.5m.

Chelsea’s £177m commercial revenue has been overtaken by Tottenham £183m, while they are miles behind the top three clubs: Manchester City £309m, Manchester United £258m and Liverpool £247m. This will surely be an area of focus for Chelsea’s new owners, who will hope to bring some US expertise to the commercial operations.

It is likely that player trading will continue to be a very important part of Chelsea’s business model for the foreseeable future, partly because their squad is now ridiculously bloated, but also because it is their best chance of complying with FFP regulations (especially if they fail to qualify for the Champions League).