LONDON – Chelsea faces a tough task complying with UEFA’s new financial controls after announcing losses of almost $110 million in the past financial year on Tuesday.
UEFA President Michel Platini is trying to curb the mass levels of spending in European football with clubs set to be barred from the Champions League if they breach the so-called “financial fair play” rules.
While Chelsea reduced its losses to 67.7 million pounds ($109 million) in the year to June 30, 2011, from 70.9 million pounds ($106 million), they were still higher than the two years before that.
That was largely due to owner Roman Abramovich funding the signing of Fernando Torres for 50 million pounds (then $80 million) on the last day of the January transfer window in 2011.
In an initial two-year monitoring period that started in July 2011, UEFA’s rules allow clubs to make a total loss of €5 million ($6.5 million) in the first assessment period or up to €45 million ($58 million) if a wealthy owner makes a one-time donation to wipe out losses.
Persistent loss-makers can first be barred from the 2014-15 Champions League, which currently distributes prize money of around €700 million ($900 million) each season to 32 clubs playing in the group stage.
UEFA said last week that 13 clubs, including several from England, would have failed break-even tests on their 2010 accounts.
Chelsea says it is “well aware of our obligations” under the new spending rules.
“The club is focused on complying with the requirements of UEFA’s financial fair play regulations while maintaining its ability to challenge for major trophies,” chairman Bruce Buck said. “We would expect this to be reflected in our results for the current financial year.”
Chelsea said it expects “the current year’s profit and loss account to show a significant improvement.”
Key to that will be bringing more money into the west London club. Turnover increased by less than 10 per cent to 222.3 million pounds ($357 million) in the year to June 30, 2011, from 205.8 million pounds ($330 million).
With revenue from the Champions League key to that turnover, Chelsea cannot afford to miss out on Europe’s elite competition next season. Andre Villas-Boas’ side is currently in the fourth qualifying place and would have to go through a playoff if it ended the season in the same position.
Abramovich has bankrolled Chelsea since the Russian billionaire’s 2003 takeover, earning three English league titles and three FA Cups. In 2009, he converted 340 million pounds (then $541 million) of interest-free loans into equity to make the club debt-free.