Chelsea, a club with Champagne tastes and a lemonade budget. It can’t go on

Chelsea’s accounts lay bare the bones of a club in trouble.

The league table does that, of course — ninth at the time of writing — but there is something more elemental and basic about a club’s accounts. For a team like Chelsea, whose rise to prominence is inseparable from Roman Abramovich’s riches, that is doubly the case.

These are the headline figures. Chelsea’s pre-tax loss was £90.1million ($112m), with wages rising from £340.2m in 2022 to £404m in 2023. It was the biggest loss in the Premier League, with only Manchester City’s wage bill higher (£423m).

Looking forward? Chelsea have paid an all-time Premier League record £205m in amortisation fees, which is only set to increase when the signings of Moises Caicedo, Cole Palmer and Axel Disasi are included in next season’s results.

Spending like this is all well and good when you are Premier League champions and kings of Europe, but even then, it lies on the limits of sustainability.

Last season, Chelsea finished 12th. This season, although a slight improvement, is unlikely to end in the European places. With revenue down as a result, losses are likely to increase. The club has always had Champagne tastes. Their form and spending mean they now have a lemonade budget. This cannot continue.

Future compliance with the Premier League’s profitability and sustainability rules (PSR) appears at best difficult and at worst unlikely. It was only achieved this year after Chelsea sold a hotel for £76.3m to BlueCo 22 Limited, a company that lists Boehly and other Chelsea board members as its directors.

The equations are limited and unpleasant. This is a club who have run out of runway.

They will surely need to sell players and slash the wage budget but, in the two years since Chelsea’s takeover, how many of their signings have increased in value? Palmer, certainly, but selling the club’s attacking fulcrum and one of the season’s lone positives will not be considered. Aside from that, the list is slim.

Youth players are the fabric of a club, aside from the fans they represent, and its connection to the past. It is these players who, under PSR, are most likely to depart — Conor Gallagher, Trevoh Chalobah, Levi Colwill. It scarcely feels utterable but any offers for captain Reece James, given his injuries and Chelsea’s predicament, will surely need to be considered.

This is a difficult economic market in which to operate. Yes, Chelsea have a lot of players to sell — but they are too expensive for the majority of clubs on the continent, while Premier League rivals are: a) not keen to do Chelsea a favour, and b) worried about their own PSR status.

Chelsea’s reality is sobering and their chair at Europe’s top table is missing a leg. These accounts must be treated as a marker — it has to be the end of their acquisition phase. They have no choice.

But there is another angle to Chelsea’s reality. Yes, they have wasted money, but they have emerged with a squad that contains several exceptional talents. Palmer has been a revelation. Enzo Fernandez (top photo) is 23, a World Cup winner, and his performances are by no means the root of Chelsea’s issues. Caicedo’s ability is undoubted. Disasi and Colwill have had teething pains, but also good moments. Chelsea have a core of players.

In elite football — especially among the privileged high-revenue clubs — there are multiple ways to achieve success. During the high points of the Abramovich era, Chelsea had spending power, outstanding structure, and some of the best coaches in the world.

Profligacy and PSR mean Chelsea’s spending power has withered. There was a complete makeover of the club’s senior leadership post-Abramovich — those individuals have not yet proved their worth.

Of all these avenues, Chelsea have one route to relevance left available. The squad is set and the solution is simple. It is down to Mauricio Pochettino to work with these young players and with them, come good.

It is not an easy task. Their traditional ‘Big Six’ rivals all have more spending power due to PSR, while new names have entered the fray — Aston Villa, Newcastle United and Brighton & Hove Albion. This is a more competitive Premier League than ever before — but on an individual level, Chelsea’s squad has a talent advantage over all three of those teams.

In Pochettino, they have a coach who has experience of needing to bring through young players on a budget. During his five years at Tottenham Hotspur, the club’s stadium build often left the Argentine without any significant funds. The development of Dele Alli was Pochettino’s headline — but he also has to take some credit for the improvements of Harry Kane (20 when Pochettino joined), Eric Dier (20 when he signed for Spurs), and Son Heung-min (23 when he signed). It was a group that reached the Champions League final.

Of course, the presence of several veterans at Tottenham meant that Pochettino could focus his attention on a handful of players — at Chelsea, he has a kindergarten. On the flip side, Chelsea’s development has been checked by a constant trickle of new arrivals — their budget now forces the club to have a settled squad.

But Pochettino is now also lacking time. Each place in the Premier League is worth some £3m, European qualification even more so, and when next year’s accounts are released, each one of those pennies will be integral to securing PSR compliance.

To move forward, Chelsea must rely on prudence and development. They are not attributes they have shown in the last two years. They are their only way out.

(Top photo: Darren Walsh/Chelsea FC via Getty Images)