Torres and Luiz to Chelsea: Blues' Abramovich Era in Losses
After capturing the British record signing of Fernando Torres and the highly-rated David Luiz, followed by the morale-boosting 4-2 win over Sunderland, things are seemingly looking up for Chelsea.
As has been well-documented, the Blues splashed out £50million on striker Torres from Liverpool in a deal which far exceeded the previous record of £32.5million set by Robinho, when he moved to Manchester City from Real Madrid on transfer deadline day in September 2008.
The Stamford Bridge club also forked out £21.3million for centre-back David Luiz from Benfica, taking their total spending to £71.3million.
In an age where the UK's economic growth looks dismal and the potential for a double-dip recession is on the cards, spending by Premier League clubs, or rather Chelsea, has spiralled out of control.
Russian oligarch Roman Abramovich has bankrolled the club since June 2003, in which time the club have posted record loss after loss in many a financial year, with the possibility of trading profit looking ever bleaker.
Chelsea posted operating losses of £70.9million for the financial year ending June 2010, despite winning the Premier League and FA Cup.
With UEFA warning Premier League clubs (namely Manchester City, Chelsea and Liverpool) ahead of the commencement of their Financial Fair Play rules, here's the time-line of the Chelsea-Abramovich era, in losses.
Russian Businessman Buys Chelsea
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In June 2003, Russian billionaire Roman Abramovich buys Premier League underachievers Chelsea in a deal worth £140million.
It is the biggest takeover deal ever in British football (as of 2003), with long-time chairman Ken Bates using the money to buy Leeds United, who are on the verge of financial meltdown.
Abramovich inherits the club's £80million debt (Bates inherited £1.5million debt in 1982 when he bought the club for £1), while vowing to build a state-of-the-art training complex in Cobham, Surrey, and make Chelsea FC a world-wide brand.
The Russian tells the BBC after completing the deal, "We are delighted to agree this deal to acquire what is already one of the top clubs in Europe.
"We have the resources and ambition to achieve even more given the huge potential of this great club."
Seller Ken Bates said of the takeover, "I think what this could signal is the arrival of overseas sugar daddies.
"If this is the start of the super-rich invaders it'll be very, very interesting to see how the fans react to it."
He added, "Football has been in terrible trouble in this country recently (2003) - it's clocked up huge debts and the transfer market has collapsed."
Some Chelsea fans weren't so sure about the deal. One said, "I think it's disgraceful because I always thought that Ken Bates was Mr Chelsea", while another on the BBC's 606 Football Forum commented, "I fear for the future of Chelsea, especially with all of the debts."
Premier League Champions at Long Last
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Two years after Roman Abramovich took control of Chelsea, the club wins the Premier League for the first time in 50 years, having finished runners-up the season before.
After appointing Jose Mourinho, fresh from winning the UEFA Champions League with Porto, in August 2004 on a record £5.2million a year salary, Abramovich sees his investments reap rewards on the pitch.
The club spent £92.05million in the summer and January transfer window of this 2004/05 season bringing in the talent required to win the league.
The new signings were Didier Drogba, Ricardo Carvalho, Petr Cech, Tiago, Paulo Ferreira, Arjen Robben and Mateja Kezman, as well as Jiri Jarosik in January 2005.
For the financial year ending June 2005, Chelsea posts losses of £140million, the most in football history.
Blues' chief executive Peter Kenyon, insists owner Abramovich isn't fazed by the figures.
"He's fully aware of where we're going in the long-term and fully aware of the stages in the short-term," Kenyon told BBC Radio Five Live.
"It's not a question of one day walking into the office and saying 'oh by the way we're just posting a £140million loss.'
"He's aware of the progress of the business and football club."
Back-To-Back Titles and a Reduced Loss
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Chelsea become only the fifth club ever in English football to win back-to-back league titles, after manager Jose Mourinho guided his men to another historic achievement.
The Blues change their squad around in the 2005/06 season in their quest for successive league glory, selling Mikael Forsell, Scott Parker, Mateja Kezman, Tiago Mendes and Alexei Smertin for a total of £22.6million.
They bolster their squad with more quality additions of Michael Essien (£24.4million), Shaun Wright-Phillips (£21million) and Asier Del Horno (£8million), whilst snapping up young talent Lassana Diarra for £1million, taking their total spend on players to £54.4million, a whole £31.8million more than they received in transfer fees.
Despite spending a lot on new signings, the club reduce their losses by £60million. With their grip on English football tightening it would seem, Chelsea look to be heading in the right direction, especially considering turnover is up and football activities have increased their overall income by 6.6 per cent.
However, the Blues still post a heavy operating loss, this time of £80.2million.
"These figures demonstrate the business is moving in the right direction," said Chelsea chief executive Peter Kenyon.
"Last year we took some painful decisions in order to help us achieve our long-term business aims. This year's figures prove that was the correct decision."
The club's director of public affairs Simon Greenberg told BBC Radio 4: "[The financial figures show Chelsea] is moving in the right direction, reducing losses and increasing major income streams."
He continued: "We are not spending as much as we used to do on wages and they are more manageable - they are down by 2 per cent.
"We think that has become more stable and as revenues grow the business will become more successful."
Reduced Losses, Reduced Pitch Performance
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After winning back-to-back league titles, Chelsea up the game by announcing two marquee signings in Michael Ballack and Andriy Shevchenko.
In a statement on intent, the clubs also adds another proven world class player in Ashley Cole to their ranks.
The club spends £46.5million on new additions, with Salomon Kalou and Khalid Boulahrouz also signing with the Stamford Bridge outfit, while earning £21million from transfer fees after selling Eidur Gudjohnsen, Damien Duff, Robert Huth, Jiri Jarosik, Lenny Pidgeley and William Gallas.
However, this still brings no elusive UEFA Champions League trophy owner Roman Abramovich so desperately wants, while the club also fail to win the Premier League, finishing runners-up.
Nonetheless, manager Mourinho still guides the team to FA Cup and Carling Cup titles in another trophy-filled season for the Blues.
On the financial front though, the picture doesn't look good, as Chelsea's aim of breaking even as a business by 2010 looked more remote than ever. The club announced it made a loss of £74 million in the financial year to the end of June 2007.
The latest loss takes Abramovich's spending to £578million since he took control in 2003.
Close, But No Cigar
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After the disappointment of missing out on the Premier League and Champions League trophies last season, Jose Mourinho resigns in September 2007.
Avram Grant, who's interference in team affairs as Director of Football led to Mourinho's departure, takes over the reigns as manager.
This time, the club come perilously close to winning a trophy, but just fall short at the very last hurdle. The club loses to Manchester United in the Premier League title race on the last day of the 2007/08 campaign, losing out by just two points.
They lose to the same club in the 2008 UEFA Champions League Final in Moscow, losing an agonising penalty shoot-out 6-5 after a 1-1 score in normal and extra time.
All of this comes after losing to London rivals Tottenham Hotspur in the Carling Cup Final at Wembley, following a 2-1 AET defeat.
That season the club announce eight new signings, three bosman players, spending £43.7million on new talent, including the £15million capture of Nicolas Anelka from Bolton Wanderers and the £13.5million addition of Florent Malouda from Lyon.
Chelsea also make £25million from selling players, including Arjen Robben to Real Madrid for £21million.
At the end of the season, the club sack Avram Grant after a trophiless campaign, meaning throughout the 2007/08 the Blues have paid £23million in compensation to Jose Mourinho, Avram Grant and the five coaches who left the club during the year.
Overall, the club post a loss of £65.7million for the year ending June 2008.
"Debt-Free" Chelsea
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After last season's disappointment, Chelsea appoint World Cup-winning boss Luiz Felipe Scolari as manager at the start of the 2008/09 campaign.
However, the end to an 86-game unbeaten league home run by Liverpool, a humiliating Carling Cup defeat to Burnley and a fourth place position by mid-February see Scolari sacked.
Guus Hiddink takes over, and his rejuvenating effect sees Chelsea finish third in the Premier League and win the FA Cup.
The club sign Ricardo Quaresma on loan from Inter Milan, while also adding Jose Bosingwa (£16.2million and Deco (£.79million) to the team for a total spend on players of £24.1million, whilst making a total of £22.9million in selling Steve Sidwell, Tal Ben Haim, Khalid Boulahrouz, Shaun Wright-Phillips and Hernan Crespo amongst others.
Despite failing on the large part with on-pitch success, Roman Abramovich decides to give his club a boost off it by turning £340million worth of debt the club owes to him into equity, effectively making the club "debt-free".
Chelsea still post a £44.4million loss though for the year ending June 2009, with Scolari bagging a cool £12.6million as compensation from his untimely sacking.
The following season, Carlo Ancelotti becomes manager as Chelsea make one major signing in the £18million capture of Yuri Zhirkov, and end the season as Premier League and FA Cup champions.
They post yet another loss though, this time £70.9million after the year ending June 2010, meaning after seven years since Roman Abramovich took control of Chelsea, they have not traded profit.
Since June 2005, the club's cumulative loss has been £475.2million as Abramovich has invested over £800million in Chelsea Football Club.
What Next for the Blues?
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After splashing out £71.3million on Fernando Torres and David Luiz, it seems clear that Chelsea will be heading yet another loss in 2011.
However, such major losses cannot continue for Chelsea, with UEFA's Financial Fairplay rules set to be implemented from the 2011/12 season onwards.
For the first two years (2012 and 2013), clubs will be permitted to overspend by a total of £38.4million, as long as that figure is cancelled out by an equity injection from the owner.
Since Roman Abramovich has taken control of Chelsea, the club have not posted losses under £44.4million, which is a whole £8million above what UEFA is demanding.
Over the following three seasons, the permitted losses will again be set at £38.4million over the entire period. That will then drop to £25.6million over three seasons, then £12.8million, then zero.
Chelsea's main rivals Manchester United and Manchester City posted very contrasting figures for 2010. City made a loss of £121million, while United posted operating profits that topped £100million.
Will Chelsea plunge as low as City in their struggle to come clean financially, or will they become a Manchester United on the Premier League financial scene?
