Chelsea’s financial fair play record is under pressure from a transfer deficit of more than €500m this season. Suddenly there are several transfers to Saudi Arabia that could repair the balance sheet – but why is this help coming?
With Pierre-Emerick Aubameyang, Edouard Mendy, Kalidou Koulibaly and Hakim Ziyech, several Chelsea FC players are currently being linked with a transfer to Saudi Arabia. These moves could be a lifesaver for the club. Because the value of the players mentioned is no longer as great for the team as their salaries. And Chelsea are under pressure from associations’ financial rules to have to sell players.
High expenses, little income – Chelsea have a problem
In the 2022/23 season, the club has accumulated a transfer deficit of more than 500 million euros, which is compounded by the high salaries of the players. After being taken over by American investors, the club had spent more money in the winter transfer window alone than all top division clubs from Spain, Italy, France and Germany put together to reach the European Cup.
The investments did not pay off, Chelsea finished twelfth in the table. In the end there is a problem: the squad is large and expensive, but there is no income from the European Cup.
UEFA has already publicly warned Chelsea about finances in 2022
UEFA’s financial rules basically state that apart from a margin of £20m per season, a club cannot spend more than it earns, with the Premier League having a similar rule of £35m per season. According to the rules, however, the reported income must come from the football business and must not come from the investor.
As early as September 2022, Chelsea and several other clubs were publicly warned by UEFA that future balance sheets must look different. Chelsea, which has already stretched the rules with extremely long contract terms for the players committed in winter 2022/23, has to give up players. So the possible transfers to Saudi Arabia come at the right time.
Why is Saudi Arabia’s sovereign wealth fund particularly focused on Chelsea players?
Saudi Arabia’s sovereign wealth fund PIF has taken control of four clubs in the country – Al-Ittihad, Al-Ahli, Al-Nassr and Al-Hilal – and is currently trying to attract numerous players from European clubs to these clubs. Tottenham Hotspur’s Heung-Min Son is said to be among them. Cristiano Ronaldo and Karim Benzema have long been committed to the Saudi image project of professional football, and Wolverhampton’s captain Ruben Neves is also moving there.
In England, however, the question is raised as to why so many Chelsea players are suitable for clubs in Saudi Arabia. N’Golo Kanté has already moved to Al-Ittihad in Saudi Arabia on a free transfer, and several others are in talks.
Chelsea’s Owners: What influence does the sovereign wealth fund have?
Russian oligarch Roman Abramovich was sanctioned by the British government in 2022 after the Russian attack on Ukraine began because the British government believed he had clear ties to Russian President Vladimir Putin. Abramovich sold the club to America. The focus of the takeover was primarily on the investor Todd Boehly. But 60 percent of the shares in Chelsea and thus the majority went to the investment company Clearlake – a private equity company.
With private equity, the principle is that money is collected from investors in order to invest. In Great Britain, several media are now reporting that the Saudi Arabian state fund PIF has invested several billions in Clearlake and, conversely, could therefore have an interest in putting Chelsea’s muddled business back in order. TV pundit Gary Neville said on the BBC: “The Premier League should impose an immediate ban on transfers to Saudi Arabia to ensure the integrity of football is not damaged.”
When examining new owners, the Premier League should be made aware of any influence. Neither Clearlake, Chelsea nor the Premier League have responded to Sportschau’s inquiries about the club’s ownership and possible influence. The extent of any PIF involvement with Chelsea’s majority shareholder is unknown.
Private equity with increasing role in football
In principle, however, private equity is playing an increasingly important role in football. Such companies entered several leagues and clubs in Europe. “Private equity firms are unsuitable owners of clubs,” Martin Broughton, former Liverpool FC chairman, told the BBC in March. It’s all about quick profit maximization, but football clubs are emotional assets for the fans.
Despite all reservations about some countries, clubs are better off even with sovereign wealth funds, as they at least have a long-term perspective, Broughton said.
A question for the future: are the regulations sufficient for the new structures?
For UEFA, the problem is not acute as Chelsea failed to qualify for the European Cup. But for the future, the question arises as to whether the current rules can still keep up with the circumstances. It is currently prohibited in European competition for a legal or natural person to control more than one club. With private equity, this may not always be transparent.
At the end of April, UEFA set up an eleven-strong working group to deal with the “long-term sustainability” of football. Chelsea’s tricks with long-term contract terms should be an issue. Private equity may also need to be discussed. The first results of the working group were announced for the end of June.