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Chelsea have sold a lot of footballers over the two years since Behdad Eghbali and Todd Boehly took control of the club, but when it comes to the revenue raised by the sizeable football department, it falls short of those generated by the club’s property lawyers.
The club’s financial results, published on Saturday, revealed 12-month losses of £248.5 million before player and other sales were taken into consideration. It is an astonishing deficit which is only partly mitigated by the sale of a whole range of footballers, from Timo Werner to Kalidou Koulibaly, and Kai Havertz to Mateo Kovacic. Although the £63.9 million earned on conventional transfers is outstripped by the £76.5 million for those two big lumps at the south-east corner of the ground.
Those would be the Copthorne and Millennium hotels, sold by the parent company of Eghbali and Boehly’s consortium, Blueco 22 Limited, to its subsidiary Blueco 22 Properties Limited. Under the regulations laid out by the Premier League’s profitability and sustainability rules [PSR], there seems to be no obstacle to doing so. What Boehly and Eghbali’s 19 cohorts of fellow Premier League owners and investors will think of this transaction is yet to be established.
This is not what PSR was created to do. It was a system intended – by and large – to maintain the competitive balance of the Premier League by the clubs who voted and agreed it all. It has become the great competition it is, in no small measure because of a match-day jeopardy in which giants can fall. That is what the broadcasters pay for and it is what keeps investors interested in all its members – big and small.
PSR requires owners to play a strategic game of player trading that can make or break their fortunes. Selling players, sometimes homegrown stars of distinct potential, is what some are being forced to do as a consequence of misjudgments of the past. But questions remain as to whether transactions such as this one were contemplated when these finely balanced rules were put into place.
As with the Football League members, the Premier League clubs had a chance to close the loophole of ownerships moving property assets from one pocket to another in 2021. The vogue among EFL clubs for selling stadiums to owners was closed off by its members but the Premier League clubs never put a similar move to a vote three years ago. It appears to have foundered on issues of disposing of former stadiums for development when new stadiums had been built. Once again, the clubs stopped short of tougher regulation that will now surely come in after the fact.
Agreeing to a set of rules and then trying to challenge them on any possible front has become a part of the Premier League’s competition’s culture. If one does not like the rules: contest them. As Manchester City have done with their 115 charges and, to a lesser extent, Everton and Nottingham Forest have attempted in recent PSR hearings. The difference for Chelsea is that, on this occasion, they have successfully eased through a loophole.
The sale of the Stamford Bridge hotels from Chelsea’s parent company to a property subsidiary of its parent company just feels like the smartest in a set of desperate attempts to comply with the financial controls. It was done to add some PSR compliant profit over two years in which the new owners have spent an astonishing £747.8 million on transfer fees.
It is not a move they can play again with Stamford Bridge itself, given the freehold itself is not in their possession, although perhaps there is a similar move to be finessed with the Cobham training ground – soon to be extended.
The club says that two independent property valuers arrived at the £75.6 million valuation although it would be interesting to know exactly what these hotels might be worth to anyone who is not the owner of Chelsea Football Club. Given that the club has outlined a clear aim to push ahead with either a huge redevelopment of Stamford Bridge, or a relocation and a development of the site, it is hard to see to whom else this property might be useful.
Other properties that formed part of Chelsea’s sale have been moved around the Blueco 22 group although this deal has been particularly convenient.
With no PSR charge for Chelsea over the course of this season it appears that the hotels sale has contributed to what the Premier League considers a successful compliancy. There will, of course, be serious questions for Chelsea in the next PSR monitoring period up to the financial year ending this June. The club has already booked two-year cumulative losses of £201.2 million with another year to come.
Chelsea has said consistently that it expects to be PSR compliant for this coming monitoring period. There will be PSR add-backs that will reduce those declared losses but, nevertheless, the magic number of £105 million permitted losses currently feels some way off.
There is always something to sell. It just depends whether one believes PSR to be a game of strategy where good players must be sold in order to buy others, and the whole league benefits from the restless nature of the competition.
Or whether it is a question of finding something – anything – to sell and then convince the regulators that the profit is compliant. English football is not the only game playing this – Barcelona booked a value in excess of €400 million (£342.6 million0 for its subsidiary Barca Studios with no evidence that more than €40 million(£32.6 million) has ever been paid for the half that was reputedly sold.
Either way these two hotels, built as part of the Chelsea Village project developed by Ken Bates, and earmarked for demolition under the redevelopment plans abandoned by Roman Abramovich, have another curious footnote in Chelsea history. Save Eden Hazard, their sale value is greater than any player in the club’s history.
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