- 9 hours ago
What has gone wrong at Chelsea? With billions invested into the club, more signings in the last few years than most have made in a decade, plus plenty of gifted players - how has the club found itself in trouble both on and off the pitch? From the new Premier League rules to the finances that just don't add up, this is why Chelsea are officially broken.
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00:00Since taking over in 2022, new Chelsea owner Todd Bolia spent over £1.5 billion on players
00:06over the course of six managers, but success has still been hard to come by.
00:11And right now, FA Cup final or not, things are looking pretty bleak amid the team's worst run
00:16of form this century. But that is just the tip of the iceberg because the bigger picture is that
00:21one of the most ambitious projects in football history is currently a financial and sporting
00:27nightmare. From matchday protests to insane transfer policies and the Premier League's
00:31new financial rules that could turn these eight-year contracts into a bankruptcy trap,
00:35this is how a failed multi-billion pound investment could cost Chelsea everything.
00:44The protests we saw before the Man United game weren't triggered by any given 90-minute performance.
00:49They were the result of wrong decisions and catastrophic results from all angles that
00:54winning the Conference League in Club World Cup were never going to paper over.
00:57Firstly, and in the short term, we have the recent results where Chelsea are struggling to find the
01:01back of the net, never mind a win, with their current league form seeing them fall out of the
01:05Champions League spots after a run of five straight Premier League losses. And then they
01:10sacked Liam Rossini after four months in charge to the fine tune of a £4 million payout. He obviously
01:15wasn't capable of getting a tune out of the players and certain individuals have been talking about
01:20their futures in the press more than they should be. But overall, I think we can liken his tenure to
01:25a
01:25brief flash of lightning in what is undoubtedly a storm that is going to get worse before it gets
01:30better. Secondly, and in the midterm, it looks as though the club's moves in the transfer market
01:35haven't quite paid off as well as they'd have hoped. Sure, there's plenty of exciting talent in
01:39Esteval, Palmer, Caicedo, Pedronetto, Jean-Pedro, but for the few good signings, there's been an awful lot
01:44of bad ones. So many, in fact, the entire squad couldn't all fit into one changing room last
01:49summer and there was even a so-called bomb squad of those left out of the Premier League registration
01:53list entirely. On top of this, so many signings appear to be for the future at Chelsea that they
01:59are neglecting the now, the need to win on the pitch this week, this season. Young stars with
02:04potential are all well and good, but I get it. There's only so many times fans can sit there,
02:10watch a poor performance and say, ah, he's just a kid, he'll come good in a couple of years.
02:14It's not ideal. Oh, and if that wasn't bad enough, any connection the fans had to the team
02:18through homegrown talents has been obliterated through the forced sale of academy products like
02:23Mountain and Gallagher, the reason for which we'll come on to a little later. But the biggest issue
02:28that gives Chelsea fans long-term fears lies in the boardroom. Not only are the club operating at a
02:34loss of almost £700 million in the last few years, but the promise of a multi-club ownership model has
02:40bared little to no fruit. When owners Bluco bought the French side Strasbourg, they said it would be
02:45for everyone's benefit. Instead, Chelsea fans have watched as their club has been treated like an
02:49office experiment, and the appointment of Liam Rossini was the final straw. Poaching a manager
02:55from your own sister club, a manager with no elite level experience or trophies by the way,
03:00told the fans exactly what the owners think Chelsea is, just another step on the corporate ladder.
03:05But the bigger question on that front is why are Bluco failing in a sport where there is precedent
03:11for multi-club ownership success?
03:18Honestly, where I think Chelsea go wrong in this area is that they lack a multi-model identity that
03:23is sustainable in both the long-term and the short-term. Let's look at City Football Group as an
03:28example. Their model is vertical integration. They have a global scouting network that feeds Man City's
03:33academy and makes some money in the transfer market, but also develops each club independently.
03:37Players and managers don't really get promoted to Man City. In fact, their sister clubs are barely
03:42used at all in the transfer market. Only Savino has made that move. Instead, City make decisions based
03:47off who can help them achieve things immediately. Their priority is to compete, to win now. Then look
03:53at Red Bull. Their model is tactical uniformity wherever they are. Salzburg to Leipzig, every team
03:59plays the same 4-2-2-2 formation with aggressive pressing, rapid transitions, high intensity.
04:04It's basically a factory for players with relatively little risk, as if you succeed at one team,
04:09you'll then likely fit at the next stage. And once you reach the top, you're a fully formed valuable
04:14commodity that clubs will buy because you came from a trustworthy seller. Put it this way, if you're
04:19buying from Red Bull, a company that has either scouted or developed the likes of Haaland,
04:23Mane, Shoboslav, Conrad, Lima and plenty more, the seal of approval is all the clubs need.
04:29We aren't done there, though. Liverpool owners FSG, for example, who are relatively close to
04:34Bluco in terms of owning other US sports teams, focus on financial sustainability. It's data-led
04:40growth within a budget where the club never spends more than it makes. It's why Liverpool
04:44were able to drop over £400 million in one transfer window last summer. And then we come
04:49to Bluco. Their model? Buy low, sell high. They're not buying clubs to create a tactical identity
04:54or global brand. They are buying clubs to stockpile intangible assets. They buy
04:58teenagers who are relatively low to mid-sum, sign them to an eight-year deal and hope the
05:02law of averages kicks in, where one in every three or four that flop, there's one that becomes
05:07£150 million player. The problem there is quite clear. There's no attempt to win now.
05:13No attempt to brand yourselves as a talent factory and no attempt to compete at the top level of
05:17football in the long run. While City and Red Bull are building empires, Bluco are essentially
05:22running a high-stakes pawn shop. But where has this lack of foresight come from? Well, part of the
05:28problem is that they've lent on their previous experience in running sports teams from entirely
05:33different sports altogether.
05:38Todd Boley and investors Clear Lake Capital frequently cite their ownership of the LA Dodgers
05:43as their success story. In baseball, their model works. They've spent big, scouted well, led Major League
05:49Baseball in Revenue and have won the last two world titles. Great success. So why hasn't it worked at
05:54Chelsea? Well, basically because the Premier League is a meritocracy and not a closed shop.
05:59In US sports, there's drafts and salary caps. Teams often tank where they lose on purpose when
06:04nothing is on the line at the end of the season because the lower you finish, the better draft picked
06:08you get. If you tank in the UK, you get relegated or at the very least, you become a mid
06:12-table club
06:13that can't attract the biggest sponsorship, loses their best and most ambitious players
06:17and misses out on Champions League revenue. Also, in baseball, you can carry a massive roster of
06:22prospects in the minor leagues that can develop for five years without it affecting the main team
06:26salary cap. In football, there's obviously no minor leagues. If for whatever reason, Garnaccio,
06:31DeLapp or Enzo Fernandes aren't starting, they are depreciating assets. Their value is closely tied
06:36to their performance on the pitch. By trying to run a football club like a baseball franchise,
06:40Blueco have created a backlog of players without a shop window to showcase themselves in.
06:44And if nobody sees your ability, you aren't worth much. And it's this particular issue that makes
06:50for bad reading for the future due to the brand new Premier League's financial rules that are
06:55rolling out next season.
06:59Do you ever wonder why Chelsea are signing massive players for not only big money,
07:04but on ridiculously long contracts? Well, it's all to do with something called amortization,
07:09which is the spreading of cost of an asset over a set period of time. For example,
07:14they signed Moises Caicedo for an initial £100 million on an eight-year deal,
07:18meaning the fee is spread out as £12.5 million a year on the books. That was clever,
07:23until the Premier League changed the rules. Starting next season, we move from PSR,
07:27the profit and sustainability rules, to SCR, squad cost ratio. And for Chelsea,
07:32this is a financial death trap. Under the new rules, clubs are limited to spend 85% of their
07:37revenue on squad costs. And here's the kicker. Whilst transfer fees are still spread out,
07:41wages are counted in real time. Meaning when a team's squad cost is calculated every season on
07:46March 1st, they need to be very strict financially to make it under 85% or else they'll face sporting
07:52sanctions like a points deduction. If it wasn't for using the loophole of amortization and spreading
07:57the cost of huge transfer fees, the club might have locked Caicedo or any other player into a
08:01shorter contract, maybe four or five years. But now they are locked into enormous wage bills
08:07well into the 2030s. So what do they have to do if they don't want to face disciplinary action?
08:13Sell their best players. Or even worse, sell them for a cut price because they're forced into it.
08:18The only way they can get out of this is by being good on the pitch, qualifying for the Champions
08:21League,
08:22getting a bigger stadium for better revenue, which looks a big ask at this stage.
08:26Also, they can bring in more revenue, therefore boosting their 85% ceiling.
08:31Stating the obvious here, but none of that looks like happening currently.
08:34Fortunately for them though, there is another way of boosting their revenue by a fair chunk,
08:39but it is absolutely soul destroying. Before we get into that though, a quick one for me to tell
08:44you about our latest offer here at 442, where right now we've got up to 50% off all of
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09:04our first World Cup issue, completely free. It comes with the World Cup wall chart and supplement as well,
09:10so the link's in the description if you want to get onto that. But for now, let's get back to
09:14the video.
09:18So everyone loves a homegrown hero, right? The player you can connect to, the one that young
09:23kids look up to, the one that represents the badge of local pride. So imagine how detrimental it is
09:28when they're sold. Not only for the fan club relationship, but for the dressing room morale
09:33as well. Well, that's what clubs do when they are chasing pure profit. Under Premier League rules,
09:38if you sell a player bought for 50 million, you only make a profit on what's left of their book
09:42value.
09:42But if you sell an academy graduate, every penny is recorded as 100% pure profit. But when a prized
09:49asset like an academy graduate is sold to fund the purchase of an unproven 18-year-old from someone
09:53else's academy, it's almost like selling the club's soul. These fans are seeing their local heroes being
09:58treated like financial units to fix the mistake of the owners. So with all of this sounding very
10:04doomsday, what does the future actually hold for the club? Well, from what I can see, there are three
10:09paths and only one of them ends well. First, there's a scenario in which the realities of
10:14cold hard business come into play. If success doesn't come Chelsea's way soon, future projections
10:19are looking bleak and the club's value starts to stagnate, the owners could sell. If they agree
10:24on it. Reports circling the club suggest that there's a breakdown in the relationship between
10:27Boley himself and those at Clear Lake. An internal rift that could deepen should the club be forced to
10:32sell in any way. Second, the collapse of the multi-club model, of which we are already seeing
10:38the strain. If Chelsea continue to bleed money, Blueco may be forced to sell Strasbourg or their
10:43other satellite clubs just to keep their biggest asset afloat. That's obviously brutal for the other
10:48clubs being used like that, but by the sounds of it, I think they'd welcome a change in ownership
10:52anyway. And lastly, what they could actually do is do what a football club is first and foremost
10:58supposed to do. Win football matches. Yes, after all this talking, the way out is actually just to
11:04be competent on the pitch. They could pivot away from unproven project managers and return to a plan
11:09that includes an experienced, top level, albeit expensive coach that can take this group of
11:13individuals and turn them into a team. But that requires something the ownership has lacked. Humility.
11:19It requires admitting that their model has failed and that football is won on the pitch,
11:23not at the end of a spreadsheet.
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