Why Chelsea can afford to play hardball with Newcastle over Noni Madueke (2024)

Chelsea will not be held to ransom over any of their outgoing players after a series of shrewd accountancy moves have left them with far greater spending power than rivals.

As reported by i, Newcastle United are interested in winger Noni Madueke, who could command a fee in excess of £29m, but if clubs had hoped to secure cut-price deals after Chelsea’s major transfer outlays they will be bitterly disappointed.

It has been thought that the Blues need to sell players quickly to raise funds after continuing the unrelenting spending which has defined the Todd Boehly-Clearlake Capital era, to avoid breaching Profitability and Sustainability Regulations (PSR). Recent breaches of the rules have been met with severe punishments, including points deductions.

The £54m purchase of Pedro Neto from Wolverhampton Wanderers completed over the weekend brought Chelsea’s spending in the summer transfer window close to £170m. Kiernan Dewsbury-Hall also signed for £30m from Leicester City, while Filip Jorgensen cost £20.7m from Villarreal.

But the club’s history of developing and selling players coupled with the hedge fund experts’ smart financial plays have put them in a strong financial position that is enabling them to outspend rivals.

“A combination of utilising legitimate loopholes, such as amortisation, sale of academy players and sale of real estate assets has meant that Chelsea have managed to circumvent PSR and continue to invest extensively in player recruitment,” football finance expert Kieran Maguire explains.

Selling academy players, developed at the club’s world-leading Cobham training facility in a move pioneered by former owner Roman Abramovich, has had a huge impact on transfer budgets.

“Chelsea have used their extensive academy as a form of revenue generation,” Maguire says.

“Most clubs rely on match-day sales and broadcasting and commercial income to generate the income to run the club, which goes into their PSR calculations.

“Chelsea have made twice as much profit from player sales over the course of the last decade than other clubs — five times as much as Manchester United. In total over £750m in profits.

“The likes of Tammy Abraham, Fikayo Tomori, Mason Mount, Billy Gilmour, Marc Guehi, Lewis Hall and many others have generated profits.

“Profit is the difference between the accounting value of the player and the sale price.

“Academy players cost nothing so every player sold is pure profit.”

In the last 13 months alone they sold Hall for £28m to Newcastle, Mount to Manchester United for £55m and Ian Maatsen to Aston Villa for £35m.

The new owners have, Maguire adds, also been smart in selling the club’s assets to other companies within the same ownership group, so Chelsea can count the profits in their PSR calculations and use it to fund player sales.

It emerged last year that Chelsea had sold two hotels to a sister company for £76.5m. More recently, the club also sold its hugely successful women’s team to a company within the same group.

“Chelsea have been very cute regarding creative accounting,” Maguire says. “When the Clearlake-Boehly group acquired Chelsea it came with no debt and a load of assets, which was beneficial to them.

“What this has allowed the club to do is to sell some of the real estate assets, such as hotels and carparks, to other parts of the group and book huge profits. It’s noticeable also Chelsea sold the women’s team on 28 June, according to records we’ve seen at Companies House.

“Todd Boehly was talking about the women’s team being worth $200m, although this raised many eyebrows. If that sale has gone through to a willing buyer, which could be another part of the Clearlake or Chelsea group, it’s profit that counts towards PSR.”

Chelsea, nonetheless, have a large squad and will want to get numbers down. It is believed the club are open to selling Raheem Sterling. Conor Gallagher, another academy product, had been set to join Atletico Madrid for £35m, although the move has dragged on. Romelu Lukaku is expected to leave for around £30m.

While most clubs, wary of being bitten by PSR rules, have spent comparatively little, Chelsea have blown rivals away. Manchester United have spent around £80m, on Joshua Zirkzee and Leny Yoro.

Arsenal spent around £70m on David Raya and Riccardo Calafiori. Manchester City have spent £30m on Savinho. Liverpool are yet to sign a player.

Another financial element that has helped significantly was Boehly maximising the amortisation system before rules were brought in to reduce the number of years across a player’s contract clubs are able to spread the cost of a transfer.

Cole Palmer, for instance, has signed a two-year contract extension that will see him tied to the club until the summer of 2033.

“While Chelsea have spent a lot of money on players since the arrival of the new owners, this has coincided with long contracts which allows them to initially spread the cost of players over a much longer period of time using the amortisation methods,” Maguire says.

“If you sign a £100m player on a four-year contract, that’s only going to cost you £25m in your PSR calculations. Stick him on an eight-year contract that’s £12.5m.

“Chelsea have been very clever, and while that rule is effectively outlawed, they had the advantage of getting in early with the acquisitions of the likes of Enzo Fernandez, Mykhailo Mudryk, Moises Caicedo and so on.”