Chelsea have breached Uefa’s limits on financial losses for last season after the European governing body did not allow the club to count as income selling its women’s team to a sister company for a world-record value of £200million.
Chelsea are now in talks with UEFA over a settlement which is likely to involve the club paying a financial penalty and agreeing to a spending plan for the next three seasons.
That plan could include the threat of stiffer sanctions such as exclusion from European competition for a season if they breach the limits again.
The outcome of the settlement is due to be made public by UEFA in mid-May.
Unlike the Premier League, Uefa’s financial rules do not allow clubs to declare income from selling assets to sister companies.
As well as £200m from the Chelsea women’s sale to the sister company Blueco 22 Midco Ltd, the actual value was revealed in accounts published by Companies House on Saturday showing a £198.7m paper profit.
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Chelsea registered income of £76.5m from the sale of two hotels to another sister company in June 2023.
Chelsea sold two hotels, including the Millennium Hotel, for £76.5million
That sum also has to be removed from Chelsea’s balance sheet when it comes to assessing its compliance with Uefa’s limits on financial losses.
UEFA allows clubs to lose a maximum of 200m euros (£170m) over three years and without the income declared from those related-party sales Chelsea have a total three-year loss of £358m.
Deductions can be made by the club for spending on youth and women’s teams and on infrastructure so the scale of the breach is not known but is likely to be significant.
UEFA also has a ‘squad cost’ rule that says clubs cannot pay more than 80 per cent of their agreed revenue on player wages, transfers and agents fees. That will reduce to 70 per cent next season.
The sale of the women’s club and the hotels helped Chelsea pass the Premier League’s profit and sustainability rules (PSR) the top-flight clubs voted last June against closing the loophole, which allows income from such sales to sister companies to be registered.
Chelsea FC Holdings Ltd’s accounts however warn that the £200m from the women’s club sale is subject to assessment by the Premier League and could be reduced.
