Chelsea’s full accounts for 2024-25 were published earlier this week, revealing details behind the record £250m+ losses posted for the fiscal year. This is all funny math to me, but I suppose the big question is, are we in trouble? As in, is the club’s existence or viability as a top-flight institution being threatened?
As far as I can tell, the answer to that is a “no”. Or at least, “no … not yet”.
People far more knowledgeable than me in such matters have made some detailed, smart-looking posts online
in recent days, analyzing the accounts. Here’s one from The Athletic. Here’s one from @theesk, Paul Quinn. Here’s one from a random Reddit expert. There may be others. Still waiting for Swiss Ramble.
But my main takeaway from all those is confirmation that a) we’re leveraged to the hilt, with growing risk; b) we’re not terribly well managed on the commercial side; and c) our model of success is not looking very sustainaable, let alone profitable, certainly not anytime soon.
Chelsea’s losses are dwarfed by the over £700m losses posted by our parent company, 22 Holdco Ltd. Holding companies are great ways to hide debt at certain reporting levels — Chelsea were technically “debt free” back in the Abramovich days because the club’s debt, owed to Abramovich himself, was at one point written down and moved to the holding company, Fordstam. This only became an issue when Abramovich was forced to sell (and remains an issue for clearing the funds generated in that sale through government bureaucracy and into a charitable organization, but that’s another story entirely).
In any case, the trouble now is that we’re no longer operating under a benevolent owner model, but rather under a private equity one. And that means that our debt, which looks to be around £1.4b at the moment (that’s b, for billion), isn’t ever going to be just forgiven by the lenders — who are charging over 10% in interest as well (with that accrued interest, less whatever payments-in-kind are made, added to the loan balance). Most of that debt, about £800m is a senior bank loan from HSBC and JP Morgan. This is technically due to be repaid next summer (2027), but as is standard in PE business models, will instead get refinanced. The idea is to do so at better rates given the appreciation in value of the underlying asset (i.e. the club). But whether Chelsea’s valuation has increased since 2023 is questionable, to say the least. If there’s a shortfall in valuation, we need to cover that somehow. There’s a general theory that sports teams increase in value simply by existing (and thus any debt eventually gets covered by a future sale). We just might put that to the test.
But it’s actually the rest of our debt that’s the more concerning part. That’s from alternative lending company Ares Management, who would most certainly force an asset sale (physical or human) if they ever needed to collect on their £600m loan, which matures in 2033 (and will be worth a lot more than that by then). Ares are no strangers to football, and are heavily involved in the mess at Olympique Lyonnais, and they could hold a lot of sway over our heads as well.
If Chelsea’s value appreciates, then these concerns would be alleviated. But that requires success on and off the pitch, and right now, those prospects are not exactly looking bright. Results have cratered. We’ve made no apparent progress on the stadium, despite the funds supposedly set aside for it. Commercial revenue has actually gone down(!) due to our persistent inability to secure sponsorships (especially front-of-shirt). We barely generated any profits through player-trading (£30-50m or so) and transfer values won’t increase with midtable mediocrity. The revenue bump from Champions League participation may not be there next season (probably will not be there next season) and the Club World Cup prize money is a one-time boost. While we remain PSR-compliant, it’s only by the skin of our teeth and the benevolence of UEFA’s lawyers.
And those are just the highlights.
So, not in trouble. Not yet anyway. Just don’t look to far towards the horizon.
