Chelsea's massive outlay on eight new players in January may not breach Financial Fair Play (FFP) rules but it represents a huge gamble, according to a leading football business expert.
The Premier League club crowned a month of squad-strengthening by smashing the British transfer record to sign Argentina's World Cup winner Enzo Fernandez from Benfica on an eight-and-a-half year contract.
Paying 106.8 million pounds ($131 million) to trigger Fernandez's release clause, Chelsea's spending in the mid-season window hit nearly 300 million pounds -- more than the combined totals of all clubs in Bundesliga, La Liga, Serie A and Ligue 1.
Since last May's takeover by an investment group led by American Todd Boehly and Clearlake Capital, Chelsea have spent more than 500 million pounds on players -- a spree that has called into question the effectiveness of FFP.
"It's right to ask the question. How on earth can a club have spent something like 486 million across two transfer windows and still be compliant?," sports business expert Rob Wilson, head of Finance, Accounting & Business Systems at Sheffield Hallam University, told Reuters.
"The reality is they've done two things. One is entirely permissible under regulations, which is called amortization of contracts. You amortize the contract over a number of years so it makes it much more affordable.
"The contract length, that's the cheeky way of not circumventing the regulations but using them to your advantage. Signing over eight and a half years reduces the contract value per year to a much smaller figure to stay within FFP.
"The risk is, to use a poker analogy, is what Chelsea have done over the last two transfer windows is go all in and hope it pays off through improved sporting performance."
With Chelsea lying 10th in the Premier League and looking unlikely to gain a Champions League spot via the top four, offsetting losses against the raised income of Europe's blue-riband competition is a long shot.
Lengthy contracts
With inexperienced players signed up on lengthy contracts, Chelsea could also see their values drop should they flop.
"In many ways I think the FFP question is secondary to the risk they've just taken because they are really hamstrung now to what they can spend. If these players don't produce, or if one or two of them get a big injury, their values plummet," Wilson said.
"Every signature that they've got through January has reduced their flexibility within the FFP framework and they're pretty much maxed out now."
Wilson said Chelsea's spending is a big endorsement for manager Graham Potter, considering his predecessor Thomas Tuchel spent more than 200 million pounds in the summer window.
But he expects a period of stability at the club.
"They won't spend heavily in the summer because I don't think they've got anything left," Wilson said. "Any transfer spending will be related to transfer outgoings."
While FFP rules on contract lengths may have be reviewed, Wilson said that on the whole FFP is working, citing the example of Newcastle United who have been relatively restrained in the transfer market since being taken over by a consortium headed by Saudi Arabia's Public Investment Fund in 2021.
"Unlike what we saw at Man City back in 2010, when they went out and spent essentially one billion pounds over three or four years Newcastle can't do that, because if they do they will breach FFP quite significantly and they want to play in Europe," he said.
"They have shown a more sensible approach to spending and drawing a line in the sand."