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Chelsea suffer £146m blow as Liverpool and FSG avoid Barcelona fate


The financial impact of the pandemic has spared no football club.

Last year’s accounts didn’t tell the whole story as only three months of a Covid-impacted season where the Premier League was suspended were included, but despite that relatively short spell it was enough, with no fans in stadiums and media rebates necessary, to see Liverpool swing from a £43m pre-tax profit in 2019 to a £46m pre-tax loss in 2020.

For the 2020/21 financial period, which ran up to the end of May this year, Liverpool are expected to post more heavy losses as a full season without fans, which accounts for up to £80m to the Reds in a normal year, was felt.

There were positives, though, with commercial activity set to rise, but certainly not at the levels to make a serious dent in the losses accrued.

But Liverpool’s model under Fenway Sports Group, while not universally popular due to the perceived lack of spend in the transfer market compared to their rivals, has enabled them to ride the storm a little easier than some.

A club that isn’t reliant on the open wallets of owners and more the money that it generates has found that its financial prudence has mitigated the damage somewhat.

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Chelsea were an outlier when the 2019/20 accounts were published. The Stamford Bridge club, so heavily reliant on the wealth of Russian owner Roman Abramovich for the best part of two decades, were one of the few clubs in Europe to turn a profit.

But the detail behind that was that Eden Hazard’s £100m move to Real Madrid during that financial year helped to show a healthier balance sheet.

But while the profit and loss columns may have been in the green, when it comes to the economic profitability of the football club, a measure which determines how healthy a business truly is when all the capital and loans are included, paints a less successful picture.

On Thursday, Chelsea released their latest set of accounts for the 2020/21 campaign, a season with no fans and no major player trading as had been seen with the Hazard sale.

The result was a £145.6m loss after tax for the financial year ending June 2021, a season when they won the most lucrative prize in European football, the Champions League.



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No crowds and a reduction in the amount brought in through player trading were the main reasons for the losses, according to the club’s financial report, which also confirmed that more than £1bn was owed to ‘related companies’, largely Abramovich’s Fordstam Ltd.

When it comes to economic loss, the latest Chelsea financials make for grim reading and show just how reliant that the club are on Abramovich’s wealth.

Economic profit and loss is the method used by financial analysts Vysyble when measuring the financial performance of a business and is different to the commonly used metric of EBITDA (earnings before interest, tax, depreciation and amortisation).

The formula for working out economic profit and loss is taking the net operating profit figure and subtracting all of the capital invested into the business. Until a business turns a profit greater than the cost of its capital then it is a business that runs at a loss.

In the past five years, while taking into account the impact of the pandemic, only the Reds and Burnley have been run as profitable businesses using the economic profit model, something that Vysyble believe provides the best indication of business performance.

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Liverpool have made an economic profit of £21.5m over the past years, with Burnley at £38m. It is likely that Liverpool, as a result of the pandemic, will move into an economic loss when the next accounts are produced.

The latest set of accounts from Stamford Bridge have resulted in the worst economic loss in Premier League history, according to Vysyble.

Despite revenues of £436.6m for 2020/21, Chelsea’s economic loss stands at £207.5m, £18.4m higher than the next largest economic loss, which occurred during Manchester City’s 2019/20 accounts.

In the latest accounts, the report said that “the company is reliant on Fordstam Limited for its continued financial support” and that support would continue “for the foreseeable future”.

What it does do, in a year when the biggest clubs, including Liverpool, agitated for the creation of a European Super League before it was spectacularly shot down 48 hours after taking flight, is show that the findings of the Crouch Review, the government fan-led review into the future of English football, show the game in a difficult position financially, with many clubs not operating profitable enterprises and propped up by individual benefactors.



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The Premier League, collectively, made economic losses of near £1.4bn in 2019/20, according to Vysyble data.

“Sustainability is a slow process and not something that can or will be an overnight success,” explained Vysyble co-founder John Purcell.

“Our most recent figures showed three teams out of 20 had made an economic profit in the past five years, but with Spurs’ latest financial results being so damaging they are now running at an economic loss.

“If football is to be sustainable going forward then you have to drive down the economic profit and loss levels.”

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Liverpool have had their own challenges, and a lack of player trading during the past financial year as well as having no fans at Anfield will bite hard in the accounts.

But with the club having been astute at leveraging success and growing their brand globally, as well as FSG having brought in investment from RedBird Capital and made investments of their own such as the move to take a stake in LeBron James’ SpringHill Entertainment company, means that from a business perspective the club can continue to move forward and not see the kind of disaster that has stricken the likes of Barcelona.

But if Chelsea and Manchester City dominate the race for the biggest prizes, economic profit will be of little comfort to Reds fans.





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