Chelsea uses loophole to avoid breaching financial rules

Chelsea will avoid breaking the Premier League‘s profit and sustainability rules (PSR) due to a loophole in the law. All English top-flight teams have to adhere to the financial regulations or risk possible penalties. PSR limits clubs from recording losses exceeding $134 million over three years. Everton and Nottingham Forest have both been charged and docked points for breaking these laws.

It was recently reported that the Blues were at serious risk of breaching this law. As a result, the club would have been forced to sell a key player or two by the end of the month. Midfielder Conor Gallagher and Trevoh Chalobah were two homegrown players supposedly on the chopping block.

Nevertheless, the Premier League has now failed to close the loophole that Chelsea has been exploiting. The specific ambiguity in the law allows teams to use profits from the sale of hotels or training grounds directly towards their financial reports.

Premier League fails in vote to block financial loophole

According to The Athletic, league officials proposed an official vote on the issue at a recent meeting. English top-flight teams, however, failed to block the loophole. Only 11 of the Premier League’s 20 teams voted to pass the measure. For the change, two-thirds of the division’s clubs had to back the league’s alteration.

The English Football League (EFL) successfully closed the particular loophole back in 2021. This move came after a handful of English teams sold their training grounds to avoid dealing with PSR penalties. The EFL consists of clubs currently in the second, third, and fourth tier of English soccer.

Chelsea, through their co-owner Toddy Boehly, recently sold two hotels and their parking garages near Stamford Bridge. The American ‘sold’ the properties to a sister company already involved in the west London club. The deal was reportedly worth around $98 million. In turn, the created funds directly helped Chelsea lower their deficit to about $114 million for the 2022-23 financial year.

Along with failing to close the PSR loophole, the Premier League was unsuccessful in another rule change as well. Clubs also opted against implementing an official law to self-report breaches of the financial rules in place. Similar rules are currently in place in various other top soccer leagues across Europe.

Blues previously took advantage of another loophole

Chelsea executives are no strangers to taking advantage of loopholes in financial laws. The Blues previously capitalized on the amortization of player contracts. Since Boehly and company took over the club, they have given extremely long contracts to new signings. The move was to help spread out transfer fees over the entire duration of the deals.

UEFA, however, quickly caught on to the move and elected to block the loophole last summer. As a result, European teams can now only spread out player transfer fees over five years. Nevertheless, the rule changes were not backdated, meaning that Chelsea’s previous lengthy contracts were not affected.

The Blues signed Wesley Fofana, Benoît Badiashile, Mykhailo Mudryk and Enzo Fernandez all to seven or eight-year contracts during the 2022/23 campaign.

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