When Jose Mourinho took over from Claudio Ranieri Chelsea had just finished 2nd in the league and reached the semi-finals of the Champions league.
In his first year of management, the club won the Premier League and the League Cup, and made losses of £140m (with £109m spent on wages).
In his second year of management, the club won the Premier League and made losses of £80m (with £114m spent on wages).
In his third year of management, the club won the FA Cup and the League Cup, and made losses of £66m (with £172m spent on wages).
In February this year a meeting of Premier League chairman in London voted to adopt spending controls and a form of restraint on salary increases.
The new rules state that clubs can only lose £105m between 2013-2016 and that wages bills over £52m can only rise £4m per season.
Despite Chelsea finishing in the top 2 in England and in the top 4 in Europe the season before Mourinho got the job, the club made losses of £286m in three years. This is more than double the losses that would be allowed according to the new rules.
In his first season the wage bill rose by £5m and in his second season by £58m, which again are rises that breach the new rules.
Former Chelsea chief executive, Peter Kenyon, claimed that the club would be self-sufficient by 2009. But they made losses of £44m that year, losses of £71m in 2010 and losses of £68m in 2011.
However, Chelsea are in a better financial position these days and in 2012 made their first profit in the Roman Abramovich era. Still, it was a profit of just £1.4m, which is less than half the figure that Championship side Burnley boasted that same year. Although we should remember that to record this £1.4m profit Chelsea had to win the Champions League and a one-off paper profit of £15m which arose from BSkyB writing off historic ownership of shares contributed too.
Winning the Europa League will have helped boost Chelsea’s income, although the prize money and TV revenue is not really comparable with Champions League funds.
Chelsea finished 3rd last season and didn’t even make it out of the group stages in Europe, which would suggest they are in a much worse position than they were when Ranieri handed his team over in 2004. John Terry, Frank Lampard, Petr Cech, Claude Makelele, Arjen Robben and William Gallas were amongst the players Mourinho already had at his disposal. But this time around, Mourinho won’t be given a blank cheque book to help put Chelsea back on top. With players like Juan Mata, Oscar and Eden Hazard, Chelsea have the foundation of a great squad, but they are still several players short of a title-winning team, which would set Chelsea back in terms of transfer fees and wage increases.
As yet, it appears as though some clubs are not taking new Premier League rules or UEFA’s FFP restrictions very seriously. Whilst we allow for £105m losses over three years, UEFA’s guidelines limit clubs to losses of just £39m over the same period of time. The consequences of failing to comply with these rules supposedly results in point deductions in the league and expulsion from the Champions League.
Can Mourinho bring the same success to Chelsea without the club making losses of around £100m a season like last time?