Thread by @Matt5cott

Now who’ll buy Chelsea? Someone with deep pockets, obvs. Last year they won the Champions League, boosting revenues relative to everyone else’s when costs were reduced by lockdowns. Chelsea made £76.3m in operating cash flow. Tidy.

Operating CF is the money a club generates after it’s fixed costs like wages, utility bills, insurance etc. If a club is run without subsidy, it’s what transfers, sacking managers. debt service and repayments and and stadium/training ground improvements must come out of.

Easily done if you make £76.3m a year. Except Chelsea don’t. Across the previous five years, Chelsea’s net operating cash flow was £7.8m. Or £1.6m a season. So if you’re a billionaire looking for a club, knowing Chelsea fans’ appetite for big-ticket signings, would you buy them?

Across the past six full seasons, Chelsea’s net transfer spending, including player sales, has been £420m, or £70m a season. Does 70 go into 1.6? No. No it does not. So if you’re a billionaire wanting a football club, for the prestige presumably, what would Chelsea cost you?

Let’s say Roman’s in such a rush he ditches it for £800m. You wouldn’t spend your own money any more than the Glazers or Kroenke did. You’d want it on the never-never. Let’s say you put in £200M of your own and borrow the rest at 3.5% a year interest across 20 years.

That’d come in at >£50m a year in debt repayments and service. You might, for now, be able to write that off against tax on profits elsewhere, but there is talk that the global community are moving to restrict that practice, so it’s a financial risk you’d be wary of.

Then there’s the transfer bill. Chelsea owe >£100m for players they’ve already bought. And the whole world can see Lukaku is not worth the money they’re still committed to paying Inter for him. So they can’t recoup all of that on the open market.

That’s already got to come out of the £1.6m operating cash flow, then. Then there’s the obligatory splurge every new owner indulges in until they come to their senses. Another £100m in Y1, easy.

Then there’s the *reason* Chelsea’s operating cash flows are so low. On the one hand, there’s a huge wage bill, on the other attendances that are only ninth in the league, per footballwebpages.com. To remedy that, you have to throw a billion or two at a new stadium.

Pre-Covid, Chelsea’s match day revenues (gate receipts, executive seating/boxes and catering) amounted to about £50m a year. Around a half what Arsenal, Tottenham and Manchester United take. But to get to those levels, you’d have to borrow at least another £800m.

This would cost you about another £40M a year (because the repayment schedule would be longer for stadium than for a leveraged buyout, you can borrow more for less annual cost).

So all in, you’d have to find approximately £500m in your first two years just to keep Chelsea going as they are now (£200m downpayment, 2x£100m transfers, 2x£50m debt repayments and interest). You’d have the ballache of having to build a new ground.

Which would cost you probably another £200m in downpayment and another £40m in each of two years while it’s being built. This would give you a transfer kitty of an extra £50m-£80m a year. Now you’re up to three quarters of a billion.

If you have to sack Tuchel, you’re probably (guessing) in for £15m more. And if you don’t build a new one, then just maintaining the training ground/stadium there’s typically another £5-10m a year extra there. All of this has to come out of £1.6m a year.

Playing Fantasy Billionaire just for a minute, ask yourself: would you do it? Nah. Me either.

Essentially, Chelsea’s financial situation is extremely precarious *even with* the Champions League pretty much every year. But just as 70 doesn’t go into 1.6, neither does six go into four. And with Arsenal, Wolves, Leicester and West Ham on the up, there are no guarantees.

Abramovich is asking someone to take on a massive, massive gamble at the highest possible stakes if they take Chelsea off his hands. Let’s see who’s mug enough.