Thread by @SwedishRumble

🚨💣Chelsea FC is reportedly forced to sell players, not only because their squad is too big, but to comply with the FFP rules of the PL and UEFA. Can we verify if this is the case? And if so, how much must they sell for? And by when? A 🧵. 👇

Long technical 🧵, so a "Summary":
(a) Best guess is that CFC must sell players for app. 30-60m before 30 June under PL rules, but it is very hard to say with any certainty.
(b) It seems to be almost a certainty that CFC will breach UEFA rules in 24'.

(Contin.) Summary:
(c) Instead of no player signings this summer (alongside the massive sales), they might opt to make that breach in 2024 fully aware that they then must get their finance in order with no leeway under UEFA orders during the period between 2025-2028.

(2/22) Due to missing all of the CL, the EL and the ECL, #CFC must not seek to be licensed by UEFA for 23/24. This does not have a big impact, since the summer of 2023 is a transitional year for the UEFA’s new FSR (replacing FFP).

(3/22) This summer, CFC must still comply with the PL Profitability and Sustainability rules.

(4/22) Under the PL FFP rule, CFC can have 105m in losses over three years and deduct costs of est. 35m (Covid) and est. 20m (the sanctions/sale). Hence with my forecast for 22/23, I conclude that they must sell players with a 66.6m profit before 30 Jun.

(5/22) What is the margin of error? First, when things go bad, it usually results in income being a bit worse than what can be expected, second, due to the sale and sanction of Abramovhich, which is an unprecedent event, CFC can argue that costs are bigger than 20m.

(6/22) It could for example be argued that the club lost Christensen to Barca since they couldn’t resign him. In addition, many claims by Everton in its ongoing FFP case can be made by CFC – if Everyone is successful. Everton is requesting to deduct costs relating to…

(7/22)…exceptional player impairments and the transfer market being depleted due to Covid 19. But how cocky can CFC be in this regard? The argument that the club only lost money due to Lukaku’s demise (70m impairment loss), can be questioned in light of the subseq. 500m spend.

(8/22)In summary, can we verify that CFC “must” sell players before 30 June 2023? No. I would characterize it as there being a ‘reason to believe’ that sales must be made, but I can’t see that it is a certainty. If so, how much must they sell players for? The 66.6m in...

(9/22)sales profit is my estimate, but it is rough. Perhaps very rough, given all the uncertainty and special circumstances.

(10/22) So how much can CFC make from player sales? A lot. The below is a table with players that might be considered for a sale. The est. fee is of course super subjective, but even if being moderate – this amounts to app. 200m in profits from player sales.

(11/22) So if the forecast that CFC must sell players for 60m is correct, selling Mason Mount before 30 Jun gets them a long way towards that. But so does a combo of Kovacic and RLC. There are many alternatives. Over to the long term implications that also must be considered.

(12/22) If CFC qualify for Europe in 24/25, UEFA will in the summer of 24’ ask CFC to apply for a license, and in connection herewith review if CFC comply with the new Football Earnings Rule, under which CFC’s agg. loss only can be 60m. With no sales, this is how they perform.

(13/22) I.e., bloody ugly to be frank. Without any signings this season, they must improve their forecasted earnings with £351m. This forecast is of course not 100%, but it doesn’t include many of the sources of uncertainty in the previous forecast (Covid and sales costs).

(14/22) Remember, that unlike in relation to the PL rule applied this summer, saved wages and reduced amortization of course improves CFC’s earnings for 23/24. So it is highly relevant to look at review in 24', when analyzing CFC's potential summer plans.

(15/22) So how would player sales impact CFC’s ability to comply with this rule? If – all – the bolded players are sold for the est. fee – it improves CFC’s earnings with 276.8m for the period, which still is 75m short. All est. fees are very moderate, they could still cover...

(16/22)…the entire balance if they get more paid for a bunch of players, than est. A few months ago, I said that CFC surely was going to breach the UEFA Football Earnings Rule in 24’ (unless they sold like Reece James), but that it probably was in the club’s plan. Without...

(17/22)..Europa League games every Thursday – the squad can be slimmer, and perhaps its doable. But as we can see – a lot of players must be sold, i.e. 10 players above including Mount, just to get close. Next, lets look at what alternative CFC have to comply with the rules.

(18/22) Why? In the previous segment, we have not accounted for CFC buying a single player. CFC is linked to Osimehn, Gvardiol, Lavia, several GKs and so forth. That is another 300m in fees or 90m in yearly costs (after 30 June).

(19/22) There are rumors of teams suing Everton if they are found to have breached the PL rule. Many will surely remember Sheffield United receiving damages of like 25m from West Ham back in the day…

(20/22)…due to the Tevez debacle. Hence, I think teams are vary to breach the PL rules right now. But what about the UEFA rule? In general – it is important to point out that PSG, Roma, Inter, Juventus and Milan currently are deemed to breach UEFA’s FFP regulation.

(21/22) What would happen if CFC breach UEFA’s new FSR? They would get a modest fine, 10m, and then they would be forced to enter into a settlement agreement. If CFC’s losses exceeds the limit with say 300m, the settlement agreement will state that CFC over a period of 3 years…

(21/22)… must improve its earnings so that it in the 3rd year complies with the rules, or in 2028 in CFC’s case. I.e. if you are minus 300m Settlement Agreement (“SA”) -1, the year of the breach, and minus 150m SA+1, you must break even SA+2 and record a profit of 90m SA+3.

(22/22) In CFC’s case, this is easily attainable, since the already made sales put them in the right direction. They might even make a profit in SA+1. So I am not sure if CFC really will scramble to get there and not make any signings.