Chelsea chief executive Peter Kenyon believes top foreign players are being deterred from moving to the Premier League football due to tax increases and the high value of euro.
Kenyon, who also admitted that Chelsea are unlikely to hit their target of breaking even by 2010, said the rise in the top rate of tax to 50 per cent and the exchange rate had had a noticeable impact.
Earlier this year, Kaka turned down a reported £500,000 a week at Manchester City, while Karim Benzema chose Real Madrid ahead of Manchester United this summer.
Kenyon told Press Association Sport: "Foreign players coming to England has no doubt been a big part in the success of the Premier League.
"If you look at the two issues of the exchange rate and the income tax both of those are challenging irrespective of which club you are.
"I think the competition itself and the stature of the clubs will continue to attract football players because ultimately they want to win things and want to play at the highest level so we still have that going for us.
"But in financial terms, yes there is an impact on us.
"When you talk about the income tax going from 40% to 50% and the euro exchange rate going from 1.47 [to the pound] which it was for five years to below 1.20, you don't have to be in football to understand that's just a general economic industry issue."
Chelsea have spent lavishly since Roman Abramovich took over the club but in the last 12 months their spending on new players has been below that of Manchester City, Tottenham, Manchester United, Aston Villa and Arsenal.
Kenyon said the reason for that was they were convinced the squad is strong enough.
"That's the only issue - there is no other reason for that," he said.
"We have always wanted to be successful and to run the business properly and those objectives remain the same.
"We were very happy to bring in (Yuri) Zhirkov, who is highly-regarded as a good player so we did that piece of business early.
"He will be a definite addition to the squad - and (Daniel) Sturridge who we think is a player for the future.
"We have re-signed our key players, which demonstrates that the players at the club are some of the best in the world and that top players want to remain at Chelsea."
In 2005, Kenyon announced a target of the club breaking even by 2010 but admitted that does not look realistic - they recorded a loss of £65.7million in the year up to June 2008.
He said: "We continue to move in the right direction. Will it happen in 2010? Probably not. It is about going in the right direction and we are doing that."
Kenyon also revealed that manager Carlo Ancelotti is unlikely to make any new signings - they have been linked with Atletico Madrid forward Sergio Aguero - before the transfer window closes on Tuesday.
He said: "It's very unlikely and I think Carlo is very happy with the squad. He's had a great start and I think at this stage it's very late in the window and generally we feel the squad is strong."Reuse content