Chelsea yesterday announced huge losses of £70.9m despite winning the Double last season, on the same day they agreed to break the British transfer record with the £48m capture of Liverpool striker Fernando Torres.
The massive loss comes after slightly better figures for 2009, when the deficit was £44.4m, and follows years in which the club had run up enormous debts. In 2008, Chelsea showed a loss of £65.7m and in 2007 the figure was £74.8m in the red.
The results make a mockery of the claim by former chief executive Peter Kenyon that Chelsea would break even by 2010. It does at least fall way short of their record loss – £141m in 2004-05, the end of the first full year following the takeover by Roman Abramovich. Last season, Manchester City recorded a loss of £121m in the first full year of ownership by Sheikh Mansour bin Zayed al-Nahyan.
The latest financial results show just how much Chelsea continue to rely on the financial largesse of owner Abramovich, and that was before yesterday's intended expenditure on the capture of Torres.
The club, however, contend they are on course to meet the Uefa Financial Fair Play rules which come into effect in 2013 and insist that all clubs must be solvent before they are permitted to enter European competitions such as the Champions League.
Chelsea will clearly have to lean heavily on the breathing space afforded them in the Uefa rules. The exceptions are that benefactors such as Abramovich and Sheikh Mansour are able to contribute up to £38m a season up to June 2015, and £25.5m a season from then until June 2018.
In a statement, a Chelsea spokesman said: "The club believes it is now well positioned to meet Uefa's financial fair play rules."
Chelsea blame the huge loss on the amortisation of player transfer fees, which means how much a player's worth decreases over the length of his contract. They say the improved figures for 2009 contained the sales of Wayne Bridge, Steven Sidwell, Glen Johnson and Tal Ben Haim, plus the £12m pay-off to former manager Luiz Felipe Scolari and his assistants.
Chelsea's chairman, Bruce Buck, described the results as "significant progress", and cited what the club termed a "net cash inflow of £3.8m" as evidence. Buck said: "That the club was cash generative in the year when we recorded a historic Premier League and FA Cup Double is a great encouragement and demonstrates significant progress as regards our financial results."
The chief executive, Ron Gourlay, added: "We are moving in the right direction, especially when viewed against the difficult macroeconomic environment. The club is in a strong position to meet the challenges of Uefa financial fair play initiatives which will be relevant to the financial statements to be released in early 2013."
Chelsea predict the figures for this current season to be much better, despite yesterday's lavish spending in the transfer window, thanks to increased ticket prices, improved sponsorship deals with Adidas and Singha Beer, and the £25m reduction in the wage bill following the release of five senior players last summer.