""No funds for José Mourinho as Chelsea loss nears £50m" - Matt Hughes.
Chelsea have abandoned their long-standing target of breaking even after recording a loss of £49.4 million for the year ending June 2013.
The club will focus instead on restricting annual losses to comply with Uefas Financial Fair Play (FFP) regulations, something they expect to manage despite a dramatic change in their financial fortunes; they posted a £1.4 million profit the previous year.
It means that José Mourinho will not be given any significant transfer funds during the January window and may even have to sell players before he can buy next summer.
Peter Kenyon, the former chief executive, set Chelsea a five-year target to stem the clubs losses when he was appointed in 2004, a target that they belatedly achieved 12 months ago, but the club has since prioritised complying with FFP while remaining competitive on the field.
Under FFP, clubs losing more than €45 million (£37.4 million) over a two-year accounting period from 2011 to 2013 will face sanctions from Uefa, with punishments ranging from a fine or points deductions to suspension from European competition.
Yet despite losing more than that in a single year, Chelsea are confident of compliance as investment in stadiums, other infrastructure, youth development and charitable foundations are exempted by European footballs governing body.
The impact of FFP will become more significant in future years, however, with the level of acceptable losses falling to €45million (£37.4million) over a three-year period from 2013 and then €30million over the next three years. During this period Chelsea will budget for losses just inside Uefas limit rather than strive for profitability.
Chelseas latest accounts reveal the extent of the clubs reliance on Roman Abramovich, as Uefa will permit any losses only if they are covered by an owner rather than loans, and the financial restrictions that Mourinho must operate under as he attempts to take more trophies to Stamford Bridge.
Chelseas need for a top-class striker is obvious, but financing new signings could be contingent on offloading one or more of the squads biggest assets, such as Juan Mata or David Luiz, neither of whom has played regularly under Mourinho this season.
The need for economy as Chelsea look to control their wage costs will also influence forthcoming contract talks with John Terry, Frank Lampard and Ashley Cole, who have yet to be offered new deals despite being free agents at the end of the season and Mourinhos insistence that he wants them to stay.
Chelseas seemingly altered financial position over the past 12 months is easily explained by the absence of two exceptional factors that combined to produce the first profit of the Abramovich era.
The club made £18million last year from the cancellation of BSkyB shares in their digital media operation and, most significantly, earned £47.3million from winning the Champions League in May 2012, which led to a shortfall of approximately £30million the next year after Chelsea failed to qualify for the knockout stage of the competition only six months later.
The combined £58million cost of signing Oscar and Eden Hazard last year is also reflected in the present results.
There is positive news for the club elsewhere in their accounts, however, with turnover up to a record £255.8 million as a result of a 19 per cent growth in the clubs commercial income after new sponsorship deals with Audi, Delta Air Lines and Azimut Hotels.
Chelsea also signed a ten-year sponsorship deal with adidas worth £300million last June that will be recorded in their 2013-14 accounts.
Bruce Buck, the chairman, emphasised Chelseas commitment to FFP, although the club do have concerns about whether the regulations will be implemented with sufficient rigour by Uefa.
Manchester City recorded losses of £97.9 million in their most recent accounts to December 2012 despite winning their first Barclays Premier League title that season, and, as they have continued to invest heavily on new players, are likely to require exemptions from Uefa to meet the £37.4 million loss limit.
Arsenal and Manchester United are both profitable and so will not be troubled by FFP.
"From the very beginning of the current ownership of Chelsea Football Club, a long-term objective was financial sustainability, and the subsequent implementation of Financial Fair Play by Uefa and by the Premier League has brought that to the top of the agenda for football clubs," Buck said.
"We are pleased therefore that we will meet the stipulations set down by Uefa in their first assessment period, and by our own analysis we are progressing from a commercial viewpoint as well as continuing to add trophies to our collection, which we never lose sight of as our most important goal."
Chelsea's rich tapestry
Peter Kenyon, the incoming chief executive, set Chelsea a five-year plan for breaking even when he arrived at the club in 2004, but the club have been unable to wean themselves off Roman Abramovichs largesse.
The Russian owners huge spending spree led to Chelsea making a loss of £88million for the period covering his first season at the club in 2003-04, which increased further to £140million, then a record, the year after.
Chelseas turnover has increased dramatically from £75million to £255.8 million as they have become a leading global player in ten years under Abramovich, but owing to the owners penchant for paying off managers at huge cost as well as investing heavily in new players, they have struggled to break even.
The club did make a £1.4million profit after last years Champions League triumph, but will now focus on complying with Financial Fair Play."