European soccer champion Chelsea FC Plc today announced its first profit since Russian billionaire Roman Abramovich bought the west London club in 2003.
The Blues, who won the European Cup for the first time in May, made a 1.4 million-pound ($2.2 million) profit on record sales of 255.7 million pounds for the year ended June 30, according to a statement on the club’s website. The club last year lost 67.7 million pounds on revenue of 222.3 million pounds.
Abramovich has spent more than $1 billion on talent, setting a platform for the 107-year-old team to win three Premier League titles, four F.A. Cups and the Champions League under his leadership.
“Our club philosophy is built on success,” Chief Executive Officer Ron Gourlay said in a statement. “We had that success on the field this year, as we were the first London team to win the UEFA Champions League, and we enjoyed it off the field as well and this helps us inject financial investment into the team.”
Chelsea’s financial data couldn’t be independently verified as it’s yet to be published by Companies House, a U.K. government register that collates company filings. The team had made an average loss of 77.6 million pounds during the previous seven seasons, according to Bloomberg calculations.
The club credited last season’s on-field success -- when it also won the F.A. Cup -- and a 28.8 million-pound profit in the transfer market for the 15 percent year-on-year increase in its sales. It said gains were also made in commercial activities without providing details. Samsung renewed a 15 million-pound per season agreement as the club’s jersey sponsor in May.
Chelsea’s announced profit in the transfer market comes as it continued to spend lavishly on buying new players to replace ageing performers like Nicolas Anelka, Didier Drogba and Alex, who all moved on.
In the year to June 30, it brought in players including the quartet of Juan Mata, Eden Hazard, Gary Cahill and Romelu Lukaku, who cost a combined 80.5 million pounds, according to the Soccerbase website. The club didn’t break down player-recruitment costs. That outlay can be amortized over the duration of the contract, meaning the spending is spread across several years.
Chelsea may have cut its wage bill by exchanging older players on expensive contracts with younger talent, though salary data wasn’t in the club’s statement. Club spokesman Steve Atkins said the accounts will be published by Companies House later this year.
During fiscal 2012, Chelsea fired coach Andre Villas-Boas just six months after recruiting him from Porto. The team didn’t reveal how much it paid to cancel his contract or those of his assistants.
Last year’s accounts showed it cost the team about 30 million pounds to buy Villas-Boas, who now coaches Tottenham, out of his contract in Portugal and to also pay off his predecessor Carlo Ancelotti.
“It looks to me like great season on the pitch explains the revenue rise,” said Andy Green, a London-based analyst. “The impressive thing is they’ve kept costs under control and they’ve done that by offloading high-earning players, but looking to the future they’ve spent a lot on new players who will have to be paid.”
Chelsea’s financial upturn comes as new rules that penalize teams for spending beyond their income start to take effect. UEFA, European soccer’s governing body, is studying annual results and from 2014 will punish teams that breach its break-even rules, with the ultimate penalty being exclusion from the Champions League and Europa League competitions.
The so-called financial fair play legislation initially allows teams to have a maximum loss of 5 million euros or 45 million euros, providing that amount is covered by an equity infusion by the team’s owner. Abramovich converted a 166.6 million-pound loan into equity to make Chelsea debt free, according to the club’s statement.
Chelsea is currently second in the Premier League and remains in contention to qualify for the knockout stages of the Champions League with two group games following its last-minute 3-2 win over Ukraine’s Shakhter Donetsk on Nov. 6.