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The Cost of Sporting Failure

8/1/2014

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By John Considine
Over the last week both Chelsea and Bolton Wanderers have posted sizable losses.  Chelsea attribute a share of their losses of £49.4m losses to their failure in the UEFA Champions League.  Bolton posted even bigger losses of £50.7m and their plight highlights the problems associated with being relegated from the top-tier of English football.  The scale of the Bolton losses is highlighted by the fact that it is only the fifth club to post annual losses in excess of £50m.
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Chelsea’s plight could have been worse had they not won the Champions League in 2012.  Success qualified them for the 2012-13 competition. This was fortunate because their Premier League 5th position would not have qualified them for the group stages.  The group stage pitted them against Juventus, Shakhtar Donetsk, and Nordsjaelland.  Chelsea did manage to finish third in the group and, therefore, qualified for the Europa League.  They also made the best of this situation by winning the competition with a 2-1 win over Benfica.  However, the failure to qualify for the knockout stages of the Champions League cost them financially.

Not all of the £49.4m loss that Chelsea has posted will be reckoned in the UEFA Financial Fair Play regulations.  The reduced losses for the FFP regulations will mean that Chelsea should not fall foul of the regulations.  Chelsea will also be helped by the fact that the FFP regulation are cumulative.   This will allow Chelsea to include the years surrounding last year.  They will benefit from the annual profits achieved during the year of their Champions League win.

With the exception of their profitable Champions League year, recent years have seen Chelsea post annual loses consistently.  These losses have been covered by their owner Roman Abramovich.  Bolton Wanderers have also been fortunate to have an individual to help them in their time of financial need.  It is widely reported that the club have benefitted from the financial support from Eddie Davies.  The worrying thing for Bolton is that its revenue streams have collapsed since its relegation from the Premier League.  They currently lie 18th in the Championship (tier-two of English football), 9 points and 12 places from the play-off places.  Their supporters might have to get accustomed to life outside.  A bigger worry for the supporters is the prospect that the club’s financial woes might drag them further down the tiers of English football.

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