ABU DHABI, UNITED ARAB EMIRATES - FEBRUARY 12: Thomas Tuchel the manager / head coach of Chelsea and Roman Abrahimovic owner of Chelsea during the FIFA Club World Cup UAE 2021 Final match between Chelsea v Palmeiras at Mohammed Bin Zayed Stadium on February 12, 2022 in Abu Dhabi, United Arab Emirates. (Photo by Matthew Ashton - AMA/Getty Images)
Chelsea’s Premier League rivals are questioning whether owner Roman Abramovich can act on his promise to write off the club’s £1.5bn debt without breaking profit and sustainability rules.
Chelsea has been clear that he can but some clubs want the issue investigated, which could ultimately lead to a points deduction or the debt having to be repaid, complicating an already-complex transaction. The Premier League board would ultimately make the decision whether to charge the club.
The Premier League’s Profit and Sustainability rules are its versions of UEFA’s Financial Fair Play rules, though far more generous. Premier League clubs can make losses of £105m over three years if the owners guarantee £90m worth of secure funding. But anything greater than that is subject to disciplinary action, which can result in a points penalty.
Leading football QC Nick De Marco, who acted for Newcastle United in the Saudi takeover, believes that the Premier League may have to take action, just as the English Football League did when QPR’s owners tried to write off a much smaller debt to get round the Football League’s Financial Fair Play rules. QPR ended up paying £20m in fines and legal costs.
Under current Premier League rules, the owners are only allowed to put in £90m over three years and anything in excess of that is treated as a debt. So, if Chelsea’s owner had written off the £1.5billion debt it would likely then become a £1.5bn debt for Profit and Sustainability accounting purposes.
De Marco said: ‘It may not be treated as debt for the purposes of an annual return under UEFA’s Financial Fair Play or the Premier League’s Profit and Sustainability rules. And large parts of the debt were entered into before Premier League or UEFA rules existed.
‘If a club normally had a debt of £1.5bn it would obviously be in significant breach of those rules, and likely be subject to a substantial points deduction.
‘However, what is the accounting treatment of writing off that debt? This was a direct issue in the QPR Financial Fair Play case.’
