Date: 9th August 2017 at 8:29pm
Written by:

One of the best blogs I’ve come across recently from @BlueYonderCFC  looking at the changing philosophy behind Chelsea’s apparently lackluster transfer business. Re-published with kind permission from Chris.

It is a strange thing to go into a new season with so much negativity surrounding the club. We have the best player in the league. We have the best defence in the league. We have the best manager in the world. We are Premier League Champions. And yet, despite it all, the all-pervading sense of D&G seems to seep out of every pore of the club. The fans I have spoken to range from quietly confident but with some misgivings – to actual blind panic.

I think the thing that upsets people is that they fear what they do not understand. Chelsea has always been a mercurial and enigmatic organisation even before Roman Abramovich took over and sometimes it has been hard to understand why certain decisions have been taken.

Let me try to explain a little. I’ll preface this by saying these are my assessments and understandings only and that I am certainly not in the know at Chelsea, by any means. I am nonetheless a specialist in structured finance, credit, business management and planning in my professional life and so hope that my thoughts do at least make sense logically. But I’ll leave that to you to decide.

The first aspect to consider is that Roman Abramovich has put in a billion of his own quid into the club to grow the brand, the club and the trophy cabinet since 2003. We have achieved this to a great extent by historically paying big bucks for players and also having very close relationships with agents. It got to a point a couple of years ago that Chelsea were paying tens of millions a year for agent fees alone. I believe behind the scenes the club have decided to reduce expenditure on agents and intermediaries. The consensus on the recent Lukaku to United deal was that Chelsea were interested in the player, but not the reported twelve million quid bonus to Mino Raiola, his agent.

Our years of brashly splashing the cash around on players in the Abramovich era can be divided up into pre and post-Torres. Prior to the arrival of the slightly-damaged Spaniard to SW6 we had been signing cheques with abandon. After he signed we have not spent truly mega money on any player since. It is not hard to imagine that behind the scenes Roman and his advisors had been uncharacteristically chastened at how badly that transfer went for Chelsea. There can be little doubt that we have been rather more careful with our money since that time and it has always been amusing to see the disappointment and disbelief that other fans, the media and the football establishment in general have when we mention that (unlike more or less everyone else) we have kept within FFP guidelines. In doing so we have had to rein in our spending.

In the new frugal era at Chelsea it is perfectly reasonable for Roman and the board to want Chelsea to stand on its own and not require bankrolling from Roman’s personal wealth. We need to pay sensible fees for the players we want, we should stop paying ludicrous bonuses to agents and we should live within our means. Fine. Marina Granovskaia’s remit at Chelsea is not simply to negotiate player transfers, it is to work with Buck and Tenenbaum to ensure the club adheres to these goals whilst growing organically as a business and a brand. It would be difficult to find any sane Chelsea fan who does not agree with Roman’s sentiment here and admit that these changes are not very necessary.

Another aspect is the new stadium. Roman isn’t going to pay for it. We have very sensibly taken it to The City for a syndicate of private and banking investors to finance. Any major asset financing project like this is underpinned by certain covenants that the club must abide by. There must be a minimum threshold of cash, equity and revenue in the business, and there will be a small number of key ratios the club will need to stay on the right side of. We fall below these and the agreement is placed in jeopardy. There are usually waivers possible but these come with penalties and I am not talking about the ABBA debacle from yesterday.

Our fanbase looks at the Nike, Yokohama, Carabao and other sponsorship deals, massive income from player sales and the financial prizes awarded for being so successful last season and assume there is huge amounts of money in the pot for new signings. There is, but probably less than we may think. The club will ensure its financial covenants are adhered to and the City-based investors will get a positive return. This will happen. It’s just that we probably can’t do that and afford to spend crazy money in the transfer window at the same time. I don’t mean £65m on Morata money I mean Neymar, Bale sort of cash. Player wages are a necessary evil but you would imagine the board looking at how much Neymar is supposedly going to earn at PSG and hoping fervently the likes of Hazard et al do not get any big ideas.

Another aspect of Chelsea’s new philosophy is that we have had (too) many managers and at first wholesale squad changes came and went with each hiring and firing. There wasn’t really a philosophy per se. The club bought who they wanted. Managers played the ones they liked. The club can no longer afford to give managers free reign and open purse strings any more to shape their own squad. In this respect the likes of Antonio Conte are less managers and more like head coaches. They can ask for the players they want but the responsibility for who comes in sits with Emenalo and his team.

The process needs to be harmonious. In theory Emenalo and Conte should want the same players and come to the same conclusion when they both look at the obvious gaps in the squad. The problem is that whilst Conte will almost certainly want genuine quality all over the park, two top class players for every starting berth and to have three or four game-changing world class players to allow him to compete in the Champions League, Emenalo likely cannot agree. The club evidently cannot afford to spend the money Conte wants, not just on massive transfer fees (that have gone crazy again this summer) but on the wages that such players demand. We do not generate enough cashflow to support that kind of business. Not for FFP and not for debt covenants for the stadium financing. I’ve not seen the financials but this is what I would expect to see. A major reason we are getting a new stadium is to allow the club to generate more revenue/cash to allow us to spend more.

It is easy to become frustrated at the prospect of going into the new season with a paper thin squad of 20 players and the club taking their time over (trying to) sign one or two 20m players, and not getting business done quickly and decisively on the four or five 50m players that we actually need. Conte doesn’t look happy.

It would be easier to accept I think if we had not been so comprehensively spoilt by the early heady days of Carefree spending in the Abramovich era. There is probably an element of that even now. We’re used to getting what we want not necessarily what we need. We also see top players moving clubs this summer for big money and this does crystalise the mind for some.

An analysis of the business Chelsea has done this summer further reinforces my point. Costa although yet to leave the club has been replaced by Morata. Terry has been replaced by Christensen, a youth product. Zouma has been replaced by Rudiger. Matic has been replaced by Bakayoko. Begovic has been replaced by Caballero. It has been a one for one in and out in every case and probably for the same or lower wages. We’ve got excellent money for the players we have sold and bought at very reasonable prices as well. We’ve not been held to ransom or paid over the odds, nor have we paid “The Chelsea Tax” that we have done in the past. Whether we have replaced quality with equal quality will not be known for a few months yet (and I am unconvinced that is the case for four of those five) but you can at least see the logic in who they have brought in. There are no obviously-unsuitable Cuadrados or Salahs here.

The issue lies in the business that the club has not done yet. It seems evident that the club was blindsided by Chalobah, Traore and Ake requesting moves when all three would have been invaluable strength in depth this season. There is no doubt Loftus-Cheek and Aina needed a loan to play but even they would likely have had a lot more minutes in this side this season. How the club probably wish they had not allowed Van Ginkel to go as well. The club has thus far failed to replace these outgoing players and we are very short as a result. It is here that the eye of Conte’s stormy wrath lies I think. You could also argue with a lot of credibility that whilst both Moses and Alonso had very good seasons at wing back for us last season, both are limited and could certainly be upgraded. A big injury to either would be disastrous. To provide a genuine step up in quality and ability to either will require a 40-50-60m player along the lines of Sandro from Juventus who we have been unable to bring in despite having been trying and trying all summer. Conte’s frustrations seem to extend to the fact that the club do not appear to have any wish to drop that kind of money on a fullback. Being forced to buy at the cheaper end of the scale for average players that offer nothing over what we have already smacks of a lack of ambition that surely jars with Conte’s winner mentality. It certainly does with many Chelsea fans.

If you suggested to Conte that our squad is too thin to not get shown up brutally in the Champions League he would likely agree.

But that is where we are at. This is what a change of philosophies at Chelsea looks like in practical terms.

Chelsea will bring in more new players before the window slams shut. That is (presumably) a given. We won’t sign four or five 50-60m players needed to put us at the glittering vanguard of European Cup contenders. We will (hopefully) get two or three players on sensible wages for sensible fees who may or may not be good enough for us – but financial pragmatism makes it difficult to do any more than that. The brutal truth of it is, simplistically, if Conte cannot be satisfied with that then he will probably leave. The board will be doing all they can to prevent this unmitigated calamity from coming to pass but if it does whose fault will it be? The board’s for being frugal and commercially pragmatic in a decidedly unpragmatic (read: utterly looney) transfer market or Conte’s for fundamentally misunderstanding what his role is at Chelsea and not being satisfied with what was possible for the club?

Let’s hope we do not have to answer that question for real any time soon.

By @BlueYonderCFC

Follow his blogs at http://bbbcfc.com/

and purchase Chris’ debut novel ‘Coming Clean’ from Amazon or Gate 17

 

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