Chelsea owners sell hotels to another company they own for £75m ‘in attempt to meet PSR rules’

Millennium Hotel - Chelsea owners sell hotels to themselves for £75m in bid to meet PSR rules
The sale of the Millennium Hotel will help Chelsea see its annual losses reduced - PA/John Walton

The US owners of Chelsea have sold both the hotels on the Stamford Bridge site to another company they own, generating £75.6 million of income which will count towards their profitability and sustainability rules compliancy.

The club made the disclosure in accounts published on Saturday that report it lost £248.5 million over the financial year ending June of last year. The club say those losses come down to £90.1 million after taxation when the hotel property sales and other adjustments are taken into consideration. The club reported adjusted losses of £121.4 million in the previous year to the end of June 2022.

The club also announced that since the Todd Boehly-Behdad Eghbali consortium acquired the club in 2022 they have spent a remarkable £747.8 million on transfer fees.

Under PSR rules governing Premier League clubs next season, permitted losses must not exceed £105 million. From the 2025-2026 season, clubs will have to comply with a new regime – squad control costs –- spending no more than 85 per cent of their turnover on transfer fees, player wages and agents’ fees.

The club will have to demonstrate to the Premier League that it is PSR compliant. As per the recent cases concerning Everton and Nottingham Forest’s PSR breaches, clubs often clash with the Premier League over which day-to-day losses that can be claimed as add-backs allowable under the Premier League’s rules. It has been confirmed that the income from the sale of the two hotels would be considered PSR compliant.

The two hotels on the Fulham Broadway side of the Stamford Bridge site – the Millennium and the Copthorne – were part of a large property portfolio that came as part of the deal to buy the club. The total deal cost the consortium £2.5 billion with an additional £1.75 billion pledged in investment.

The hotels were built as part of the Chelsea Village development completed in 2001 under Ken Bates. Both were scheduled for demolition in the vast stadium redevelopment planned under former owner Roman Abramovich in the previous decade and then later abandoned.

Chelsea said in its accounts that the hotels were sold by the group to Blueco 22 Properties Limited “a fellow subsidiary to the intermediate parent company Blueco 22 Limited”. Sources say that two independent valuers were consulted before a price was agreed for the transaction of the two hotels.

In addition to the losses, the club announced that its wage bill last season had grown to £404 million, the second highest in the Premier League. Since these results were published the club said that it had spent £454.3 million on another 21 players while selling a further ten. In the results up to the end of June 2023, player amortisation alone, the writing down of the value of players on the books, cost the club £203.2 million.

The club say that in the year ending June 2023 it has made a profit on player sales of £62.9 million with income from sales of the likes of Kai Havertz, Mateo Kovacic and Timo Werner – in addition to payments from player sales made in the previous year. Chelsea said that its revenue for the year ending June 2023 had increased to £512 million.

The strategy of selling parts of a club’s property holdings to an owner to generate allowable revenue under financial fair play rules has been attempted before – principally with stadium sales. Sheffield Wednesday sold their Hillsborough stadium to owner Dejphon Chansiri in the 2017-18 season. However, the timing of that sale led to a Football League charge and an eventual six-point deduction.