Chelsea, Erling Haaland, Liverpool & Sustainability

Why I'm glad we are being run in a more sustainable way

Erling Haaland’s new nine and a half year contract at City (long contracts, what an evil thing, who thought of that? lol) opens up an important conversation about football and Chelsea, and why Chelsea have the strategy they have.

Erling Haaland will be earning 500k per week PLUS as a basic salary for the next 9 seasons. That’s £26 million per year minimum, plus bonuses. It’s absolutely insane money, certainly one of the best paid footballers in the world, and best paid in the Premier League.

Just for contact, Chelsea’s best player Cole Palmer earns 130k per week, or £6.7 million per year. That’s less than one quarter of what Erling Haaland earns. The best paid player in the current Chelsea squad is captain Reece James, who is on 250k per week, or £12.5m a year, under half of what Erling Haaland now earns.

Chelsea now have a strict wage structure, where salaries are paid as a relatively low base salary, with the big money coming in bonuses for league place, European qualification and trophies. So the more successful we are, the more players will get paid. This makes sense, as generally the more success you have on the pitch, the more revenue you’re generating off the pitch.

Also it appears pay rises are built into the contracts dependent on personal achievement. Cole Palmer got an extension and pay rise because he performed well, but didn’t technically sign an entirely new contract, it was built into the contract he signed. So players know if they perform well, they will earn more, which gives more incentives to players to perform.

The long contracts protect the club from losing money on players, so if anyone chooses to leave the club can make back their money at a minimum on the transfer fee, or even make a profit.

If we sold Renato Veiga this window for £20m for example, the club has made a cahs profit of about £8-9m in just 6 months. Ideally this wouldn’t happen, but it gives a degree of protection to Chelsea if it does. Chelsea seem to be acting quickly if a signing does work - hence Kiernan Dewsbury-Hall is already on the way out - and are protected from too big a loss and will find it easier to move them on due to the long contracts and lower base salaries.

Chelsea have done this, because the new owners recognised the wage structure at Chelsea was getting out of control. It was over £330m when they arrived. It went up for a year after the takeover due to the flurry of new signings, initial lack of sales and the multiple managerial payoffs which were covered under wages in that first year. But now, according to Capology.com, our wage bill, including loan players like Kepa Arizzabalaga, is approximately £172m. Loan players wages are normally covered by the loan club, so in reality, we’re paying out even less on wages.

Under the new contract set up, wages go down by around 20-30 per cent with no European football, and my guess is they’d go up with Champions League football. This can add about £70m plus to a clubs annual revenue, so a small increase in wages is more than covered financially if it happens.

The new owners decided they wanted to run Chelsea in a sustainable way. Liverpool have been run this way under the Fenway Sports Group (FSG), and yet found a way to achieve success anyway, creating a huge data hub which governs every decision, even managerial appointments. They’ve never paid the huge wages Manchester City do - the only player who broke this pattern was Mohammed Salah, and that was only once he’d established himself as a truly world class player. They’ve managed to become one of the most successful clubs in the country in a financially sustainable way, and that success has increased commercial revenue so allowed them to slightly increase their wage structure, but still, they don’t go crazy, and its working.

This is the model Chelsea are trying to implement. There’s no doubt data led scouting has led to some smart signings. There’s been teething problems and we’re still not there yet. Certainly the quality of our overall scouting has increased substantially. Cole Palmer only cost £42m, Nicolas Jackson only £30m, Andrey Santos looks a steal at £12m, and all three of those are likely to be part of our first team squad for the long-term.

I’ve been supporting Chelsea since the late 1980’s and three times since then I’ve seen the club I love threatened with extinction. Twice over financial issues. Back in 2003, we were allegedly a week or so from going out of business before Roman Abramovich stepped in. Again, in 2022, had the takeover not been completed in time, Chelsea could have gone into liquidation. We’d become financially dependent on one man to cover our financial commitments, and that simply was not sustainable.

So for me, I’m happy to see Chelsea run in a sustainable way financially. Once we can achieve Champions League football, the commercial deals will pick up and our revenue will go up.

It looks like CL football could mean shirt sponsorship of £60m per year, and potentially a contract with Jordan brand too, which if comparable to PSG’s could be upwards of £50m per year. There’d be other commercial deals too. This, in turn, increases revenue so we can invest more on the playing side, but still be profitable and sustainable as a club, and hopefully then,the success will snowball.

That’s the plan. I think we can all agree the execution hasn’t be perfect up to now and there’s a lot of work which needs to be done to get us to where we need to be. But I’d certainly rather be run in a sustainable way, than the way Manchester City are, paying obscene amounts of money in wages.

The Score