Enzo Fernandez’s comments in the wake of Chelsea’s thumping Champions League round-of-16 loss to Paris Saint-Germain on Tuesday evening did little for faith in football contracts.
Fernandez’s current deal at Stamford Bridge runs to June 2032, more than two World Cups away, yet when asked if he’d still be there next season, the Argentinian said: “I don’t know.”
Chelsea paid Portuguese side Benfica a club (and, at that time, British) record €120million (£103.6m, $138.1m at the current rates) to bring Fernandez to west London in January 2023, at which time a midfielder who’d helped Argentina win the World Cup just over a month earlier signed an eight-and-a-half-year contract. His new club exercised an option to extend his deal by a further year soon after, seemingly tying him down until the age of 31.
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Those post-match comments yesterday have now cast significant doubt on that, though Chelsea, as ever, have much to consider financially.
In the summer following their winter-window signings of Fernandez and Mykhailo Mudryk (who also signed an initial eight-and-a-half-year deal), European football’s governing body UEFA moved to limit the length of time over which teams could expense, or amortise, transfer fees.
Clubs spread fees across the life of player contracts, and Chelsea signing players up to such lengthy terms was widely seen as a way of spending big — they paid £745million for players in 2022-23, still a single-season world record — without torpedoing their immediate finances, and remaining compliant with profitability and sustainability rules (PSR). Amortisation costs there were already the highest in England before the BlueCo takeover of May 2022.
The Premier League mirrored UEFA’s five-year amortisation limit later in 2023, but, importantly, where Fernandez is concerned, neither of the rule changes were backdated. As a result, Chelsea could still, and continue to, amortise his deal up to its June 2032 end date.
That has been useful for them so far, but may pose an issue now. Lengthier amortisation terms mean players hold higher book values for longer; if Fernandez is to be sold in this year’s summer window, Chelsea will need to recoup a sizeable fee in order to turn a profit on him.
The figures are inexact, given the lack of verified detail around the costs of signing players, but we can estimate.
We know, for example, that Fernandez cost Chelsea £106million three years ago, and that the Premier League applies a four per cent levy on all incoming transfers. Guess at some agent fees to go on top, and you arrive at a total acquisition cost of £121m.
Chelsea were amortising that region of fee over eight and a half years for a short time, but their triggering of a one-year option in spring 2023 spread the cost yet further. In essence, based on The Athletic’s estimates, Fernandez currently costs them £12.8million in annual amortisation fees. It is worth remembering that all of this relates to how the transfer is accounted for, and that is separate to the cash terms of the deal.
By extension, at just three years into a now nine-and-a-half-year deal, Fernandez’s accounting value remains high. According to our estimate, on the day this summer’s transfer window opens, Fernandez will still carry a net book value of £77.6million. Any fee received below that, or below £75m by the window’s end, would see Chelsea recognise a loss.
Achieving a £75million fee for Fernandez is feasible, especially as transfer spending in the game continues to soar. Only 33 players in history have been sold for that amount or more and only 13 were, as he now is having turned 25 in January, aged 25 or older, but it’s not like he’s been a failure at Stamford Bridge. There’d be takers at that price.
One assumption that would change matters materially if wrong is that Fernandez’s book value has not previously been impaired.
When The Athletic reported on Chelsea’s English-record £342million pre-tax loss filed with UEFA for last season, a source with knowledge of the club’s dealings, who asked to remain anonymous to protect relationships, advised that the huge deficit included player value write-offs. The players whose book values were impaired are not known, but Fernandez is not a likely candidate.
Any reduction in his existing book value would make it easier to turn a profit if he were to be sold this summer, but it is far more likely that his value is unimpaired and in step with the estimates outlined here. The wider problem for Chelsea is that they could really do with making notable profits on any sales, something made much harder when a player’s existing book value is so high.
Making little or nothing in profit on Fernandez would be a lesser issue if Chelsea’s business model were not so heavily reliant on player sales as, in effect, a fourth stream of income. They were keen sellers when Roman Abramovich was the owner, but the strategy has been turbo-charged under BlueCo. Last summer, Chelsea recouped in the region of £300million on player outgoings.
Those sales are a necessity.
In response to reports of that record pre-tax loss, Chelsea told outlets the club was ‘profitable on an operating basis’, but that is only true once player sales are included. Player trading profits haven’t historically been included within clubs’ operating results, though an increasing number of team now do include them when announcing figures (Manchester United are another), in part to avoid highlighting pre-player sale losses.
Those losses have been huge at Chelsea in recent seasons, topping £200million in each of the last three for which we have accounts. We don’t yet have full 2024-25 financials, but another massive pre-player sale loss is a given. According to the UEFA report which detailed that £342m pre-tax loss, Chelsea’s wages and operating costs were £113m higher than revenue, a £63m worsening from 2023-24, when their operating loss, which includes nearly £200m in amortisation costs, was £213m.
Selling Fernandez would naturally result in wage savings and remove those £12.8million annual amortisation costs. Yet at a club where player sales are so important, only managing a slim profit or, god forbid, an accounting loss on a star’s departure would hardly help matters.
This season’s numbers have been aided by winning the Club World Cup and returning to playing in the Champions League — alongside that £300million or so from player sales, even as the profit on those deals is expected to be some way lower — but it’s clear Chelsea need to continue to be good sellers, not least when the terms of their settlement agreement with UEFA limit them to €5m in adjusted losses this season and require them to break even (again, adjusted) in 2026-27.
If they have to sell Fernandez, doing so for a notable profit would, of course, be the ideal outcome.
But past decisions, like handing him such a lengthy contract, have made that a harder goal to achieve.