Article published 10 Mar 2012
Under FFP regulations the cost of acquiring a player's contract (i.e. the transfer fee) has to be written off over the life of the contract. However, the same restriction does not apply to other contracts. The cost of acquiring a manager's contract (eg. André Villas-Boas) can be written-off immediately as a one-off hit against that year's financial results. When Chelsea sacked Ancelotti, they decided to write off the cost of paying up his contract AND the cost of the acquiring AVB's contract from Porto in the same financial year. This action resulted in a one-off expense of around £28m in accounts up to the end of the 2010/2011 season. They chose the immediate write-off because FFP monitoring did not commence until the start of the current season; Chelsea must have felt the impact of firing and hiring a new manager would not have an impact on FFP calculations. However, now that AVB has been dismissed, Chelsea are faced with daunting prospect of having to write down the cost of paying up AVB's contract (around £10m) plus the cost of buying-out a new manager's contract during the first year of FFP monitoring. Chelsea lost £71m during the 2010/2011 season and also faced with the expensive task of rebuilding an ageing squad - this unplanned managerial cost has hit them at the wrong time and meeting the FFP requirements seems to be beyond them.
