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Offline Sam

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This is good football business.
« on: September 10, 2014, 01:09:07 PM »
How much is Chelsea's army of youngsters on loan costing the club?
It's actually earning them millions
By Jake Cohen

Chelsea currently has twenty-six players on loan, and save for Fernando Torres, they are all young footballers with varying degrees of talent and room to grow. We've previously written at length about Chelsea's unique approach to youth development, and in short, the club's ruthlessly effective strategy of acquiring as much young talent as it can and then sending said talent on loan to develop provides Chelsea with a steady stream of cost-effective young players. These players can then be added to the first team (Thibaut Courtois, Kurt Zouma) or sold for profit to help offset its spending in the transfer market and remain a step ahead of UEFA's financial fair play regulations (Kevin de Bruyne, Romelu Lukaku).

Combined, these twenty-five players are costing Chelsea around 16m on the FFP books this season, or a mere 640,000 per player. The majority of the players have their wages paid by the other club, and with highly sought-after players, Chelsea also commands a loan fee on top of the wages (Moses, Piazon, Hazard, Kalas). As such, Chelsea only has to cover the usually very small amortised transfer fees.

At such a low cost, Chelsea only needs two of these players to become 10m players for this strategy to pay off.

Members of Chelsea's loan army include -

six current and former members of IBWM 100, which is an annual list of the world's best 100 youngsters playing regular first-team football (Kalas, Hazard, Pasalic, Piazon, Romeu, and Van Ginkel)

four players who are automatic selections for the starting eleven on their country's respective senior national teams (Atsu, Moses, Omeruo, and Traore)

a striker who just turned 21 years old and scored 25 goals last season (Bamford), and

a player who started in a Champions League final (Bertrand).

Given that these twenty-five players could easily have fetched over 100m this summer, the question isn't whether this strategy will pay off, but rather how much Chelsea will benefit from it's forward-thinking approach to youth development.

The profits from selling Romelu Lukaku (21.6m), Patrick van Aanholt (2.5m), and George Saville (1m), all of whom were on loan last season, deemed surplus to requirements and sold this summer, total 25.1m. The entire 25.1m profit is recorded on the 2014-15 FFP books and completely offsets the cost for Chelsea's entire loan army, and then some.

In fact, Chelsea is actually earning 9.1m this season to simply watch their youngsters become better footballers and increase in value.

The genius of this strategy cannot be understated, and the credit likely goes to the Marina Granovskaia, Michael Emenalo, and Piet de Visser triumvirate.

Chelsea has also used this system to incorporate cost-effective young talent into the first team. For example, Thibaut Courtois spent the past three seasons on loan to Atletico Madrid developing into one of the best goalkeepers in the world, and has now returned to Chelsea.

Courtois has cost Chelsea a mere 2.8m so far. Pretty good value for a twenty-two year old who was named as La Liga's best goalkeeper last season.

In addition, Kurt Zouma, who has arrived at Stamford Bridge after finishing out last season at Saint-Etienne, is locked up for the next five years at just 4.7m annually. This also represents excellent value for a player who the Guardian named as one of the ten most promising youngsters in Europe.

Last week, Jose Mourinho told Yahoo, "The reality is that the big teams, the big clubs, the clubs with more years at the top with [a larger] fan base around the world, with more income, are the players that keep being the big spenders."

"So Real Madrid, Barcelona, Bayern, Manchester (United) all these huge teams, I think they have an advantage."

Indeed, those four clubs earn considerably more (i.e. well over 100m more) than Chelsea, largely on the relative strength of their commercial revenues. Under the financial fair play regulations, these clubs are therefore permitted to spend considerably more than Chelsea.

This unique approach to youth development sets them apart from just about every other club in the world and helps the club keep pace with these bigger clubs. While some might bristle at the fact that Chelsea treats youth development like a hedge fund, Chelsea has built a very sustainable and profitable strategy with regards to acquiring and developing young talent. The more a club spends, the better its chances are for success, and FFP mandates that clubs only spend what they earn. As such, forward-thinking clubs have redoubled their efforts on opening new revenue streams and maximising resources, and Chelsea is on the cutting edge.

Lastly, for those wondering how sustainable this strategy will be in future, as a professor at Harvard Business School explained to me during an interview for a forthcoming article for another outlet, it is unlikely that Chelsea's burgeoning reputation as a club that farms out youngsters will have an adverse affect on its ability to continue to recruit the world's best available young talent.

Note that Fernando Torres is not included in this analysis, as his loan is a unique situation and has nothing to do with how Chelsea utilises the loan system as part of its youth development policy.

Christian Atsu - Everton
Victor Moses - Stoke
Ryan Bertrand - Southampton
Nathaniel Chalobah - Burnley
Jamal Blackman - Middlesbrough
Kenneth Omeruo - Middlesbrough
Patrick Bamford - Middlesbrough
John Swift - Rotherham
Mario Pasalic - Elche
Gael Kakuta - Rayo Vallecano
Ulises Davila - Tenerife
Thorgan Hazard - Borussia Monchengladbach
Tomas Kalas - FC Cologne
Lucas Piazon - Frankfurt
Oriol Romeu - Stuttgart
Marco van Ginkel - AC Milan
Marko Marin - Fiorentina
Bertrand Traore - Vitesse
Wallace - Vitesse
Josh McEachran - Vitesse
Stipe Perica - NAC Breda
Joao Rodriguez - Bastia
Matej Delac - Aries-Avignon
Islam Feruz - OGI Crete
Cristian Cuevas - Universidad de Chile

Thanks to WAGNH's own Steve Schmidt for putting this list together.

Meanwhile, Chelsea have emerged as shock contenders to sign Real Madrid star and ex-Manchester United hero Cristiano Ronaldo.

The Ballon d'Or holder has been tipped to leave Carlo Ancelotti's side next summer, with a return to Old Trafford on the cards.

It is believed that United have set aside as much as 60million in a bid to bring Ronaldo back to England, and Louis Van Gaal is ready to offer him a lucrative deal exceeding his current 290,000 weekly wage.

However, reports now claim that Jose Mourinho has thrown his hat into the ring after forming a close-bond with the 29-year-old during their time together in the Spanish capital.

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Offline Tiresais

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Re: This is good football business.
« Reply #1 on: September 11, 2014, 11:12:13 AM »
This type of system is more common in Italy - just look at Udinese's loan list. there's a club with like 5 team's worth of loanees lol.

Can definitely make sense, but it's sad to see talent just hoovered up indiscriminately and then farmed up - it's likely better for their development if they were cared for a bit better, but then again it leaves spaces open at other clubs' youth teams...


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