Chelsea face 'long term pain' after signing £500m paperwork

By Kieran Maguire

12th Nov, 2023 | 2:05pm

Kieran Maguire: Chelsea face 'long term pain' after signing £500m paperwork

Chelsea could suffer ‘long term pain’ because of the £500million loans they agreed this summer.

That is the view of finance expert Kieran Maguire, who exclusively told Football Insider that the loans could end up having a big impact on the Blues’ transfer and wage budget.

As reported by Bloomberg, Chelsea raised £500million in loans from US-based investors Ares Management in September.

The Daily Mail report that Chelsea’s finance finance comes in the form of a payment-in-kind (PIK) loan with interest fees set to cost up to £60million per year.

Todd Boehly and Clearlake have provided security on the loans rather than the club itself.

Similar loans were taken out by the Glazer family before their £790million takeover of Manchester United in 2005, with their payment-in-kind loans holding an interest rate of over 16 percent.

Maguire explained that Chelsea are now under pressure to qualify for Europe as they could suffer financially due to Boehly’s short-term risks.

Chelsea’s PIK loans are good for cash flow because you are not physically having to pay interest to the lender,” Maguire told Football Insider’s Sean Fisher.

But what they are doing is storing up future problems.

“So it’s short-term gain which potentially could result in long-term pain, especially if Chelsea struggle to qualify for European places.

At some point in time, that’s going to have an impact upon the transfer budget, the wage budget, and upon Chelsea’s ability to be competitive with their rivals.

We saw that with the way Todd Boehly sacked Thomas Tuchel and tried to snatch a manager for £20million without really doing any due diligence.

He then quickly realised that you’ve got to have the right culture for the right manager and sacking Potter afterwards meant another significant payout.

In other news, Chelsea plot ‘shock’ January signing to replace summer arrival