Chelsea transfer news: How can the Blues keep spending?

Enzo Fernandez (left) could soon join Mykhailo Mudryk at Chelsea, with Jorginho (right) potentially leaving Stamford Bridge before the transfer deadline

If Chelsea are successful in signing Benfica midfielder Enzo Fernandez, it will take their total spending since Todd Boehly's takeover last summer past the £550m mark.

According to Transfermarkt, recruiting Fernandez for 120m euros (£105.6m) would take the club's January spending to 328.5m euros (£288m) on eight arrivals as they try to turn around the form that has left them 10th in the table.

It comes after a summer in which they spent a Premier League record £270m - the second-highest summer spend by any club in the world after Real Madrid (£292m) in 2019 - and contributes to a record £2.5bn spent by Premier League clubs so far this season.

However, there could also be some significant outgoings with Jorginho, Hakim Ziyech and Conor Gallagher linked with deadline-day moves.

So how can Chelsea afford to keep spending, and how do the numbers work with regard to Financial Fair Play rules? BBC Sport takes a closer look at the sums.

• The Football News Show: How can Chelsea afford to keep signing new players?

What are the rules on spending?

Chelsea have to adhere to the Premier League's profit and sustainability rules and, as they regularly play in European competition, Uefa's Financial Fair Play (FFP) regulations.

Premier League profitability and sustainability rules allow for total losses of £105m over a three-year period. Any club that posts losses in excess of that figure could face penalties, including large fines or even a points deduction.

Under Uefa's current rules, clubs can spend up to 5m euros (£4.4m) more than they earn over a three-year period, though they can exceed this level to a limit of 30m euros (£26.6m) if it is entirely covered by the club's owner.

Uefa has a wide-ranging list of potential punishments for clubs which break these rules - such as Wolves in 2020 - including warnings, fines or even the loss of European titles.

New rules introduced in June limit clubs' spending on wages, transfers and agents' fees to 70% of their revenue, though permitted losses over a three-year period have risen to 60m euros (£49.96m).

Clubs have been given three years to implement these changes.

Football finance expert Kieran Maguire estimates Chelsea only had a three-year FFP loss of £5m in their most recent accounts, which go up to 2021, so have a fair amount of leeway in terms of permitted losses.

• Latest Chelsea news, analysis and fan views

• Get Chelsea news alerts

How can Chelsea keep spending so much?

Kieran Maguire on BBC Radio 5 Live's Monday Night Club

There are two issues.

Can they afford it in terms of cash? They can because they are buying players and paying for them in instalments. So the finances of the club itself are fine.

With regards to Financial Fair Play, the accounting is more Harry Potter than Graham Potter in the sense that it's quite weird and wonderful.

When you buy a player, you spread the cost of the player over the life of the contract. If we take a look at Mykhailo Mudryk, they bought him for £89m and he is on an eight-and-a-half-year contract. So you do the maths and he is costing them £10m a year for FFP purposes. When you sell a player, all of the profits are taken into the accounts immediately [even if actual payments are made in instalments]. We have got the sales of Tammy Abraham and Fikayo Tomori. That was £77m worth of profit.

They also won the Champions League, the Uefa Super Cup and the Fifa World Club Cup, and all of that was extra money coming in. So things aren't as bad as I think some of the commentators are making out.

• Chelsea sign Mudryk on £89m eight-year deal

• Club are in 'complete disarray' over transfers - Sutton

• Who will be in? Who will be out? MOTD analyses Chelsea's attacking options

Chelsea's incomings...

... and Chelsea's outgoings

What are the risks?

Football finance expert Kieran Maguire

It's a very high-risk strategy.

If the players turn out to underperform, you have then got a player on a total salary cost of £7m or £8m a year and you are committed to that for seven to eight years. No other clubs are willing to take that wage off your hands for such a long period of time. So you've got four or five players who are happy to sit down for the rest of the contracts. They are even taking up space on your 25-man roster as far as Uefa is concerned or they are tying up space on your payroll.

If they are fantastic players, it is great because it means that if Real Madrid come calling in two years' time, you have still got five or six years remaining on the contract and can extract the maximum fee.

What if Chelsea fail to qualify for the Champions League?

Football finance expert Dr Rob Wilson from Sheffield Hallam University, on the Football News Show

If Chelsea were to reach the Champions League final they would earn around 110m euros in prize money. That's why you saw lots of Champions League clubs on the recent Deloitte rich list like Manchester City, Liverpool and Real Madrid.

Without those ongoing Champions League revenues or higher Premier League positions, naturally your revenues go down and it puts a huge amount of pressure on the football club I would say over the next 18 months or so.

Ultimately, if you cannot afford to pay your contract value over the course of a year and it looks like you are going to breach Financial Fair Play, you either have to renegotiate the contracts to reduce a player's wages or you have to sell them.

That's what the real risk is when you sign a player over five, six, seven, eight, even nine years. They are one injury away from reducing their value quite significantly and being unsaleable.

'Chelsea are making it up as they go along'

BBC Sport pundit Chris Sutton

It's just amazing the spending. You cannot accuse Todd Boehly of not putting his money where his mouth is.

It seems from the outside that they are making it up as they go along.

It's like 'any good player about, we'll pay whatever, we'll bring him in'.

I saw Enzo Fernandez at the World Cup and he was really influential. They are buying potential because he is still a young man. He is miles off the finished article.

It's incredible Chelsea are going to pay that amount of money [120m euros]. But January is a crazy month.

• Our coverage of Chelsea is bigger and better than ever before - here's everything you need to know to make sure you never miss a moment

• Everything Chelsea - go straight to all the best content