How Chelsea came up with £1bn evaluation for sixth-best paid squad in the world

Chelsea’s squad is worth more than a billion pounds and has the sixth highest wage bill in the world, according to the club’s latest set of accounts.

Their valuation of the squad up to June 2019 rose to £1.052billion, up from £843.6million a year earlier, while they spent £285million in player wages during the 2018/19 campaign.

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That places the club third among Premier League sides and sixth in the world – after Barcelona, Manchester United, Manchester City, Real Madrid and Paris Saint-Germain.

The rise to a £1billion valuation is largely explained by the additions of Kepa Arrizabalaga, Jorginho and Christian Pulisic last season for a combined £170million.

Per Chelsea’s books, the squad contained players signed for a total of £476.6million as of 30 June 2019, a figure that includes amortisation, also known as the gradual writing off of their values over the lifetime of contracts.

Under this accounting method, highly-rated players like Callum Hudson-Odoi have no value on the books, hence the disparity between Chelsea’s personal valuation and the net book value.

Chelsea added a total of £280.6million of new players registrations in 2018-19 but also amortised £167.6million worth of transfer fees.

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“The valuations assume willing buyers for the relevant players’ registrations on normal contractual terms and an orderly disposal over a period of time,” the accounts said.

Clubs may devalue or impair the net book value of their squads if they feel the amount is not recoverable – for instance, if the player has suffered a serious injury or is not part of the first team’s plans.

No impairment charges were registered in the past two seasons by the club.