Chelsea?s FC latest financial statement shows a ?70m loss on the back of winning the ?double? last season!!, yesterday the Chelsea board insisted that the club will meet the UEFA fair play solvency eligibility rules due to come into effect in 2013.
The rules are clear and will be implemented over 2010/11/12 becoming mandatory from the beginning of the 2013/14 financial reporting period.......failure to comply will trigger the UEFA financial control panel to pronounce sanctions, based on reconciled financial statements for 2011/12 and 2012/13.

The Financial Fair Play Regulations detailed in the PDF below, Auditors will have a field day with ANNEX X: Calculation of the break-even result from page 75 through to 84 where exclusions are mentioned or should I say mumbled.........

Scope:

a) Depreciation / Impairment of tangible fixed assets.
b) Amortization / Impairment of intangible fixed assets other than player registrations.....

Using Amortization (debt) formula P = A * ( R - 1 ) / ( 1 - R-N ).

A is amount borrowed, N number of calendar fixed installments, 1 is annual percentage rate, P is the net monthly repayment process and R is the reconciliation(APR + 1/12)

If studying ACCA economics.......

The full Derivation, and I have used a Sage ?cheat?, sorry I did not break the formulae down...

Let A = P[0] The amount owed increases by the interest accrued, P'[1] = P[0]*(1+i) or P'[n+1] = P[n]*(1+i)........remember this is a generalisation...

So P[1] = P'[1]-p = P[0]*(1+i) ? p or P[n+1] = P'[n+1]-p = P[n]*(1+i) ? p so R = 1+i.....Allowing P[1] = P[0]*R-p, P[2] = P[1]*R-p = P[0]*RR-pR-p,P[3] = P[2]*R-p = P[1]*RR-pr-p = P[0]*RRR-pRR-pR-p, P[N] = P[0]R^N-pR^(N-1)-pR^(N-2)...-pR-p, After N payments the loan is paid off, P[N]=0, Remember that P[0]=A......So the finite sum of the geometric series is S[n] = a(1-r^(n+1))/(1-r) = a + ar + arr + , (+ ar^n <---Checking for deviation) ...A = (p/R)*(1-(1/R)^N..()should encase the N/(1-(1/R)).....

The outcome is that Chelsea blaming the loss on the amortisation of player transfer fees, the amount a player is worth decreases over the length of his contract, is mathematically doubtful that Chelsea can ever make the fair play rule., along with Man City......Man U is another case altogether .........

Credits and Sources:

http://en.uefa.com/MultimediaFiles/Download/uefaorg/Clublicensing/01/50/09/12/1500912_DOWNLOAD.pdf

http://www.independent.co.uk/sport/football/transfers/chelsea-we-are-strong-despite-16370m-losses-in-double-season-2200213.html

Well Kayoko it would take a miracle on the scale of water into wine and five loaves and two fishes to get past the fair play rules ........