Chelsea Can Agree With UEFA to Ban Themselves From European Competition Soon—Why Does It Have to Happen?

English club Chelsea FC is navigating through one of the most tumultuous periods in its history.

After enjoying years of success over the past two decades, the club has experienced a significant decline, plunging into a phase of mediocrity.

The club's fortunes took a significant hit with the sanctions imposed on former Russian owner Roman Abramovich following Russia's invasion of Ukraine in early 2022. As a result, Abramovich was compelled to sell the club, and in May of that year, a consortium led by businessman American Todd Boehly took over.

After finishing the 2021-22 season on a relatively positive note in the Premier League after securing a third-place position, Chelsea experienced a drastic downturn in the subsequent season, ending in 13th place. This marked their lowest finish since the 1993-94 season.

The struggles have persisted into the current season, with Chelsea occupying the tenth spot in the Premier League standings.

It's worth noting that this decline is significant, as Chelsea had clinched the UEFA Champions League, Europe's premier club competition, as recently as 2021.

Why does Chelsea have to avoid European competition?

Despite their recent struggles, Chelsea has an opportunity to secure a trophy as they are set to face Liverpool in the Carabao Cup final on Sunday, February 25.

If Chelsea emerges victorious in the Carabao Cup final, they will qualify for the UEFA Europa Conference League, the third tier of continental club football in Europe, situated behind the Champions League and Europa League. However, this qualification could pose financial challenges for co-owner Todd Boehly.

Chelsea is currently governed by the Premier League's Profit and Sustainability rules (PSR), allowing for losses of up to £105m ($133m) over three years. The club met this objective last season.

Yet, if they secure a place in the Europa Conference League by winning the Carabao Cup, they would then be subject to UEFA's PSR rules, limiting losses to £68.5m ($86m), according to The Athletic.

This financial constraint has led to speculation that Chelsea might contemplate avoiding European competition altogether next season.

The financial rewards for participating in the Europa Conference League are comparatively modest, with West Ham United receiving £16m for winning the tournament last season.

The net financial gain from the Conference League will not be as much when factoring in players' bonuses, transport, accommodation, and other costs.

Chelsea might gain financial flexibility by taking a page from AC Milan's playbook. The Italian club violated UEFA's Financial Fair Play (FFP) regulations three times and reached a compromise with UEFA that allowed them to skip one year of Europa League participation in 2019.

While the typical penalty for such an offense is a two-year ban, Chelsea could explore negotiating a similar arrangement with UEFA to help them balance their books first while being slapped with a less harsher punishment.