Graphic: Chelsea's numbers crunched

Roman Abramovich’s willingness potentially to write off £369.9 million by turning more than half his loans into shares in the club is good news for Chelsea, but after a difficult week their fans should not start celebrating yet. The underlying message from the 2007-08 financial results published yesterday is of a club striving hard to attain self-sufficiency, meaning that the heady days of 2003, when in excess of £100 million was spent on new players in the space of a few weeks, will never return.

On the day that Luiz Felipe Scolari blamed his demise on the failure to sign Robinho, it seemed appropriate to hear Chelsea effectively concede that Manchester City are in a league of their own. The club retain the right to ask Abramovich, the owner, for money if they want to make a huge signing such as Kaká or Lionel Messi, but in the normal course of events they will require no additional funding for transfers from the end of the season. As the squad inherited by Guus Hiddink needs substantial reshaping, the club may be in for a busy summer.

Chelsea recorded a surplus of £11.5 million in the recent transfer window, but it will take considerably more than that to improve, particularly as a new manager, or even Hiddink, will want to sign his own players in the summer. Even if the club convinced Abramovich to sign a new galáctico, it will take more than one player to bring balance to the squad, so considerable player-trading is inevitable.

Unfortunately for Chelsea, most of their major stars are not for sale. John Terry is coveted by Manchester City, but would resist any move even if Chelsea wanted to cash in, while the club are determined to keep hold of Frank Lampard, Michael Essien and Petr Cech. Michael Ballack can leave on a free transfer in the summer and John Obi Mikel and Salomon Kalou have yet to prove they belong at the highest level, leaving Didier Drogba, Florent Malouda and Alex as the most tangible assets. Drogba is likely to be sold, leading to the intriguing possibility of a swap deal with City for Robinho.

Chelsea will not use player sales to help them achieve their goal of breaking even, which remains some way off despite cutting their losses by 12.2 per cent to £65.7 million. The club admit that they are likely to miss their target of breaking even by next summer, but are confident of further reductions as turnover continues to rise, particularly if they can eradicate the so-called exceptional, but in reality habitual costs of compensation paid to former managers. A £7 million payoff to Scolari will be included in next year’s accounts, but Hiddink is working without a contract and will not receive any severance payment. José Mourinho, Avram Grant and their assistants were paid a total of £23 million.

Although the club’s wage bill continued to rise to £148.5 million (not including payoffs) and remains comfortably the highest in the Barclays Premier League, as a percentage of turnover it fell fractionally to 70.6 per cent and should remain relatively stable. Lampard’s improved contract will be included in next year’s accounts, but with Andriy Shevchenko off the books, Ballack likely to take a pay cut if he stays and fewer significant signings, that staggeringly high percentage will eventually drop. (Manchester United’s wage bill as a percentage of turnover last year was, by contrast, a far healthier 43.6 per cent.)

The significance of Abramovich’s conversion of loans to shares is debatable, but even men of his wealth are reluctant to write off close to £400 million so it must be taken as an indication of his commitment to the club. The Russian is understood to have been buying up shares steadily for a period of time, with the consequence that the repayment due from the club in the event of his death or a decision to walk away has been reduced by over 50 per cent to £339.8 million.

Chelsea insist that they have security for that loan in the shape of the Stamford Bridge complex, which they value at £350 million, but in current market conditions it is doubtful that they would find a buyer at that price.