Sources: Oracle close to becoming Chelsea s new chest advertising sponsor

Hupu reported on November 15 that Chelsea Chronicle reporter Adam Williams reported that Chelsea is close to finalizing a chest advertising sponsorship agreement with Oracle, a world-renowned software company.

Industry sources revealed that Oracle is expected to become Chelsea's new chest advertising sponsor. If the agreement finally comes to fruition - there is news that the contract has been signed - it will be officially announced after the international break, most likely on the eve of Chelsea's Champions League match against Barcelona on November 25, or before the subsequent game against Arsenal on Sunday.

Oracle is an American multinational software company and one of the world's largest companies by market value. As of press time, its publicly traded shares have a market value of approximately £470 billion. It is worth noting that the company has recently reached a cooperation with FPT, a Vietnamese information technology company, and FPT was officially announced as Chelsea's sleeve sponsor last week.

In the past 18 months or so, Chelsea has missed out on more than 100 million pounds in sponsorship revenue, which is undoubtedly a significant loss. But the club's commercial arm may be able to take solace in Oracle's blue-chip status - the company was co-founded by Larry Ellison in 1977. As of press time, Ellison is the second richest man in the world, with a net worth of 210 billion pounds, far surpassing Chelsea shareholders Todd Boly (6.5 billion pounds), Mark Walter (9.5 billion pounds) and Hansjörg Wise (12 billion pounds).

The current specific value of the agreement has not been disclosed, but it is consistent with almost all commercial contracts. It is likely to include a fixed fee, an annual increase clause adjusted for inflation, and a bonus mechanism linked to performance.

Chelsea has been without chest advertising sponsorship for nearly a season and a half. This type of sponsorship is typically the second most valuable item in a club's sponsorship portfolio, after kit and equipment sponsorship. For a top club like Chelsea, its previous target in negotiations with potential sponsors was around £60 million per year.

The value of the chest advertising cooperation accounts for approximately 10% of the club’s annual revenue. For reference, this amount is roughly equivalent to Chelsea's budgeted bonuses for this season's Champions League matches - even in the worst-case scenario.

In April this year, Chelsea announced a cooperation with Dubai real estate developer DAMAC Group (DAMAC). Although the company remained as a secondary commercial partner, the chest jersey partnership was only a temporary solution at the time.

Chelsea's need for income is obvious. While the club has avoided the Premier League's PSR (Profit and Sustainability Rules) regulators through financial operations such as selling assets to other companies in the group and its women's football team, UEFA's rules are stricter.

In July this year, Chelsea reached a settlement agreement with UEFA for violating UEFA's financial sustainability regulations in the 2022-23 and 2023-24 seasons. The terms of the settlement are complex, but the core is to rebalance the club's turnover (including media income, matchday income and commercial income) and football-related expenses (first-team wages, transfer fees and agent commissions).

If Chelsea fails to comply with the agreement, in addition to the £27.5 million fine it has already paid, it may also face further sporting and financial penalties from UEFA. Therefore, reaching a chest jersey sponsorship agreement is crucial, and there seems to be good news in this regard.

In the published data for the 2023-24 fiscal year, Chelsea's commercial revenue reached 225 million pounds, an increase from the previous season's 215 million pounds. Although this figure is far ahead of most teams in the Premier League, it only ranks fifth in the BIG6:

-Manchester City: £345 million

-Liverpool: £308 million

-Manchester United: £303 million

-Tottenham Hotspur: 255 million pounds

-Chelsea: 225 million pounds

-Arsenal: 218 million pounds

It is expected that after the financial reports of both parties are released next spring, Arsenal's commercial income will easily exceed Chelsea's. On the one hand, this is due to Arsenal's recovery on the field and the ensuing growth in sponsorship and retail business; on the other hand, it is also due to Chelsea's long-term lack of chest shirt sponsors, and it was not until recently that a sleeve sponsor was determined.

In October this year, Chelsea adjusted its corporate structure and former chief revenue officer Casper Stelsvig resigned. Todd Crane (Commercial President), Phil Lynch (Chief Digital Officer) and James Murray (Chief Operating Officer) have taken on their new roles, reporting directly to club president Jason Gannon.