Chelsea in crisis after new £40million loss as Abramovich continues funding freezeCarlo Ancelotti, without a win in five Premier League matches, will not be allowed to bolster Chelsea's faltering title hopes by adding to his squad in the January transfer window.
Chelsea will announce in the new year that the club lost £40million last season despite winning the League and FA Cup Double.
Only if owner Roman Abramovich has a major change of heart and subsidises a new signing will Ancelotti be able to bring in new blood next month. And the Italian has been told that such an about-turn is not on the agenda.
The lack of funds will further frustrate a manager who is expected by Abramovich to improve on last season's performance, despite having to operate with a squad that captain John Terry admits is weaker than the one that completed the Double.
Ancelotti, who has insisted that despite recent injuries he cannot blood his youngsters at such a time of crisis, now faces Arsenal in a vital match tomorrow knowing that his principal rivals for the titles - Manchester United, Manchester City and Arsenal - have significant funds to strengthen in January.
City will make a further move for £35m Wolfsburg striker Edin Dzeko, while United are monitoring Liverpool's £20m goalkeeper, Pepe Reina, and Atletico Madrid's £15m David de Gea, as Arsenal contemplate a £10m move for Bolton centre-half Gary Cahill.
But potential Chelsea moves for a new striker, such as City's unsettled Carlos Tevez or Liverpool's Fernando Torres - either of whom would cost £40m - or for Benfica centre-half David Luiz, who is valued at £25m, are seemingly impossible.
Despite enjoying an historic season in 2009/10, Chelsea's financial figures are unlikely to see a significant change from the previous year's loss of £44.4m, taking the total amount of losses since Abramovich took over seven years ago to more than £500m.
The Russian has committed to reducing the club's annual deficits ever since announcing a record loss for a football club of £140.2m in 2005.
Chief executive Ron Gourlay has already told players, in a team meeting at the start of the season, not to expect major signings, as the club are now expected to generate their own transfer funds through sales rather than rely on hand-outs from Abramovich.
Gourlay has been instituting a number of economies this season, which included refusing to renew the contracts of Joe Cole and Michael Ballack and cutting the win bonuses of some players.
Chelsea need to show UEFA they are making progress in reducing their losses from next season. Europe's ruling body will monitor club accounts as part of new financial fair play regulations.
Any club making persistent losses, such as Chelsea and Manchester City have done, will be banned from the Champions League from 2013.
Chelsea are confident recent cutbacks and improved sponsorship deals negotiated by Gourlay, including an eight-year kit deal with adidas worth potentially £30m a year, mean the deficit will be considerably reduced by the time the new regulations come in.
The rules will permit clubs to incur exceptional losses of around £38.5m in the two years running up to the 2013/14 season, if they are underwritten by shareholders and owners. The measures Chelsea have taken mean they should meet those criteria.
But to do so would mean continuing to run a steady financial ship until the club can significantly increase their income.
