Chelsea lost 70.9 million pounds ($113.7 million) last season despite winning the Premier League and FA Cup.
Announcing its financial results Monday for the 12 months to June 30, 2010, the west London club said turnover increased by 1.2 percent to 205.8 million pounds ($330 million) but that a reduction in the value of its squad was the main reason for the loss.
Chelsea chief executive Ron Gourlay highlighted the fact that the club has become cash positive, with a surplus of 3.8 million pounds ($6.1 million) compared to an outflow of 16.9 million pounds ($27.1 million) for the previous season.
''The reduction in operating losses and increased sales in 2009-10 shows that we are moving in the right direction, especially when viewed against the difficult macroeconomic environment,'' Gourlay said. ''The club is in a strong position to meet the challenges of UEFA 'financial fair play' initiatives, which will be relevant to the financial statements to be released in early 2013.''
UEFA will ban clubs from its European competitions, including the lucrative Champions League, from 2012 if they go into debt on football-related business.
''That the club was cash generative in the year when we recorded a historic FAPL and FA Cup double is a great encouragement and demonstrates significant progress as regards our financial results,'' chairman Bruce Buck said.
Russian billionaire Roman Abramovich has bankrolled Chelsea since his 2003 takeover, earning three English titles and three FA Cups. In 2009, he converted 340 million pounds ($541 million) of interest-free loans into equity to make the club debt-free.
Chelsea's chances of retaining its Premier League title have been derailed by its worst run of results for 15 years, while its finances could be hit if it completes the signing of Spain striker Fernando Torres from Liverpool.
Torres will reportedly cost Chelsea a British-record 50 million pounds ($79.5 million).
