Chelsea, the English Premiership football champions, today revealed the true price of success, as the London club reported record-breaking losses of £140 million.

The losses, the highest ever recored by any football club, were up by 60 per cent on the year, from £87.8 million, which the club described as being "almost entirely due to a series of exceptional one-off items".

And while Chelsea was able to record a 4.1 per cent increase in football revenues to £122.7 million from £117.9 million, overall the club experienced a reduction in turnover to £146.6 million from £152.1 million, as a result of the sale of one of the subsidiary businesses the club's present owners inherited

Chelsea said that overall, they had reduced the group's operating loss to £6.3 million from £13.1 million.

But both Bruce Buck, the club's chairman, and Peter Kenyon, the chief executive, said that they were confident of fulfilling a five-year plan to reorganise the operation into a profitable business.

The past year saw the club win the English title for the first time in 50 years and reach the semi-finals of the European Champions' League for the second year in succession.

"These figures reflect the continuing restructuring of the business which we began in 2003-04," Mr Kenyon said.

"The overall loss increase is, in the main, down to some exceptional items that were necessary in order to help us achieve our strategic business aim of break-even by 2009-10.

"In simple terms we have taken some pain now for long-term gain."

Among the exceptional items was the termination of the club's kit deal with Umbro, which cost £25 million, and the write-off of players Adrian Mutu (sacked after a positive drug test) at £13.8 million and Juan-Sebastian Veron at £9 million. Academy recruitment was put at £5 million.

Chelsea was bought by Roman Abramovich, the Russian multi-billionaire, in July 2003, and since then has revived the flagging European transfer market, spending at least £265 million on player acquisitions. When Mr Abramovich bought the club, it had debts of close to £100 million.

Mr Buck reiterated that, despite Mr Abramovich's vast private fortune, the club still intends to become a profitable operation.

Chelsea is following a business plan initiated by Mr Buck, Mr Kenyon and managing director Paul Smith.

"We sat down and said we wanted this club to be profitable," Mr Buck told the BBC. "Peter and Paul were directed to put together a business plan that would make us profitable.

"We are doing a lot of things to make the club more efficient and towards profit-making in five years' time.

"Having said that we announced a significant loss last year and we are going to announce a significant loss this year." Mr Buck said that the figures did not include new sponsorship deals with Samsung and Adidas.

"We think we are moving in the right direction," he said.

"From an operating loss perspective - which was £13 million last year - that will go down but the total loss will go up because there were a lot of exceptional charges this year.

"We paid Umbro £25 million to release ourselves from that contract. That enables us to enter a contract next season which over the next five to ten years will provide a bonus for Chelsea."

Buck argued, however, that despite Abramovich's millions Chelsea were cautious with their money from transfer fees to stationery.

"We watch every penny. If the guy who sells us pencils is charging too much and he thinks he can because it is Roman and Chelsea then we find another supplier of pencils.

"In the transfer market there is one price for Chelsea and another price for everyone else but we are not afraid of walking away from a deal," said Buck.

"There are many deals we have walked away from just because of the pricing. But we have probably put £100 million into transfer fees in England and that money gets churned many times, which is a benefit for football."