Chelsea chief executive Peter Kenyon has warned that any signings in the summer will have to be financed by selling players after the club announced losses of £65.7m for the last financial year.
Despite the losses, Chelsea insist they are committed to breaking even by 2010 - but that means very limited funds available for new signings.
Kenyon said: ''We have set ourselves ambitious targets, to require zero cash funding from the owner at the beginning of the financial year 2009/2010.
''We have consistently advocated the aim of self-sufficiency which has always been supported by the owner. We are hopeful of being close to these targets in the time-frames we have set given the underlying strengths of the business.
''Success on the field is a key part of this. But in line with our long-stated business aims, any squad structuring in the summer will be funded prominently by sales as we have consistently reduced our net transfer spend over the last five years and will attempt to continue this trend.''
The latest figures include £23.1m paid in compensation to Jose Mourinho, Avram Grant and five coaching staff. It does not include any pay-off for Luiz Felipe Scolari, sacked on Monday, however.
The figures do represent another improvement after last year's losses of £74.8m, £80.2m the previous year, and record losses of £140 in 2004/2005.
Chelsea's wage bill remains comfortably the biggest in the Premier League at £148.5m 70.6% of their turnover. Manchester United' by contrast was £106m in 2006/7, 43.6% of turnover.
Chelsea owner Roman Abramovich has also reduced the debt the club owe to him personally by half, turning the £369.9m of his loans into shares in the club. It still means however that Chelsea owe him £339.8m as an interest-free loan.
Chelsea chairman Bruce Buck said he hoped the move by Abramovich would silence the doubters over the Russian's commitment to the club.
Buck said: ''Following the conversion of half of the interest-free loans into equity there should now be no doubt as to the owner's commitment to the club and the stability of the company's funding structure.
''We have always believed that this 'debt', now reduced by 50%, has been misrepresented. Chelsea has no external debt and makes no punitive interest payments to external funders.''