Chelsea have recorded a loss of £96.6 million for the year ending June 30, according to the Premier League club's latest financial results released on Tuesday.
After two profitable years, Chelsea insisted they are still compliant with UEFA's Financial Fair Play regulations.
The club cited a lack of Champions League football, costs associated with changing manager and a record outlay on players Kepa Arrizabalaga, Christian Pulisic, Mateo Kovacic and Jorginho for the loss.
Turnover grew slightly to £446.7 million.
"Consistent revenue growth and careful financial management over recent seasons has allowed the club to make significant levels of investment in the playing staff whilst maintaining compliance with UEFA Financial Fair Play regulations," Chelsea chairman Bruce Buck said on chelseafc.