Chelsea Football Club chief executive Peter Kenyon says the club must sell to fund transfers despite announcing record turnover and a reduced debt.

The Stamford Bridge side have reduced their annual losses by 12.2 per cent to £65.7 million, with £23 million spent on compensation packages to Jose Mourinho, Avram Grant and other coaches.

The losses do not take into account the likely pay-off for recently sacked manager Luiz Felipe Scolari, with reports suggesting he could receive around £7.5 million despite having only managed the club for seven months

And while the club announced record group turnover of £213 million for the financial year ending June 2008, its transfer policy is still based on self-sufficiency, Kenyon explained.

“We have consistently advocated the aim of self-sufficiency which has always been supported by the owner [Roman Abramovich],” he said.

“We are hopeful of being close to these targets in the timeframes 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 restructuring in the summer will be funded predominantly by sales as we have consistently reduced our net transfer spend over the last five years and will attempt to continue this trend.”

Abramovich is believed to have invested around £710 million in the Blues and recently converted half of his investment from interest-free loans into shares, to demonstrate his continuing commitment to the club.

However, as the club aims to reduce its debts, any summer purchases would be offset by the sale of current squad members, with Didier Drogba, Florent Malouda and Alex the most likely to leave Stamford Bridge.