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Some were surprised that Hereford United FC won the Champions League three times running. But once the club had received the initial cash injection, their journey through the divisions and into Europe was relatively straightforward for their inexperienced manager.

Things only went wrong when the success became so unrelenting that the manager grew bored. Then he had to stop to do his homework. And when the hard drive on his computer crashed, he lost everything.

All this only happened to a 13-year-old neighbour of ours, playing a game called Total Club Manager, and the analogy with Chelsea FC and the reign of Roman Abramovich and Jose Mourinho is not precise. But you might recognise one or two similarities.

Of the two big Premiership matches played this week, the one between Arsenal and Manchester United was infinitely more thrilling than Chelsea's mundane, but perhaps crucial, win at Blackburn Rovers. But the excitement at Highbury was born of desperation: the hatred between the teams and the glory of the football sprang from the same womb.

Arsène Wenger and Sir Alex Ferguson are whipping themselves and their charges into a frenzy of loathing for each other because they are both in the same boat, and they know it. They are terrified that nothing they do, nothing they spend, can enable their clubs to compete with the juggernaut that is Abramovich's Chelsea.

It is faintly absurd to talk of football's economy being distorted - on a par with that phrase about "bringing the game into disrepute". But within the past week some staggering figures have emerged showing the effect of the Chelsea phenomenon on the English game.

According to a report by accountants Deloitte & Touche, the £260m Chelsea have spent since Abramovich bought the club 18 months ago accounts for 40 per cent of the total transfer layout of the 20 Premiership clubs.

Chelsea themselves lost nearly £88m in the year to May 2004, dwarfing the previous record loss set by Leeds in 2003. When rumours started that Chelsea had lost £50m, the club said that figure was completely false, which was true but only because the actual loss was so much greater. Normally, one might use a word like "worse" at this point, but this does not figure in the club's current thinking.

Chelsea are even considering playing, by choice, without a shirt sponsor next season, a notion calculated to make rival football executives feel fainter still.

Peter Kenyon, the club's chief executive, is not talking of moving towards an operating profit until 2009-2010 at the earliest. And analysts think this may be optimistic, even if Chelsea achieve their promised dominance of English football and qualify for the Champions League every year. The £115m interest-free loan from Abramovich himself is excluded from the calculations. Kenyon (himself paid £3.5m a year, more than six times as much as any of his Premiership counterparts) can announce all this quite blandly.

I suppose the British public might take a dim view if the revenues from North Sea oil had been spent propelling Moscow Dynamo to the Russian League title. But we will leave aside the morality of whether the mineral wealth beneath the Siberian wastes (which used to belong to the glorious peoples of the Soviet Union rather than Abramovich) might have been better spent nearer to home and on some worthier cause than the improvement of a London football club.

Is this good for English football? In the short run, Chelsea's rise has broken up what was turning into an irritating Arsenal-Manchester United duopoly. But football leagues (look at Scotland, look at Spain) can get along OK with duopolies. A monopoly, however, is a disaster.

Everyone else in the Premiership has to operate on some kind of business footing, and the terror stalking Highbury and Old Trafford is that Chelsea will be immune from financial discipline forever.

But maybe Herb Stein's law is helpful here: "If something can't go on forever, it won't." Russian oligarchs do come croppers. And when that happens, the real-life equivalent of the fate that ended Hereford United's reign as European champions may well befall Chelsea.

It is hard to be certain what long-term protection may lie behind the club's bizarre imbalance sheet. But the fall could yet be as spectacular as the rise. (There is a small warning lurking near the very cellar of the Football League right now: Rushden & Diamonds, the overgrown village club who rose without trace until their benefactor's pockets became shallower.)

Lord knows what the late Ted Drake, the man who guided Chelsea to their only League championship precisely half a century ago, would have made of Stamford Bridge now. He splashed out all of £11,000 on the Newcastle United centre-forward Roy Bentley to complete his squad.

The last straw might have been the sight of the team removing their shirts to celebrate victory at Blackburn on Wednesday and standing half-naked on a Lancashire winter night. I bet Drake's players never shaved their chest hair.

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