I think a good man manager can keep a tight-knit squad of players happy, more than 11 (but that is just my opinion). I think Pep worked out smaller squads are better for harmony and that's why he has a core of about 18-19 high quality players generally. He was the same at Barca.
Alternatively, look at United - they stockpile garbage and have about 30 players usually and there's always in-fighting.
Chelsea though are on a different level entirely. With that many players, all that chaos, all that turnover from season to season (managerial and playing staff) how can you ever build a cohesive system and create chemistry with your team-mates?
It's easy for us looking in as fans from the outside, to say they're playing poorly and they're rubbish. But think about if you were in that environment - you'd be very happy with your wage packed sure, but from a playing perspective you'd be at best indifferent and at worst demoralised.