Chelsea lose £140 million

[Lord Bracknell]

From the BBC:-


Chelsea make record £140m losses


Chelsea have recorded losses of £140m, the biggest in football history.

It was a severe increase from the £88m loss they made last year, with the Blues citing a 'series of exceptional one-off items' behind the rise.

"These figures reflect the continuing restructuring of the business which we began in 2003-4," Chelsea chief Peter Kenyon told the club website.

"The rise is down to some exceptional items that were necessary to help us in our aim to break-even by 2009-10."

The termination of a deal with Umbro, which cost £25.5m, plus a total loss of £22.8m over the transfers of Adrian Mutu and Juan Sebastien Veron and the £5m for Academy recruitment were picked out as the "exceptional items".

Kenyon added: "We terminated the Umbro contract which had a huge impact on these figures, but we have not yet seen any of the financial benefit of our new adidas contract.

"Similarly these figures do not include any of the monies from our new sponsorship deal with Samsung, which was the biggest in Premiership history."

Chelsea have used Roman Abramovich's fortunes to fund a transfer spend of nearly £265m which helped them win their first domestic league title for 50 years when they won the Premiership last season.

 

[1066gull]

The only way is DOWN for Chelski.

A warning to Pompey too.

 

[Everest]

They should be more bloody careful.

 

[Pavilionaire]

I would say that level of debt is out of control.

 

[Les Biehn]

Its not debt though is it? Surely Roman is funding it and I'm pretty sure he has enough to cover it.

 

[Lammy]

Its not debt though is it? Surely Roman is funding it and I'm pretty sure he has enough to cover it.

It is Chelsea's debt not Roman's. If he walked away he would be under no obligation to bail them out. Chelsea is Roman's 'play thing' at the moment. When he gets bored he will move onto something new. If they're lucky he'll do this when the club are solvent. If not.......

 

[Les Biehn]

It is Chelsea's debt not Roman's. If he walked away he would be under no obligation to bail them out. Chelsea is Roman's 'play thing' at the moment. When he gets bored he will move onto something new. If they're lucky he'll do this when the club are solvent. If not.......

But if they have borrowed all this money he must have given the lenders assurances that he would be around to see it through. After Leeds surely no one would be that stupid. Stupid yes, but not that stupid.

 

[Infernal Optimist]

This is why everybody else in the PL may as well pack up and go home. Nobody else in this country could stand even half that kind of loss in one season let alone £228m in the last two years.

If the FA had any guts they'd step in and do something about it, but that will never happen.

 

[Pavilionaire]

Chelsea owe him the money he has injected in in the form of a directors loan.

The problem is that their turnover will not be sufficient to pay players wages and service any external bank loan.

They've paid pretty much over the odds for anyone they've signed under Abramovich, meaning that anyone they sell they'll be making a huge loss on, a la Veron and Mutu.

Fortunately for Chelsea there are 4 Champions League places, so if things did go tits up and Arsenal, Man Utd and Liverpool got ahead of them in the future they'd still be OK. Unless someone like Spurs, Newcastle or Villa got their act together...

 

[Easy 10]

I would be "uncomfortable" with these figures.
No-one really knows anything about Abramovich. Everythings been sweetness and light so far, money is clearly no object. BUT, if he gets bored, or if something catastrophic happens in one of his businesses which leads him to pulling out of Chelsea...boy oh boy they'd go down faster than a crack whore in Croydon.

 

[Pavilionaire]

I don't see how Chelsea could ever pay Abramovich back.

Turnover = wages plus debt servicing. If they sold the players they've bought they'd be lucky to get 2/3rd of their money back, the ground only holds 40,000 and it would cost too much to relocate like Arsenal.

The best they could hope for would be a sale and lease back on Stamford Bridge or persuade the FA to let them play at Wembley.

 

[Lammy]

But if they have borrowed all this money he must have given the lenders assurances that he would be around to see it through. After Leeds surely no one would be that stupid. Stupid yes, but not that stupid.

I'm afraid they would.

The loan will be secured mainly against the clubs assest. i.e. Prime development space in Fulham! Not to mention a shed load of multimillion pound players. They have a far bigger net worth than Leeds simply due to location. The loan would alo be based on a sound busines plan. i.e. we're going to spend £500m over the next 4 years. We intend to be up and running by 2009 and the debt will be cleared by 2020 etc.

It's a can't lose situation for the lenders. The very last place they would go for money is Romans' personal wealth. It's akin to the ITV digital fiasco. The owning company has no responsibility to the debt. In the eyes of the law a company is treated the same as a person.

 

[Lammy]

I don't see how Chelsea could ever pay Abramovich back.

Turnover = wages plus debt servicing. If they sold the players they've bought they'd be lucky to get 2/3rd of their money back, the ground only holds 40,000 and it would cost too much to relocate like Arsenal.

The best they could hope for would be a sale and lease back on Stamford Bridge or persuade the FA to let them play at Wembley.

The real money comes from a world wide fan base lappig up all the merchandise. The bigger the fan base the higher you can charge for shirt space.

With the exception of corporate hospiatality, bums on seats is a very small consideration.

 

[Billy in Bristol]

Should we offer them our share of the Leon money

Looks like they need the £37,500 as much as we do!

They spent £5 million on Academy Recruitment, which must have been for Fame Academy considering we dumped them out of the Youth Cup.

 

[Pavilionaire]

Chelsea have very little global support at present because they're a johnny come lately team without the history of a Man Utd, Arsenal or Liverpool.

Chelsea are better off buying global stars like Rooney, Ronaldinho, Henry who will enhance their global brand than spunking £27 million on Shaun Wright Phillips.

 

[Gritt23]

I'm afraid they would.

The loan will be secured mainly against the clubs assest. i.e. Prime development space in Fulham! Not to mention a shed load of multimillion pound players. They have a far bigger net worth than Leeds simply due to location. The loan would alo be based on a sound busines plan. i.e. we're going to spend £500m over the next 4 years. We intend to be up and running by 2009 and the debt will be cleared by 2020 etc.

It's a can't lose situation for the lenders. The very last place they would go for money is Romans' personal wealth. It's akin to the ITV digital fiasco. The owning company has no responsibility to the debt. In the eyes of the law a company is treated the same as a person.

I doubt they have much in the way of loans with banks etc. Roman is bankrolling these losses. As has been mentioned, this has probably been accounted for as a "Directors Loan", but there is simply no way he would ever be able to call in that sort of loan amount, and nor would he ever want (or need to).

Having said that I would feel uncomfortable with this situation as a Chelsea fan because the possibility exists, and he would be perfectly entitled to for a legal stand point. The reality is that they wouldn't be able to pay him back, even with the sale of the land, as the "Director's Loan Account" must be astronomical by now.

 

[Storer68]

"The loan will be secured mainly against the clubs assest. i.e. Prime development space in Fulham! Not to mention a shed load of multimillion pound players. They have a far bigger net worth than Leeds simply due to location. The loan would alo be based on a sound busines plan. i.e. we're going to spend £500m over the next 4 years. We intend to be up and running by 2009 and the debt will be cleared by 2020 etc"

but that is owned by Chelseaa village which is totally seperate from Chelsea FC


I wonder how much of Chelsea FC Abramovich has a stake in, as opposed to Chelsea Village.

All abramovich bought was the debt that matthew harding was unable to service.

 

[Gritt23]

Chelsea did at one point sell the pitch to a fans group to prevent the club from ever moving away from Stamford Bridge.

What happened to that agreement, does anyone know if it's still in place?

 

[dcseagull]

The real money comes from a world wide fan base lappig up all the merchandise. The bigger the fan base the higher you can charge for shirt space.

With the exception of corporate hospiatality, bums on seats is a very small consideration.

No, the real money has come from all the Russian workers that Abramavoich conned out of shares in newly privatised companies following the collapse of the old Soviet Union. Allegedly.

 

[Le Premier Cru]

There it was, just tucked down the side of the sofa.

I had a kind of feeling that it wasn't mine - surely I'd remember something like £140M.