NFR - Football Financials

[White Noise]

http://www.telegraph.co.uk/sport/football/teams/chelsea/8436348/Chelsea-owner-Roman-Abramovich-counts-the-cost-of-European-failure-740-million-and-rising.html


Chelsea owner Roman Abramovich counts the cost of European failure: £740 million and rising

As Roman Abramovich ponders Chelsea's chances of overturning Wednesday night's 1-0 home defeat to Manchester United next week, it has emerged that the cost of the Russian's so-far fruitless pursuit of European glory has risen to almost £740 million.


Deep pockets: Roman Abramovich has spent a lot of money at Chelsea Photo: GETTY IMAGES By Paul Kelso, Chief Sports Reporter 6:30AM BST 08 Apr 2011
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Figures for Chelsea's holding company published on Thursday reveal that Abramovich's total loans to underwrite the football club had reached £739.5 million by the end of the 2009-10 season.

The loans are interest fee and repayable on demand within 18 months if Abramovich were to withdraw his support, though he shows no sign of walking away as long as his ambition to lift the European Cup is unfulfilled.

The scale of his remarkable personal investment has already increased further as a result of the £73 million January purchase of Fernando Torres and David Luiz, both bought to help secure Europe's premier competition in mind.

The accounts for Fordstam Limited, Chelsea's ultimate holding company, reveal that the oligarch was required to pour in a further £13 million last season even as the club won the Premier League and FA Cup Double and made a net loss of just £1 million on transfer business.

Despite last season's success, the club lost £70.9 million, up from £44 million in 2008-09, largely because of a wage bill of £172.5 million, which increased almost £20 million on the previous season and now accounts for 82 per cent of club turnover.

The revelation that Abramovich continues to make massive loans to Chelsea's holding company also puts the club's claim to be "debt-free" into context.

Since buying the club from Ken Bates in 2003 Abramovich had been lending money to the holding company, initially called Chelsea Limited but now renamed Fordstam Limited, which in turn passed it down the chain to the football club to fund his massive investment.

Last year the club announced that Abramovich had converted those loans, which then stood at £726 million, into equity to help the club deal with the looming challenge of Uefa's financial fair-play regulations.

In fact, as the latest accounts make clear, the loans were converted to shares at just one level of the complex company structure, Chelsea FC Plc.

At holding company level however, and another company in the group, loans remain, and grew by almost £13 million last year.

Intriguingly figures also published this week for a company that sits below Chelsea FC Plc, Chelsea FC Limited, show it has an outstanding inter-company loan from Fordstam of £545.3 million.

Fordstam Limited is at the top of a chain of companies that control the football club and the wider Stamford Bridge development project, and a Chelsea spokesman said yesterday that the £13 million increase in its debt to Abramovich was not attributable to core football activities.

The spokesman also stressed that the club owed no significant amounts to external parties beyond Abramovich, and that his loans were comparable to those a father might make to his children.

The latest figures underline the depth of Abramovich's commitment to funding Chelsea, and place the club's challenge in meeting Uefa's financial fair play regulations into sharp focus.

Former chief executive Peter Kenyon famously declared that Chelsea would break even by 2010 and the club have spent the last two years imposing a cost-cutting regime intended to make that process.

Having fallen woefully short of that target — and Abramovich's sanctioning of the £50 million purchase of Torres indicates his definition of cost-control is elastic in the extreme — the challenge now is to reduce losses so they do not breach Uefa's guidelines.

Financial fair-play requires clubs to break even over a three-year period starting in 2011-12. They will be allowed losses of £38.5 million in each of the first two seasons.

Chelsea are hopeful that an enhanced commercial programme, including the search for a £100 million naming rights deal, will help close the gap. With wages continuing to rise faster than revenue however the day is approaching when Abramovich may not be able to ease his on-field frustrations with ever-larger loans to the network of companies that control his pet project.

[AlFayedsChequebook]

This would be hilarious:

Chelsea win Champs League and while they are all celebrating, Abramovic calls in all his loans and flogs the club, sending them spiralling down the leagues.

[epsomraver]

http://news.bbc.co.uk/sport1/hi/football/9450671.stm I wonder how long it will take the accountants to find a way around it, more brown envelopes

[finnster01]

http://news.bbc.co.uk/sport1/hi/football/9450671.stm I wonder how long it will take the accountants to find a way around it, more brown envelopes

Good question. Accountants will have some good years ahead of them, and I am sure they'll find a way.

Incidentally, we technically have the same problem as Chelsea...

[jarv]

Yes, technically we do but not in the same park as the others which MUST make champions league. Realistically, for Fulham that is not on the radar. OK, Euro league is  but, again realistically, can Fulham repeat last season? probably not. As Alex ferguson said "Fulham's achievement in Europe is no doubt the best ever by any British team". As I said, can that be repeated? It would take a very large miracle, combined with a lot of luck.
Fulham's ambition? I think we will all be happy, stay in the division. Steady like an Everton. :tom: OK, not the best example but you know what I mean. :045:

[RidgeRider]

Yes, technically we do but not in the same park as the others which MUST make champions league. Realistically, for Fulham that is not on the radar. OK, Euro league is  but, again realistically, can Fulham repeat last season? probably not. As Alex ferguson said "Fulham's achievement in Europe is no doubt the best ever by any British team". As I said, can that be repeated? It would take a very large miracle, combined with a lot of luck.
Fulham's ambition? I think we will all be happy, stay in the division. Steady like an Everton. :tom: OK, not the best example but you know what I mean. :045:

Agreed Jarv.

I think the thing for me is the main theme which is £746M invested and no champions league trophies with a payroll that is north of £172M which will not claim them a Premier League title this year.

So, if you are a Chelsea fan and a football fan at the same time....how do you get ANY satisfaction from it?