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Abramovich writes off club's massive debt

Roman Abramovich has shown a sensational act of commitment to Chelsea by writing off the club's £340million debts.

The Blues have eased the threat from so-called 'financial fair play' rules after the Russian billionaire wiped out the interest-free loans he had given the club since taking over in 2003.

New chief executive Ron Gourlay insists the club are now on track to become self-sufficient and survive without the help of Abramovich after announcing much-reduced losses.

Chelsea's year-end financial figures show an annual loss of £44.4m - down from £65.7m last year - but it was confirmed that compensation payments to Luiz Felipe Scolari and three of his coaches cost an eye-watering £12.6m. Scolari was sacked in February, just seven months into a two-year contract.

Chairman Bruce Buck said: 'The club's debt load has been reduced almost to nil in order to provide more long-term stability for the club.
'The reduction will also enable the club to comply with any regulations on debt levels which are being discussed by the football community.'

Former chief executive Peter Kenyon last year admitted that the club would not meet a target to be self-sufficient by 2010, but after revealing the lastest figures, Gourlay said the club could eventually achieve the aim by keeping a tighter rein on spending.

'It is still our aim to be self-sufficient and we will achieve this by increasing our revenues as we continue to leverage off our brand,' said Gourlay. 'We are reducing our costs by controlling expenses, including salaries and wages.'

Abramovich, 43, last year wrote off a similar level of debt, but has now turned the rest of what Chelsea owe into shares. As the sole shareholder, it effectively means he has absorbed the debt.

Turnover was reduced from £213.1m last year to £206.4m, though the club said this was down to big sponsorship payments being paid up front last year rather than being staggered.

Net capital expenditure reduced from £85.1m to just £4.2m following the completion of major projects such as the Cobham training ground.
And cash outflow was dramatically reduced from £107.4m to £16.9m.

UEFA president Michel Platini has pushed a 'financial fair play' agenda after voicing converned by the levels of debt in English football.

European football's governing body still believe clubs should limit spending to a percentage of their income - Chelsea currently spend more - but the elimination of debt reduces the threat of any sanctions.

Clubs could be barred from the Champions League and Europa League if they do not satisfy UEFA, with former Belgian Prime Minister Jean-Luc Dehaene heading a panel to consider their rules.

Beefymcfc wrote:One question that springs out to me from that article is 'How Much Are Chelsea Worth?'. If RA has written off close to £700 million, would he recoup that if he sold the club? The mind boggles!!

On the same note, how much has Sheikh Mansour pumped into ours and how much are we now worth considering we don't own a stadium?

Socrates wrote:

Beefymcfc wrote:One question that springs out to me from that article is 'How Much Are Chelsea Worth?'. If RA has written off close to £700 million, would he recoup that if he sold the club? The mind boggles!!

On the same note, how much has Sheikh Mansour pumped into ours and how much are we now worth considering we don't own a stadium?

the stadium is on the balance sheet as an owned asset as we own a 250 year lease on it.

To answer the original post, as John says a gift now wouldn't help as the formula will be turnover minus non-capital expenditure other than that which relates to the academy.

Beefymcfc wrote:

Socrates wrote:

Beefymcfc wrote:One question that springs out to me from that article is 'How Much Are Chelsea Worth?'. If RA has written off close to £700 million, would he recoup that if he sold the club? The mind boggles!!

On the same note, how much has Sheikh Mansour pumped into ours and how much are we now worth considering we don't own a stadium?

the stadium is on the balance sheet as an owned asset as we own a 250 year lease on it.

To answer the original post, as John says a gift now wouldn't help as the formula will be turnover minus non-capital expenditure other than that which relates to the academy.

Cheers pal. Saying that then, the Chelsea balance sheet shows that they are not within the guidelines as of yet; possibly why they are not buying this January?

Socrates wrote:

Beefymcfc wrote:

Socrates wrote:

Beefymcfc wrote:One question that springs out to me from that article is 'How Much Are Chelsea Worth?'. If RA has written off close to £700 million, would he recoup that if he sold the club? The mind boggles!!

On the same note, how much has Sheikh Mansour pumped into ours and how much are we now worth considering we don't own a stadium?

the stadium is on the balance sheet as an owned asset as we own a 250 year lease on it.

To answer the original post, as John says a gift now wouldn't help as the formula will be turnover minus non-capital expenditure other than that which relates to the academy.

Cheers pal. Saying that then, the Chelsea balance sheet shows that they are not within the guidelines as of yet; possibly why they are not buying this January?

think he is trying to get the cost of borrowing out of the equation and has an eye on the wage bill ahead of Platini's plans...

Socrates wrote:

Beefymcfc wrote:One question that springs out to me from that article is 'How Much Are Chelsea Worth?'. If RA has written off close to £700 million, would he recoup that if he sold the club? The mind boggles!!

On the same note, how much has Sheikh Mansour pumped into ours and how much are we now worth considering we don't own a stadium?

the stadium is on the balance sheet as an owned asset as we own a 250 year lease on it.

To answer the original post, as John says a gift now wouldn't help as the formula will be turnover minus non-capital expenditure other than that which relates to the academy.

gillie wrote:What pisses me off about Platini's plans are that before we were taken over by the Sheikh he never voiced his alarm at clubs operating outside there means.It is so biased against us it's laughable really and no i dont think i am wrong in thinking it's anti City i know it's anti City the french bastard never raised this when the scum were going into the red by a cool billion only when we get taken over by one of the wealthiest men in the world.SHIT SCARED THE LOT OF THEM!

Beefymcfc wrote:

Socrates wrote:

Beefymcfc wrote:

Socrates wrote:

Beefymcfc wrote:One question that springs out to me from that article is 'How Much Are Chelsea Worth?'. If RA has written off close to £700 million, would he recoup that if he sold the club? The mind boggles!!

On the same note, how much has Sheikh Mansour pumped into ours and how much are we now worth considering we don't own a stadium?

the stadium is on the balance sheet as an owned asset as we own a 250 year lease on it.

To answer the original post, as John says a gift now wouldn't help as the formula will be turnover minus non-capital expenditure other than that which relates to the academy.

Cheers pal. Saying that then, the Chelsea balance sheet shows that they are not within the guidelines as of yet; possibly why they are not buying this January?

think he is trying to get the cost of borrowing out of the equation and has an eye on the wage bill ahead of Platini's plans...

Well if he is still 45 million shy of his total then he is going to have to cut his wage bill drastically, or cut staff. I can see quite a few of his big earners departing to other clubs who have a bigger revenue stream. They cannot really expand the ground from their current 41,000 and don't see them as a global force commercially, so this will always leave them in negative figures.

Another question that crops up is 'How do teams expand or build a new stadium without it being brought into account?'. Say Liverpool went ahead with plans to build their own as already proposed, which would put another 300 mil on the books and with them already have crippling debts, surely that would put them out of the running for a CL place due to unsubstainable debts? And that goes for any club as we all know that most run their clubs up to the hilt.

Sorry for boring people but I do find that there are many questions other than those already posed?

Socrates wrote:

Beefymcfc wrote:
Sorry for boring people but I do find that there are many questions other than those already posed?

People who find this boring don't need to read it but it is the biggest singleissue facing our club and is something those with a brain cannot ignore. Debt in itself does not seem to form part of the equation, as long as it is from commercial sources and is successfully serviced from the turnover. Ground redevelopment would not count either as it is capital expenditure. Two things a rich owner can still do if these proposals come to fruition are 1) develop their ground and 2) spend as much as they like on their Academy.

MANCIO4EVER wrote:

Socrates wrote:

Beefymcfc wrote:
Sorry for boring people but I do find that there are many questions other than those already posed?

People who find this boring don't need to read it but it is the biggest singleissue facing our club and is something those with a brain cannot ignore. Debt in itself does not seem to form part of the equation, as long as it is from commercial sources and is successfully serviced from the turnover. Ground redevelopment would not count either as it is capital expenditure. Two things a rich owner can still do if these proposals come to fruition are 1) develop their ground and 2) spend as much as they like on their Academy.

Socrates, Pal:
as I totally agree that financial regulation is the biggest issue, what do U think about my above opinion.
It's definitely pointless from a technical point of view and quite cynical, I Iagree in advance on.
But providing that i'm steadily convinced of that, what's your expert's opinion about.
thanks.

Ted Hughes wrote:Be interesting to see how they enforce it. Sooner or later, someone very very big is going to find themselves on the wrong end of this if it comes to fruition & there'll be hell to pay. I expect Platini will be quietly removed before then.

Socrates wrote:

Ted Hughes wrote:Be interesting to see how they enforce it. Sooner or later, someone very very big is going to find themselves on the wrong end of this if it comes to fruition & there'll be hell to pay. I expect Platini will be quietly removed before then.

It's the very, very big people behind this, Platini is just a figurehead...

john68 wrote:The major problem that UeFA have, is that it is the cartel clubs, their financial interests and their hegemony that are pushing this.
It effectively stops new money coming through and competing with them and cements their position as the main recipients of the very big bucks.

Remember it was the cartel's threat to break away from the European Cup some years ago that led to the present design of the CL. The financial restructuring has handed thr rags approx £350M (possibly more) over recent years and has guaranteed them a place in the competition....UNTIL THE LIKES OF CITY CAME ALONG.
They see City and any clubs like us as a threat to their position and need to stop us.