Chelsea

[jimmylibel]

Chelsea owner Roman Abramovich has no intention of walking away from Stamford Bridge, with the reassurance coming on the morning the club revealed losses of £80.2million for the year ended June 2006.

 

The club's director of public affairs Simon Greenberg has moved to quell fears with regards Abramovich's future, following the billionaire's non-appearance at Chelsea games in recent weeks, amidst talk of a spat with manager Jose Mourinho.

 

Although Greenberg believes the confirmed losses do need to be reduced, he is confident that costs being cut by 42.9 per cent indicates the club are heading in the right direction, of the opinion they are still on course for their long-term plan to break even by 2010.

 

While Abramovich has ploughed £500million of his personal fortune into the club and in the process made them perhaps the biggest player in the global transfer market, Greenberg has intimated that the idea is turn Chelsea's policy from buying big, into one of nurturing young talent of their own.

 

"No, I do not think it is success," he told Radio 4. "It is moving in the right direction, reducing losses and increasing major income streams.

 

"Our turnover was up and football activities increased income by 6.6 per cent.

 

"It matters to him (Abramovich) and it matters to us as we have an ambitious and challenging target of breaking even by June 2012. We are on track or at least hope to get very near to it.

 

"We are not spending as much as we used to do on wages and they are more manageable. We are not spending as much on players, wages are down by 2 per cent. We think that has become more stable and as revenues grow the business will become more successful."

 

Greenberg insisted that Abramovich remains entirely committed to Chelsea's cause, explaining his absence from games in recent weeks was due to other business commitments.

 

"He has a lot of business to attend to," he added. "Mr Abramovich made his views clear about transfer policy and investing in the academy.

 

"You can never say never [that Chelsea would not buy a £20million player] but that would be an exception.

 

"We would hope not to have to go to that level and that our academy would bear fruit in the near future."

 

In summary, Chelsea reduced losses by £60million to the year ended June 30, 2006. Losses were reduced by 42.9 per cent from £140.4million (2004-05) to £80.2million (2005-06), while turnover increased by 2.3 per cent from £146.6million (2004-05) to £150million (2005-06).

 

Merchandising increased by 44 per cent from £7.7million to £11.1million, and football activities increased by 6.3 per cent from £122.7million to £130.4million.

 

Link

[johngibo YPC]

I think 2010 is when they 'break even'

[Stevie H]

gary richardson interviewed that greenberg chap on radio 4 this morning and gave him the easiest ride ever. it was like peter o'hanrahahanrahan on the day today.

 

"so you're moving in the right direction are you with the loss down to just £80m?"

 

"oh yes, no problems here. we're doing just fine thank you"

 

"so no problems at all if roman abramovich deceided to walk away then?"

 

"none whatsoever. nothing to see here. move along".

 

"that's great, back to you in the studio chris".

[Guy_Incognito]

YOU'VE LOST THE NEWS!!!!

[Roscoe]

richardson is like alan partridge without the journalistic instinct.

[L19red]

same on radio 5. Nicky Campbell asked him what would happen if Roman left, and he let him get away with some glip comment about there being loads of buyers for a club like chelsea.

[fyds]

same on radio 5. Nicky Campbell asked him what would happen if Roman left, and he let him get away with some glip comment about there being loads of buyers for a club like chelsea.

Not with a total of around £560m debt and a wage bill that would cripple a nationalised industry, there isn't. I have a sneaky that Abramovich is already eyeing an exit strategy.

[Rimbeux]

Not with a total of around £560m debt and a wage bill that would cripple a nationalised industry, there isn't. I have a sneaky that Abramovich is already eyeing an exit strategy.

 

 

That's a fair point, because I'm of the opinion that he's not been picking up the tab, just borrowing large amounts to cover it all. Having said that, they're due to get about another £10m per year from sponsors kicking in, add in new tv money also. If they don't carry on buying as they have done, and dont renew one or two of the top earners, they may well have a break even year in 2010.

[fyds]

That's a fair point, because I'm of the opinion that he's not been picking up the tab, just borrowing large amounts to cover it all. Having said that, they're due to get about another £10m per year from sponsors kicking in, add in new tv money also. If they don't carry on buying as they have done, and dont renew one or two of the top earners, they may well have a break even year in 2010.

If they rake in £50m+ profit per year with no new signings or outgoings, it would still take them 11 years and 3 months to break even, not counting any interest they may have to pay or new ground or improvements to Stamford beach if as you say, he's been borrowing rather than spending his own. So if they're lucky, roundabout summer 2019 then.

 

Not very likely is it?

[richt71]

If they rake in £50m+ profit per year with no new signings or outgoings, it would still take them 11 years and 3 months to break even, not counting any interest they may have to pay or new ground or improvements to Stamford beach if as you say, he's been borrowing rather than spending his own. So if they're lucky, roundabout summer 2019 then.

 

Not very likely is it?

 

Sky are showing an interview with Kenyon today. He's saying how much better their finances are as they've reduced the loss of £140m the year before to 'only' £80m last year. The interview was done in front of chelsea's 'trophy cabinet'....a shelf!

[Cobs]

Not with a total of around £560m debt and a wage bill that would cripple a nationalised industry, there isn't. I have a sneaky that Abramovich is already eyeing an exit strategy.

and how does Abramovich just walk away owing that sort of money ?

 

 

I reckon he needs to spend big money at Chelsea to launder for tax purposes

[Kahnee]

and how does Abramovich just walk away owing that sort of money ?

 

Very slowly, smiling, and while facing all those he's leaving to clear up the mess

 

I reckon he needs to spend big money at Chelsea to launder for tax purposes

 

Have thought the same for a while. Thought it was odd that he didn't buy a player from Russia this January. Are the authorities over there starting to take more of an interest? Or is it all clean now?

[Coyler]

Chelsea will self-implode and Ferguson will claim for the next ten years that he knocked them off their perch.

[surf]

If they rake in £50m+ profit per year with no new signings or outgoings, it would still take them 11 years and 3 months to break even, not counting any interest they may have to pay or new ground or improvements to Stamford beach if as you say, he's been borrowing rather than spending his own. So if they're lucky, roundabout summer 2019 then.

 

Not very likely is it?

 

Yeah but that wouldn't look good, so what you do is change the definition of ' break-even' . It's now not about when you actually break even (i.e. recouping your investment), but when you stop making a loss each year.

 

Then you break-even in 2010 and you're a financial genius for doing it so quickly.

[Earl Hafler]

I think 2010 is when they 'break even'

 

Kenyon's original claim was 2009

[Rimbeux]

If they rake in £50m+ profit per year with no new signings or outgoings, it would still take them 11 years and 3 months to break even, not counting any interest they may have to pay or new ground or improvements to Stamford beach if as you say, he's been borrowing rather than spending his own. So if they're lucky, roundabout summer 2019 then.

 

Not very likely is it?

 

 

Yeah but that wouldn't look good, so what you do is change the definition of ' break-even' . It's now not about when you actually break even (i.e. recouping your investment), but when you stop making a loss each year.

 

Then you break-even in 2010 and you're a financial genius for doing it so quickly.

 

Exactly, the claim is not to have no debt, but to have a no loss year in 2010, and I think they could do it.

[surf]

That's easy though, stop spending £100m on new players a year and they're there.

[fyds]

That's easy though, stop spending £100m on new players a year and they're there.

Trouble is they keep updating the already astronomical wages of the players they've got.

 

Yeah but that wouldn't look good, so what you do is change the definition of ' break-even' . It's now not about when you actually break even (i.e. recouping your investment), but when you stop making a loss each year.

 

Then you break-even in 2010 and you're a financial genius for doing it so quickly.

They can change the definition anyway they like - but anyone looking at the books will know different.

[liverbird04]

A 2 per cent decrease in the wages they pay out didn't sound to me like the biggest reduction ever considering they are paying the likes of ballack and sheva about 130 grand each for example.

[Ed the Wool]

If he does go, they'll go bankrupt. Simple as. Out of the league with them.

I'll love it.

[Tim]

Trouble is they keep updating the already astronomical wages of the players they've got.

They can change the definition anyway they like - but anyone looking at the books will know different.

 

All they will do is do what the mancs are now doing, quoting the EBITDA figure.

 

There are 3 items that are included in their figures this year that won't improve the books next year. The saving of the £25.5m charge for cancelling the umbro contract, the £13m charge for cancelling the contract of Mutu, and the £4m to £5m increase in shirt sponsorship. That there is £42.5m of the reduction in loss.

 

The new tv deal won't go through their books until 2007-08 season so next year won't be a significant improvement bar the adidas deal that adds about £7m to £9m to their revenues. But then this will be offset by the £4m a year amortisation of Mikel, and £7m amortisation of Schevchenko's transfer fee. They may reduce their losses again next year but I suspect it won't be by much. If you compare this years figures to the accounts from 2003-04 they have only cut their losses by £7m. The next tv deal will help to shave off about £15m but they still then have about £50m to £60m to find.

 

There are only a few ways that would occur.

 

1. They don't spend any more money on new players. Unlikely

 

2. They renew the contracts of all players who cost alot of money thus reducing the amortisation charge through the P&L, although this would increase the wage bill and won't really help cashflow.

 

3. They change accounting/estimation methods. Very unlikely.

[Sir Tokyo Sexwale]

The wedge he's ploughed into Chelsea is absolutely buttons to him. He can walk away & leave it ticking over. It's not like he has to sell, unless he wants to buy another club

[growler]

Personally, I see this as worrying. By spending big upfront, they have invested in infrastructure and are finding new ways of increasing the top line.

 

Creative ways are:

 

1. chinese web site and focus

2. Bollywood movie

3. working WITH youtube

4. Discussions with Disney

 

not to mention sorting out deals with adidas and samsung and seeing their shirts everywhere.

 

As much as we hate them, and hope they fail, I can't see it. I can see them turning it around, and making the business a 'going concern' by 2010.

 

The 500mil debt or whatever it is, is not much different to the debt at man u now is it? and if their commercialisation goes according to plan (like it looks like it will) then by 2010, they will have a juggernaught with a european cup win and big names, with a huge pool of youth players breaking through.

 

Frankly, we need to look at them as a real threat. the 'IFs' around the dodgy russian are just that. Ifs. He isn't leaving anytime soon.

[jimmylibel]

Personally, I see this as worrying. By spending big upfront, they have invested in infrastructure and are finding new ways of increasing the top line.

 

Creative ways are:

 

1. chinese web site and focus

2. Bollywood movie

3. working WITH youtube

4. Discussions with Disney

 

not to mention sorting out deals with adidas and samsung and seeing their shirts everywhere.

 

As much as we hate them, and hope they fail, I can't see it. I can see them turning it around, and making the business a 'going concern' by 2010.

 

The 500mil debt or whatever it is, is not much different to the debt at man u now is it? and if their commercialisation goes according to plan (like it looks like it will) then by 2010, they will have a juggernaught with a european cup win and big names, with a huge pool of youth players breaking through.

 

Frankly, we need to look at them as a real threat. the 'IFs' around the dodgy russian are just that. Ifs. He isn't leaving anytime soon.

 

If they can do that with their fanbase imagine how much we could be raking in with ours?

[Tim]

The 500mil debt or whatever it is, is not much different to the debt at man u now is it? and if their commercialisation goes according to plan (like it looks like it will) then by 2010, they will have a juggernaught with a european cup win and big names, with a huge pool of youth players breaking through.

 

Frankly, we need to look at them as a real threat. the 'IFs' around the dodgy russian are just that. Ifs. He isn't leaving anytime soon.

 

But Glazer took over a club that was making profits year on year consistently. In terms of getting to a break even level they don't have that much to do compared to Chelsea.

 

Also they are going to have to replace, or renew contracts of, their players. That is going to cost them a fortune either with increased wages or high transfer fees. The only way I can really see them breaking even the next few years is them reporting EBITDA as the mancs did. £80m is alot to make up in 3 years (especially since over the last 2 their losses only dropped by £7m).