mancs and chelsea collectively 1.5 billion in debt

[Stevie H]

abramovich could ask for his money back if they lose tomorrow night.

 

Chelsea and United debts at record £1.5bnNew accounts show London club owe £736m

Abramovich has loaned - not donated - his money

David Conn The Guardian, Tuesday May 20 2008

http://www.guardian.co.uk/football/2008/ma...rleague.chelsea

 

Chelsea and Manchester United, the Premier League's two representatives in tomorrow's Champions League final, owe creditors £1.5bn between them. According to the latest accounts of Chelsea Limited, the company which owns the football club, Chelsea owed £736m to all its creditors. United's accounts, also recently filed at Companies House, showed total creditors at £764m. Those unprecedented figures will fuel concern that at this time of English football's greatest club triumph its clubs are carrying too much debt.

 

Covering the year to June 30, 2007, Chelsea's accounts show that the club's largest creditor was the owner himself, Roman Abramovich, who had poured £578m into the club, not as a donation but as an interest-free loan. As stated by the chief executive, Peter Kenyon, in February, Chelsea did not owe "external debt" to any bank.

 

However, with Abramovich's £578m loan, introduced to sign players and pay wages since he bought the club in 2003, plus general amounts owed, taxes and some categories listed among creditors for formal accounting purposes, Chelsea's creditors stood at £736m in total.

 

Chelsea's director of communications, Simon Greenberg, confirmed that the £578m, described in the accounts as "Other loan", is indeed the loan from Abramovich. Greenberg reiterated that Chelsea has no "external debt" and pointed out that the creditors included season-ticket holders for 2007-08, whose money has technically to be treated as owed until the season is over, "and other normal operating creditors". The figure also included £36.3m still owed on a Eurobond taken out by Chelsea's previous owner, Ken Bates, in 1997. That, the last of Chelsea's "external debt", was then repaid last December.

 

Kenyon released headline figures from these accounts in February, highlighting that the club made a record turnover, £190.5m, and that its losses were down from £80.2m in 2005-06 to £75.8m last year. Kenyon said then that the club was in a healthy financial position, still aiming to break even by 2009-10, partly because it did not owe money to outside creditors and retained Abramovich's support. "With the company being external debt free and our ownership clearly demonstrating continuing commitment to the long term," Kenyon said, "I am very confident about the future."

 

United's accounts showed the club's total creditors at £764m. United does have "external debt" - £666m owed to financial institutions, including £152m to hedge funds - taken on by the Glazer family when they bought the club in 2005, then loaded on to United itself. While United's loans incurred interest of £81m last year, the loan to Chelsea by Abramovich is interest-free. Abramovich has funded Chelsea's extraordinary acquisition of stars and, although transfers showed a profit last year, he continued to allow Chelsea to be run at a substantial loss.

 

Kenyon's role is to transform Chelsea into a club which can survive on its own earnings. In February he acknowledged it was an "ambitious" target to aim to be self-financing by 2009-10 but the accounts bear out commercial progress in all areas. Having finished runners-up in the Premier League, won the FA Cup and League Cup and reached the Champions League semi-final, the club's sponsorship, match-day and media income all increased to push total turnover 25% up.

 

However, there is no doubt that the club remains wholly reliant on Abramovich's continued funding. Chelsea's chairman, Bruce Buck, has stressed that Abramovich "loves football" and will not "walk away" from Chelsea.

 

If the owner's enthusiasm were ever to wane, and Abramovich decided he did want his loan back, the accounts show that Chelsea would have 18 months to find the money.

[Spike]

Why did Abramovich loan them the money? He owns the club does he not or is the repayment some money laundering front of sorts?

[Eskimo]

Why did Abramovich loan them the money? He owns the club does he not or is the repayment some money laundering front of sorts?

 

I'd imagine, should he come to sell at any stage, he will want his money back.

[floyd]

And people say we rely too much on Gerrard and Torres.

Edited May 20, 2008 by floyd

[Andy @ Allerton]

£666M owed by the Mancs.

 

Why doesn't that figure suprise me? The 'Red Devils' and all that...

 

Hmmm..

[ManxRed]

Just for perspective, how much in debt are we?

[johngibo YPC]

I'd imagine, should he come to sell at any stage, he will want his money back.

 

Within 18 months as well!

[Eskimo]

Within 18 months as well!

 

eh?

[R A Softlad]

Chelsea and Manchester United are each struggling to sell-out their allocation of tickets for the Moscow showpiece, despite the Luzhniki stadium's capacity being reduced to 69,500 from 85,000. (Times)

[Cobs]

sounds unlikely

[Tyler]

sounds unlikely unless its due to visa problems

 

uefa are a joke

why organise a european final in a country where eu citizens have to get a visa to enter

only reason is money

 

platini won't mention that though will he when he pontificates

[johngibo YPC]

eh?

 

"If the owner's enthusiasm were ever to wane, and Abramovich decided he did want his loan back, the accounts show that Chelsea would have 18 months to find the money."

 

Not alot of time to come up with £500m is it?

[Gomez]

sounds unlikely

Why? I know quite a few Liverpool fans who'd normally go but said they wouldn't go to Moscow if it was against the mancs.

[Cobs]

Why? I know quite a few Liverpool fans who'd normally go but said they wouldn't go to Moscow if it was against the mancs.

triffic

[Sir Tokyo Sexwale]

the pitch is f***ed too

[Eskimo]

sounds unlikely

 

BBC reported this morning that plenty of tickets were still available.

[Eskimo]

"If the owner's enthusiasm were ever to wane, and Abramovich decided he did want his loan back, the accounts show that Chelsea would have 18 months to find the money."

 

Not alot of time to come up with £500m is it?

 

 

Learn me to read the entire article

[Guy_Incognito]

sounds unlikely

 

I work in Manc and there are s***loads of Glams here, including quite a few matchgoers. There are a total of 4 people going from here, including 2 of the senior partners who don't even like football. AND all 4 are women. Not that it matters, just building a picture.

 

Liverpool fans here are outnumbered by about 3 to 1, but there were 3 people from here who were at Istanbul. And I know that it cost me a similar amount to get there as I've heard quoted to the Man U fans.

 

Essentially, they're just all w*** fans, and being able to point this out to them has made the last couple of days at least bearable, cos it really did threaten not to be a couple of weeks back.

[R A Softlad]

There are a total of 4 people going from here, including 2 of the senior partners who don't even like football. AND all 4 are women. Not that it matters, just building a picture.

 

Tell them Beckham left Man U and they'll be on eBay soon enough.

[Tyler]

have all the predictions of trouble just been hype

[Guest Kaizer]

have all the predictions of trouble just been hype

 

There is no one there.

[growler]

I think its more so that if he decides to sell the club, he gets his money back. If chelsea were to be sold today, he would not get the value to cover his debt, therefore, put the debt on the club, and whoever buys it, has to pay him back.

 

I wonder what the structure at Newcastle, Villa and Man City is too?

[RaoulD]

Abramovich's investment in the company has to be recorded somehow. Unless you get something in return i.e shares, the money will be shown as a debt owed by the company. The problem for Chelsea is that they are operating on credit which they could not afford without Abramovich's money. If anything happened to Abramovich they are in trouble as it is likely that his estate would call in the loans. The debt also makes Chelsea an unattractve proposition for potential buyers and they may have difficulty selling players who currently earn high salaries. Unlted on the other hand have the asset base to service their debt and would be an attractive proposition to other investors should the Glazer family decide or be forced to sell.

 

If Chelsea were to win the Champions League I suspect that Abramovich will lose interest to the extent that he will not want to put more money in rather than call in the loans. Chelsea will then have to operate in the same way as everyone else and will probably drop out of the so-called Big Four as they have huge problems in generating sufficient revenue due to the limitations of their stadium and a much smaller fanbase than the others.