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richard

Chelsea Finances Thread

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I agree Neath blue Peter Kenyon is doing a great job for us My Arsenal mates are sick with jealousy they are now admitting that we will be the biggest and best club in England .

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Evening Standard may have got this right, because they got information about our deal with Adidas right. And it won't surprise me, the profits we've made can in no way keep up with our spending and now massive wage bill.

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Kal   

"I agree Neath blue Peter Kenyon is doing a great job for us My Arsenal mates are sick with jealousy they are now admitting that we will be the biggest and best club in the world."

Fixed your post, Helen. =)

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Khobar   

It's on the Richard Bacon phone in on 5 likve tonight. Major sensationalism - makes me pleased to pay the exhorbitant licence fee (plus Ross Kemp returning to Eastenders for £1,000,000) crap actor, crap show, crap organisation. Anyway, back to the "revelation" of the debt that 5 live have "exclusively learned" (they obviously think no one else reads the standard). I think that ANYONE on this forum could have forecast a large loss last season given the spending, but I can't see what the big deal is - it's just the first step on the way to self sufficiently.

Still, keeps the cheap rags occupied.

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linton   

Just heard on BBC news that Chelsea have made British football history - losing the most money in one year! £87.8million to be exact. For any other club and it's fans this would mean disaster, but for us chelsea fans it is nothing suprising.

From BBC's official website:

"Premiership club Chelsea's wild spending on transfer fees is over after making a record pre-tax loss for last year of £88m.

The club spent £175m on new players last season, more than doubling its annual payroll to £115m."

http://news.bbc.co.uk/1/hi/business/4219397.stm

Is anyone the least bit bothered by this? na, didn't think so! :)

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Frankly I would be absolutely astounded if we didn't post a "huge" loss on trading (whatever figure defines "huge"in this case). Depending on the exact period that the figures cover, we spent at least 110 mill on new players (perhaps more), which in turn would have upped the wages bill significantly, even allowing for the departure of a dozen players from the previous squad (remember that some of the players had the remainder of their contracts paid-out by CFC). There also HAS to have been a sharp increase in administrative costs, not to mention agents' fees. Then, there has been investment in infrastructure. Depending on how the business is structured, some of the costs of buying the business may also have been treated as operating costs (maybe). Given all this, together with the fact that we know the club was trading at a loss before Roman took over, makes a significant loss almost inevitable. At this stage, we have also not recouped any money on the likes of Veron, Crespo and Mutu (That's 48 mill right there!).

It may well end-up being the biggest loss in English football in a single year....given all the spending, the income streams couldn't be expected to catch-up, could they? The Standard may be right, or even close to right, but where they are WRONG is to compare CFC's situation with that of Leeds'. No comparison at all. There are 3 major differences between the 2 clubs: Firstly, CFC has 260 mill of fixed assets, Leeds didn't. Secondly, CFC has the financial muscle of Roman Abramovich, Leeds didn't. Thirdly, the people running Leeds were inept, the people running CFC are not. Even though they were accruing major losses, Leeds kept borrowing, in the desperate belief that they'd win something, and make it all right. (They even financed part of Viduka's contract on hire purchase! ) When they were then knocked-out of Europe, they also went into "free-fall" in the League, and it was "Goodnight Vienna!" By contrast, CFC has spent big to build a foundation that was needed, in the full knowledge that it is going to take some time to become self-sufficient...they will have factored this in to the business plan. They will have clearly understood where the figures were heading, before committing to the new training/academy investment. It is a very different situation, indeed.

What it DOES highlight, of course, is what PK has been saying from the start, that CFC needs to become self-sufficient within the next 5 years. That's why the spending will be curtailled. That's why there will be fewer big-money transfers. That's why discarding players who's contracts need paying-out will have to stop. This more conservative approach to spending, coupled with increased prize monies, increased merchandising income, and the anticipated incomes from newer marketing initiatives, put us in an entirely different universe to Leeds.

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PhilH930   

I'm sure this is more ammo for other teams and managers to throw at us! I think its a short term view though to look at it like this, although city financiers are interested...

See, RA and PK and looking Long term, but to get the ball rolling a lot of short term investment was required which RA was more than happy to do. its not so much Chelseas loss, its all out of RA's pocket.

Take away the transfers and we might have been near a profit!

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I'd be "bothered" if it was still happening in 5 years! This is why we have to stop spending 100 mill on new players every summer...maybe some of more excitable supporters( Let's buy Gerrard, Ronaldinho, Joaquin, Defoe, Beckham, etc, etc.) will now get a grip on reality?

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RXM   

Mind you, an £87m loss sure would save a lot on tax when offset against earnings... ;-)

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