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richard

Chelsea Finances Thread

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I understand it for what it is and am very grateful to Roman as should any Chelsea fan be. Roman isn't only making us the club we are, he is also writing away debt after debt for us, much like what happens in Spain with the big 2. I imagine the Mancs, Gooners and Liverpool fans were green with envy yesterday, not you though eh Michael, still got to stick your oar in. It has everything to do with the long term you muppett !!! Without continuing to write of the debt as he has done there would be no term to look into...........

Roman bails us out time and time again and all you think is its just for appearance and UEFA and we should just understand it as financial dynamics and book keeping?? Your making a point that isn't necessary !!!!! Roman obviously doesnt see it as the business and book keeping your making it out to be or he would be writing away millions of pounds of his wealth. I honestly can't believe how ungrateful your post above sounds...............

Its not ungrateful at all. Roman doesn't want us to be in debt, and UEFA rules will change on debt which would really hit us given our debt to him. Therefore Roman has essentially turned the debt into shares in the club - which as he already owns the club, is essentially just removing the debt off the books. He's writing it off so that the club isn't in debt. If he ever sold Chelsea he'd make back much more than he sold it for - remember, he bought it for £140 million. Chelsea is worth much more now, and an even more attractive proposition without any debt. Roman already owns the club 100%, but moving/writing off the debt essentially increases the price he paid for the club.

But essentially the debt was to Roman anyway, and he would never have called it in. Its his investment in the club and there was never any intention on his part to demand it back, all he's done is make it official.

We should be grateful for that, and for all he's done for our club and may yet do. I'm sure MT is and I certainly am. It is I think a sign of RA's long-term committment and that he wants the club to be viable as a business, and not hamstrung by debt. It proves he cares about the club by not demanding anything of the club. Only now its not just words, but its been proven by his actions.

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No offence, but you're not reading it correctly. Again, it was a case of Roman owing the debt to Roman. And he was never going to just 'walk away- that's fanciful. If he wanted out, he'd sell to another individual/business entity, and the price he'd ask would include his total investment, just as it would do now. The only difference being whether that investment stayed on the books as 'debt', or was wrapped-up in Roman's valuation of the business. The situation at Chelsea is an accounting one, and very different to clubs such as Man Utd and Liverpool, who have huge debts owed to external entities (banks/financial institutions, etc) - that's real debt, that needs to be serviced and repaid at some time.Treating the two situations as if they were the same, is simply a mistake.

Unfortunately, it's not so simple in the real business world. RA and the club are two separate and different entities. Even as an owner, he does not have any obligation to pay up any debts own by the club beyond the value of any shares that he bought, or beyond any obligations as a guarantor for loans taken by the club.

Which means that at any point of the time, RA can demand for his money back. If he can't be repaid, then he may file a bankruptcy petition against his own club. If successful, all the assets of the club will be liquidated and split amongst all the creditors including himself.

So the papers are right when they said that if "RA ever gets tired of his plaything", we would be in deep sh!t. RA therefore sought to assure the fans and everyone that he's willing to make an irretractable commitment to the club by converting the debt to shares. He can no longer sue for his money back, and the only way to recoup his investment into the club will be to sell off the shares he has.

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Harvz   

>> Only now its not just words, but its been proven by his actions.

Well surely it's in the best interests of the owner of any given business to have his business working viably as a business?

If he sold the club last week with that 'debt' or sells it next week without, he'd technically get exactly the same amount, down to the last penny.

I'd even venture to say that a better indication of his commitment is how much MORE money he puts into the club in this way from this point on (if indeed we're still looking for that - call me naive if you will, but I am most definitely not). For all we know, turning the loans into equity could be a way of making the business more attractive to potential investors.

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For all we know, turning the loans into equity could be a way of making the business more attractive to potential investors.

And would the new owners bring Jose back?

All hypothetical,of course....................................

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I'm no expert in businees or finance (believe me that's an understatement), but rather than this being simple "charity" can't it be seen as further investment from Abramovich with the hopes that the team can be self-sufficient in the future? He bought the team in 2003, it's been 6 years. Maybe he has a 10 year investment plan or 15 years.

Can't it be more of a plan to make the club stronger financially by putting some money into the club?

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kembo   

if you are getting tired of supporting the club, you know the way out mate. you can close d door on your way too.

I do know the way out and have done for the last 45+ years of consciously following Chelsea. I shall bear your comments in mind. if you had any idea of how the game has changed over the last 40 years perhaps you would understand my frustrations.

Chelsea FC are now a much more viable asset,for those wishing to buy a football club.For as we are often told by said media,Roman isn't in it for the long haul.

Agreed we are now a club without debt but the price of the club has just gone up. See also comments below.

I'm no expert in businees or finance (believe me that's an understatement), but rather than this being simple "charity" can't it be seen as further investment from Abramovich with the hopes that the team can be self-sufficient in the future? He bought the team in 2003, it's been 6 years. Maybe he has a 10 year investment plan or 15 years.

Can't it be more of a plan to make the club stronger financially by putting some money into the club?

RA has put in an absolute shed load of money(thanks again RA) but I am not sure if there is a plan.

The conversion of debt to equity makes Chelsea a club without debt so that is two fingers to Platini and FIFA. It hasn't cost RA anymore money to do that apart from professional fees for for a bit of paperwork.

However, If RA transfers his shares to a holding company of a trading group and and that company then sells the shares at a profit then the holding company could pay no tax on the profit on sale of shares.if RA holds them personally and sells at a profit then potentially a lot of tax to pay. Financially clever move. However, I don't see RA ever leaving the club until we win the CL or we look like we are never going to win it or perhaps never. Football is a passion and I hope RA has caught the bug as far as Chelsea is concerned.

I am also hopeful that one day the fans will own the club just like Barcelona fans own Barcelona and thereby avoid the FC United of Manchester approach but with the same underlying principles.

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DarkSoul   

People forget. If not for Roman we would have had to sell Gallas, JT, Lampard and others just to stay afloat. We were days from going under before Roman arrived. Now not only has he delivered 8 trophies, a CL final and 4 CL semi-finals, and world-class players and managers, not only has bought us a new training ground with world-class faciities, and invested tons in the whole structure of the club and our academy, but he's actually written off the debt that the club owed him out of his own pocket, by having it converted into shares.

Is that mean, he can notice a benefit, by our club developing in long-term?

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Very good news indeed. I'm not a financial wiz-kid nor did I stay at a Holiday Inn last night... but could this be the first steps in selling the club? You know, getting all the books in order so the accountants can come in and do their due dlilgence? Scarey and I hope not...

Simple answer - NO.

converting debt to equity is the last thing you would do prior to a sale. Any new owner could do that themselves, but they probably wouldn't want to. Debt is normally more tax efficient (for profitable companies). And while converting debt to equity is easy, Converting equity to debt is difficult without big tax charges.

Interestingly, if RA or any new owner wanted to extract cash out of the business, the simplest way would be to pay off the debt. So the conversion to equity actually suggests RA is happy to put further cash in. It is a hint of a big spend ahead.

I'm quite happy being one of the best 3 clubs in Europe, but if RA really wants to go for it, I'll be pleased enough to watch.

Fair enough, but even so we had no chance of competing for the trophies we now compete for regularly, and little or no money to spend on the squad.

That is as much bad history as your earlier bankruptcy comments.

Hold on, of course the financial stability has changed. Beforehand Roman could recall those debts, which we would have to repay. Which he may well have done if he sold the club. To say that getting rid of a debt that may have to be paid at any time isn't financially stabilizing is plain foolish.

No. MT has explained why, I can't be bothered. Debts to the owner aren't a risk to the fans, but they are normal good business practice.

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kembo   

I don't get why people are offended by this 'Brand' thing. Chelsea are a brand. In fact that's all we ever were.

Nothing remains the same:

Manager -nope

ground-nope

owner-nope

fans-nope

staff-nope

kit-nope

crest-nope

In fact every single thing about the club-apart from the name or rather the brand name- has changed from when we first started supporting

So what exactly are we supporting ?

Let me hazard a guess at :childhood memories...

We don't want someone stamping on our childhood dreams. Sorry but t'was ever thus.onwards and upwards

Cheers

Richard

Nope not childhood memories but a common passion which has endured inspite of the underlying general trend to measure success in terms of £.

A lot of fans remain the same, as for the club well from perspective it changed when MasterBates took the club over. I support Chelsea Football Club not Chelsea Village money making machine.

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Agreed we are now a club without debt but the price of the club has just gone up. See also comments below.

Thats obvious, A Top European Club without Debt what do you expect?, buyers will be queuing to buy us no matter what the price is. Anytime better than buying a club with debts having to pay interest to banks.

Secondly, I dont understand the media circus over Roman wanting to leave the club or losing interest. When you invest the amount of money that he has, you tend to develop an affection towards the club. You become a fan, it may be his "toy" or whatever, but he is the best owner there is in England. I doubt he will ever leave this club. Heard his son is a big Chelsea Fan.

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