Food for thought

[Zola]

http://www.guardian.co.uk/football/2010/ma...elsea-loan-debt

Roman Abramovich still owed £726m under complex Chelsea structure

When Chelsea published their accounts for 2008-09 earlier this year, the club announced that its owner, the Russian oligarch Roman Abramovich, had written off his mammoth £726m loan to the club, and converted it into shares.

But is not quite as clear-cut as that. Abramovich channelled his loans to the club, since taking it over in 2003 and wanting to spend its way to trophies, via a holding company, Chelsea Limited. He loaned money to Chelsea Limited, who then loaned it on to Chelsea FC plc, which runs the club.

It is true that the loans from the holding company to Chelsea FC plc were fully converted to shares last year. However Abramovich's loan to Chelsea Limited, the holding company which owns Chelsea FC plc, was not. That loan remains owing; in fact it increased from £701m, because Abramovich loaned another £25m in a year when Chelsea's extravagant spending, and the dismissal of Luiz Felipe Scolari and his coaching team, produced losses of £47m.

The accounts of Chelsea Limited (whose name was changed during the year to Fordstam Limited), show that loan still outstanding: £726m, owed to Abramovich.

A spokesman for the club confirmed that yesterday: "Recapitalisation of loans happened at the level of Chelsea FC plc, not the holding company (Fordstam), therefore making the football club debt free."

That is true. But Fordstam owns the football club company, and owes Abramovich £726m. The loan is interest free, but it is repayable if Abramovich gives 18 months' notice. The Russian could still demand the money back some day, either if the club is making a profit, or if he were to sell it. He has not, in fact, written off the huge loans he has made on his Chelsea adventure.

[SydneyChelsea]

Very much a storm in a teacup.

It's an accounting exercise that means the moral police and debt-regulators at UEFA and Arsenal FC don't have a leg to stand on.

[fester]

Typical of Guardian's attitude to Chelsea, never anything positive to say about the club, even though we've just won the double.

[Epic]

Horrendous article. Essentially the jist of the piece is...

The Russian could still demand the money back some day, either if the club is making a profit, or if he were to sell it.

which is nothing more than scaremongering. This is not new information so I don't undestand why he has presented it as something new. Bruce Buck said only a few days ago Roman is here for the long haul and has never suggested anything otherwise.

[Tim W]

It's only a counter attack as there are stories doing the rounds about the increased interest on the Glazier's loans being paid by manure

[ethicalstrategy]

It shows the general level of ignorance that exists about these financial structures.

If Abramovich wants out and to get all his money back then he would have to sell the club as a going concern. This would be true whether his investment was in the form of loans or equity. There would be zero chance that he could force the winding up of the club and realise £700m+ in cash from the sale of the assets.

No-one can say that he won't want to sell someday. Where that would leave us, going forward, would depend entirely on who bought us.

However, there is little chance that he would force the club out of business, as it would be against his own commercial self-interests.

[Jawan]

It shows the general level of ignorance that exists about these financial structures.

If Abramovich wants out and to get all his money back then he would have to sell the club as a going concern. This would be true whether his investment was in the form of loans or equity. There would be zero chance that he could force the winding up of the club and realise �700m+ in cash from the sale of the assets.

No-one can say that he won't want to sell someday. Where that would leave us, going forward, would depend entirely on who bought us.

However, there is little chance that he would force the club out of business, as it would be against his own commercial self-interests.

Its good that these bull$h!t news papers are coming out with new stories....at least we get novelty in stories being put on the internet to make themselves controversial and popular .

But on serious note;

In any case no big club is safe these days.Most clubs are facing financial crisis and debts...Clubs need to rethink about the money being spent on transfers and also the weekly wages of their star players.

Edited May 19, 2010 by Jawan

[ethicalstrategy]

There is plenty of evidence to show that Roman is working hard to get a more sustainable financial structure at the club. A huge proportion of the total loans was spent early on in his ownership. Some was frittered away on players and more recently on paying off managers, but quite a substantial amount has been invested in the structure of the football club, and particularly the facilities at Cobham.

The main issues for us at the moment are the wage bill and how to increase revenues. Both are difficult issues.

[Jawan]

There is plenty of evidence to show that Roman is working hard to get a more sustainable financial structure at the club. A huge proportion of the total loans was spent early on in his ownership. Some was frittered away on players and more recently on paying off managers, but quite a substantial amount has been invested in the structure of the football club, and particularly the facilities at Cobham.

The main issues for us at the moment are the wage bill and how to increase revenues. Both are difficult issues.

Wages is something which is very difficult situation to handle.

Once the wage of some player is increased ,afterwards no one expects it to be brought down even if he isn't playing well.

But as many clubs are ready to pay high wages management isn't ready to lose out on players just for this wage thing and have to accept player demands.

Last year the big summer transfers happened as Real Madrid were ready to pay whatever demand was made for CR7.Even though they were in debt they went for it.

Although It remains to be seen how effective this deal is for them over long run.

Edited May 19, 2010 by Jawan

[DimaCFC]

Seems an article out of nothing to me... As far as club is concerned it is still debt-free, the only difference is shares do not belong to Abramovich directly (quite naturally) but another company (probably in turn owned but yet another company).

[TheWestwayWonder]

which is nothing more than scaremongering. This is not new information so I don't undestand why he has presented it as something new. Bruce Buck said only a few days ago Roman is here for the long haul and has never suggested anything otherwise.

Exactly. Their point is that "Well , uhh, well, hmml, he might still try and get his money back!" Something that has no basis in reality or experience. Its the same sh*t as the "well, once your sugar daddy leaves you will do a leeds". Just some fantasy to keep the sad and jealous happy at night.

I'm willing to bet the writer saw Roman signing along with the Liquidator after we won the title, had a rant about sugar daddies and russian oil money, and then decided to write this piece.

All the "he will f**k off and leave you" talk is as much of a joke now as it was 7 years ago. Its not happening and it must kill alot of very bitter people inside.

Notice how Man City never hear about how their owner is going to leave, just us. Once City start winning silverware im sure that talk will start like clockwork.

Edited May 19, 2010 by TheWestwayWonder

[Zola]

Exactly. Their point is that "Well , uhh, well, hmml, he might still try and get his money back!" Something that has no basis in reality or experience. Its the same sh*t as the "well, once your sugar daddy leaves you will do a leeds". Just some fantasy to keep the sad and jealous happy at night.

I'm willing to bet the writer saw Roman signing along with the Liquidator after we won the title, had a rant about sugar daddies and russian oil money, and then decided to write this piece.

All the "he will f**k off and leave you" talk is as much of a joke now as it was 7 years ago. Its not happening and it must kill alot of very bitter people inside.

Notice how Man City never hear about how their owner is going to leave, just us. Once City start winning silverware im sure that talk will start like clockwork.

:) YES!

:D

[Ruh Buh Juh]

http://www.chelseafc.com/page/LatestNews/0...2055740,00.html

Contrary to media reports today, other than a small residual balance Chelsea Football Club and its parent company Chelsea FC plc are debt free and do not owe any money to their shareholder (Fordstam Ltd). Neither do they owe any money to Roman Abramovich.

So, this debt story was completely made up? Why doesn't that suprise me?

[Bez]

http://www.guardian.co.uk/football/2010/ma...league-finances

This prat David Conn who wrote the article also published these premier league finances for the season, we have the biggest debt in the premier league according to him. Oh.. funny guy

[Plavi26]

What's even more interesting with that chart J.C.B. is that according to him, Liverpool are a viable investment when you look at the numbers. Funny that it's only Chelsea and Manchester United that are singled out as in trouble, the Mancs might be, but like our numbers show that we are fine.

[superdan]

The two articles (the article and the table) go together and I don't think there was much to get annoyed about apart from the misleading headline.

In fact the table was quite interesting and basically shows that clubs rely on heavy investment to stay afloat (although the TV money is increasing again next year)

Yes Chelsea would be in trouble if Roman left but our situation and Roman's looks more stable than many European economies right now!

Was interesting to read how precarious a position Liverpool are in - their debt (and Man U) are racking up huge interest payments which Chelsea don't have as our loans are interest free!

Interesting also to read how solvent spurs and Arsenal are - I think Spurs have done well though the article says that their wage bill will soar next year - as for Arsenal they seem to have settled for mediocrity over the last few years and though they have a good financial footing their team are consistently not quite there - right now I'd rather the trophies and the sugar daddy!

[Barry Bridges]

[qoute]It is true that the loans from the holding company to Chelsea FC plc were fully converted to shares last year. However Abramovich's loan to Chelsea Limited, the holding company which owns Chelsea FC plc, was not. That loan remains owing; in fact it increased from £701m, because Abramovich loaned another £25m in a year when Chelsea's extravagant spending, and the dismissal of Luiz Felipe Scolari and his coaching team, produced losses of £47m.[/qoute]

So in layman terms.......Chelsea FC (CFC) exchanged its debt to Chelsea Limited (Cltd) into stock, so CFC no longer owes Cltd money as CLtd owns part of CFC. Cltd still owes Roman the cash equivalent that the stocks were traded for.

So essentially CFC is now out of the equation except that Cltd owns shares in it. Roman owns CFC, he also owns Cltd. Cltd owns CFC shares and owes Roman 726m, and .......essentially Roman owes himself 726m through his holding company Cltd, and he also owns more CFC shares as owner of his holding company, Cltd.

So yes, Chelsea FC still is debt free....and roman still owns CFC........but aside from that, its really irrelevant to us as aside from the shares in CFC that Cltd owns, they have no relation to us.......except that the owner is our owner.......

So yes, like any other club owner in the world, Roman could sell us....GASP SHOCK AND WOW!

[BigIzz]

I think the bigger concern would be having Abramovich's finances outside of Chelsea take a downturn. I could imagine if he went broke or didn't have the revenue to support his lifestyle he might start wanting some of his loan back. That said I know very little about his finances, nor is it my business, so I don't know how likely this is to happen. That said, all the bug clubs seem to have their issues and risks. Nothing in life is 100%. Roman is the least of our conerns and we are lucky to have him.

[Hutch]

if you asked any liverpool or man u fan whether they'd rather have roman or their respective yanks as owners, they'd choose roman every time.

never mind the crap in the press, we're in a far better financial state than either of them.

[Barry Bridges]

I think the bigger concern would be having Abramovich's finances outside of Chelsea take a downturn. I could imagine if he went broke or didn't have the revenue to support his lifestyle he might start wanting some of his loan back. That said I know very little about his finances, nor is it my business, so I don't know how likely this is to happen. That said, all the bug clubs seem to have their issues and risks. Nothing in life is 100%. Roman is the least of our conerns and we are lucky to have him.

A super simple explanation is this.

Roman gave the holdings company the loan.

The holding company than gave it to the plc who run CFC.

CFC didnt want to carry the debt, so they paid back the holding company in shares/equity in the club.

The holding company owns part of CFC via shares.

The holding company still owes Roman the value of the loan they received.

CFC owes Roman nothing, but is owned by him.

The holding company owes Roman money, owns shares in CFC, and is owned by Roman.

Roman owns both CFC and the holding company and thus really is indebted to himself via the holding company AND NOT CFC.

Roman can sell either of those if he wants, but that likely hood is 100% unrelated to this non issue of a story

Essentially its no more worrisome than if he sold the club itself.....which, really isnt that worrisome because whoever can afford to buy us will have cash to splash (or should theoretically) anyways.

My only concern of Roman selling the clubs is, weird as it sounds, winning the Champions League.

Since day 1 this has been his goal, and often in business when you meet a goal you move on to the next one. As I dont know him personally, this opinion is obviously pure speculation.

It is also why I always stress we need to become as selfsufficient as possible in a manner that allows us to continue to be a Europen football powerhouse.... because we really dont know when Roman and/or his cheque book will become closed to us, or actually try and draw money out of the club.