Some nice financial news.

CHELSEA BECOMES CASH POSITIVE

Posted on: Mon 31 Jan 2011

Chelsea FC plc becomes cash positive as it prepares for UEFA financial fair play rules

Chelsea FC plc today announced that results for the financial year end June 30, 2010 show the group had become cash positive for the first time since its acquisition by Roman Abramovich. The club had a positive cash inflow of £3.8m in the year compared to a net outflow of £16.9m in the previous year.The club believes it is now well positioned to meet UEFA's financial fair play rules.

In addition, the group had a reduced operating loss of £68.6m on an improved group turnover of £205.8m. The operating loss was £3.6m better than the previous year. The total loss for the financial year was £70.9m.Amortisation of player transfer fees constitutes the largest component of the difference between the positive cash flow and the operating loss.

Group turnover has increased by £2.5m despite the economic situation and reflects the strength of the team, and the attractiveness of the FA Premier League allied with the continued allegiance of our fans and commercial partners.

The main figures were:

- Group turnover was up from £203.3m to £205.8m

- Operating Loss for the financial year reduced from £72.3m to £68.6m

- Net capital expenditure reduced from £4.2m to (£15.5m) due to player sales

- Cash inflow of £3.8m against an outflow of £16.9m in 2008/09.

Chief executive Ron Gourlay said: 'The reduction in operating losses and increased sales in 2009/10 shows that we are moving in the right direction especially when viewed against the difficult macroeconomic environment.

'The club is in a strong position to meet the challenges of UEFA 'financial fair play' initiatives which will be relevant to the financial statements to be released in early 2013.'

Chairman Bruce Buck added: 'That the club was cash generative in the year when we recorded a historic FAPL and FA Cup double is a great encouragement and demonstrates significant progress as regards our financial results.'

Now let's go and spend about €100m on Torres, Luiz and Neymar/Lukaku ;)

Greaaat news, yeaaaaaah!!! ::ChElSeaFLag:: ::ChElSeaFLag::

Good stuff

Great news, but it's interesting that the club chose to release this announcement on the final day of the transfer window. Something big is going to happen I suppose

Awesome, nice one Chels.

this is awesome news

Well the club say it's good news - but we made 68 million loss rather than 72 million - and most other figures are pretty similar - is this actually good news? I guess as long as Roman is happy and prepared to continue to shell out then I'm happy

does a positive cash inflow mean that we broke even, in accordance to the UEFA rules? Or does the "breaking-even" mean our operating losses should be zero? Sorry for sounding ignorant..i am a lil slow with these financial stuff!

Nice!

Hmm, seems to be a lot of spin there..

Of course it is spin, but it is still a more positive result on the past few years. The main bit for me is an improved overall income, which considering the financial climate is pretty decent.

does a positive cash inflow mean that we broke even, in accordance to the UEFA rules? Or does the "breaking-even" mean our operating losses should be zero? Sorry for sounding ignorant..i am a lil slow with these financial stuff!

Thats exactly what I was thinking.

I took it that we couldnt have losses but it appears Chelsea are focusing on the Cash inflows which is a whole different ball game. It will appear we could meet the requirements

Sorry for being so ignorant but I cant see the good news when making again an operating loss of £68.6m. Fine, cash flow is better, slightly increase of turnover in a difficult environment but at the end of the day we would went out of business when we were an ordinary medium-sized company.

Maybe it's a cultural difference that I'm missing the general idea how to run a business with permanent losses or at least to sell this at good news. -_-

I have to admit that at first glance I thought we were finally making money instead of losing money.

But apparently being "cash positive" means "losing cash". Not sure how, but...

The Profit and loss account is not always good reflection of value. Although in chelsea's case it probably is.

The P&L records depreciation on players purchased but doesn't record any increase in value on players within the squad that might be realised on sale.

For instance the market value of say Boswinga, Terry and probably Cech and maybe even Kalou has increased while we owned them but that increase in value is not recorded in the accounts.

On the other hand we have to record depreciation on the purchase price of all the players we have bought.

The cash flow statement is probably a better measure of how we are doing although it still doesen't give a measure of whether the overall value of the club has gone up or down during the year.

The other metric we should watch is an efficiency measure and the best one is wages/turnover.

Chelsea's ground size limits ticket sales compared to Manu Arsenal and ManC and in the long run that may tell against us. The only way to compensate for that is to build up the value of the club's merchandise division. There I think we have an advantage over ManC as it will be difficult for the latter club to build a second global brand sourced from Munchester.