ROMAN ABRAMOVICH spent a further €112 million last year to fund his ambitions for Chelsea, taking the Russian oligarch’s personal spending on the club since he took over in 2003 to almost €781 million. Chelsea’s accounts, released on the club’s website yesterday to conclude a week of turmoil at Stamford Bridge, showed that Abramovich’s subsidy of Chelsea increased from €645 million in 2007 to €758 million by June last year.
The extra €112 million absorbed another thumping annual loss the club made last year, of €73 million, following €83 million the previous year. Chelsea’s wage bill was €166 million and the loss also included €26 million paid in compensation to the departing managers Jose Mourinho and Avram Grant and five members of the coaching staff. Abramovich’s sacking of Grant’s successor, Luiz Felipe Scolari, on Monday, means a further €8 million will be paid in compensation this year.
That instability, along with rising players’ wages, shows that Chelsea accept they are highly unlikely to meet their target of being free by this July from reliance on Abramovich’s fortune.
Chelsea’s chief executive, Peter Kenyon, nevertheless reiterated that aim yesterday, pointing to a 96 per cent increase in Chelsea’s annual earnings since 2003, to €238 million last year, the fifth highest of any club in the world. Kenyon said this “aim of self-sufficiency” means that whoever is Chelsea’s manager this summer will be able to fund signings only by selling first.
“Chelsea is building a strong business base in what will be challenging times,” said Kenyon, who has repeatedly warned that Premier League football is not immune from recession. “We have consistently reduced our net transfer spend over the last five years and will attempt to continue this trend.”
Chelsea had promised that the accounts would contain proof of Abramovich’s commitment to the club, to contradict speculation that his interest has been waning.
Those rumours were shattered anyway by Abramovich’s brutal personal sacking of Scolari this week but the accounts are notable for a permanence in Abramovich’s financial contribution.
Previously all the owner’s €645 million funding was in the form of an interest-free loan, which attracted questions, and also criticism from the Uefa president, Michel Platini, and the FA chairman, Lord Triesman, who both expressed concern about top Premier League clubs’ levels of debt.
Last year Abramovich converted half of his €758 million contribution into Chelsea shares, leaving a reduced €379 million as a loan. Putting the money in as shares is a genuine financial investment in Chelsea, not repayable, as loans are, unless he sells the club. It is by far the largest equity contribution ever made to a football club.
“Following the conversion of half of the interest-free loans into equity there should now be no doubt as to the owner’s commitment to the club and the stability of the company’s funding structure,” said Bruce Buck, Chelsea’s chairman and Abramovich’s lawyer. “We have always believed that this ‘debt’, now reduced by 50 per cent, has been misrepresented. Chelsea has no external debt and makes no punitive interest payments to external funders.”
Football finance experts believe the club face an enormous task if they are to succeed in reducing losses to zero, in particular in cutting the wage bill.
Stephen Morrow, head of sports studies at the University of Stirling, said: “It’s a hell of a target and it’s not easy to see how they will reach that.
“They have said that future signings will have to be funded by sales, but the big thing is player wages, and to get it down to a sensible percentage of turnover. A fundamental change is required there. It requires a huge change in personal behaviour and business culture.”
Ray Wilkins, meanwhile, believes that Chelsea need “to get the unity back” as he suggested the players had to shoulder the responsibility for the sacking of Scolari as he prepared to take caretaker charge for today’s FA Cup fifth-round tie at Watford.
The new manager, Guus Hiddink, will watch from the stands. “All of our players realise that situation,” Wilkins added. “It ultimately falls with the coach but those guys have to perform. The consensus is that they could have done more.” Guardian Service
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