Chelsea lost £140million last year

super_furry

http://www.rte.ie/sport/2006/0127/chelsea.html

And still people claim that they aren't buying the league. Unbelievable really, I can't see anyone competing with them financially ever again.

iregk

ok thats what annoys me about the lets have it both ways brigade. I'm a chelsea fan and yes while i agree the money spent is vile at the best of times its also not a true valuation of what we have. I.e. SWP was 10mill at best, as soon as Chelsea came in he was 28mill. Now that is our fault for paying that amount of money i will agree but what annoys me is the hypocrisy from a lot of people.

When Roman came in I had to put up with weeks/months of you can’t buy success and money wont buy you the title. Now those same people are saying you bought the title and you bought your success. So which way is it? You can’t have it both ways!

Pigman II

super_furry wrote:

I can't see anyone competiting with them financially ever again.

They said the same thing about Blackburn. Don't worry once Abramovich dies everything will be back to normal.

yom 1

iregk wrote:

When Roman came in I had to put up with weeks/months of you can’t buy success and money wont buy you the title. Now those same people are saying you bought the title and you bought your success. So which way is it? You can’t have it both ways!

Is that even an argument? They are right - you did buy the Title

Superfurry is spot on. There is not a single team in the world that can or will get close to Chelsea's money unless Roman II buys some club. I mean they made losses of £140m but will still spend in the region of £50m in the summer if previous years are to go by.

Guy:Incognito

Pigman II wrote:

They said the same thing about Blackburn. Don't worry once Abramovich dies everything will be back to normal.

He's probablt younger than some of teh posters here so we'll have to wait a while. Hopefully he'll get bored before that.

redspider

Yes, Chelsea are buying their success. Bates was doing it before Abramobitch arrived as they had ran up a massive debt. The aim of the club is also laughable, to only reach break-even by 2010. Roman is will to run the club at a loss until then and buy success with it.

I think Uefa should step in, set club spending limits in any one year to something like 50m and prevent clubs from running at a oss say more than 10m. That allows any club to invest, but no club to unfairly dominate, especally as the source of Abramovich;s wealth is from corruption. (dont ask!).

chelsea.com wrote:

Chelsea are on course to achieve the business plan and break even in 2009/10 said chairman Bruce Buck and chief executive Peter Kenyon at the announcement of the year’s accounts this morning, Friday.

The accounts were for the year from July 1st 2004 — June 30th 2005, the second year of Roman Abramovich.

Chairman Buck emphasised: “The very beginning of the business plan was that Chelsea Football Club should aspire to be successful on the pitch.” That’s what stimulated the investment of £175m in Mr Abramovich’s first year, 101m in the year reported, and is currently at £57m this year.

Its there in black and white that they are trying to buy success on the pitch, even they are not denying it.

For real Chelsea fans with any morals, they should feel sick to their stomach. Granted they have success, but not one best on principals and their reputation will forever be tarnished in this period.

redspider

Guy:Incognito

Clubs should befinately be sanctioned for running at a loss, if for nothing else than to protect the club. If Abramovich ups and leaves tomorow Chelsea will go under, which would not be in anyones interest.

p.pete

yom 1 wrote:

Is that even an argument? They are right - you did buy the Title

I think you missed his point.

redspider

Stekelly wrote:

Clubs should befinately be sanctioned for running at a loss, if for nothing else than to protect the club. If Abramovich ups and leaves tomorow Chelsea will go under, which would not be in anyones interest.

They wouldnt go under straight-away. There is a difference between running at a loss and debt. Chelsea, although I haven't seen their financial accounts, dont have large debts. Abramovich is bankrolling them by putting in money. A good analogy is VC funding, or with listed corporates, a share issue. Celtic got more money in this way reently from Dermot Desmond.

But you are right in the sense that if Abramovich left quickly and managed to sell his holding to someone, the new owner would be left with more costs than income as the business last season ran at a loss of 140m. They would have to sell/loan players to reduce salary costs and would have a far less chance of winning the title or the CL. They shouldnt go under if they can adjust their trading position quickly and match costs to income.

What a lot of clubs do is they wait to long hoping for things to change before its too late. eg: Leeds. They needed to qualify for the CL in the year that they got relegated. It must have been obvious tio the bean counters that it was unsustainable.

redspider

Atlas_IRL

Will be interesting to what happens to Chelsea when Abramovich is hauled to jail for being in the Russian Mafia

ianmc38

redspider wrote:

The aim of the club is also laughable, to only reach break-even by 2010.

I see you have a shrewd business acumen.

ianmc38

Stekelly wrote:

Clubs should befinately be sanctioned for running at a loss, if for nothing else than to protect the club.

Isn't a football club a business? Should all companies running at a loss receive sanctions?

Mighty_Mouse

Bates was doing it before Abramobitch arrived

:eek: slight difference me thinks!

think Uefa should step in, set club spending limits in any one year to something like 50m and prevent clubs from running at a oss say more than 10m. That allows any club to invest, but no club to unfairly dominate, especally as the source of Abramovich;s wealth is from corruption. (dont ask!).

good idea

iregk

p.pete wrote:

I think you missed his point.

Exactly, thanks pete

iregk

The thing is and for a moment lets ignore the football and uefa side of things here. From a purely business point of view the loss is colossal, 140mill is a hit in anyone’s language unless your Microsoft of course.

The way you have to look at this is that football clubs are a business. They are not what we all like to think and have the interest of the fans as their priority, the bottom line is their priority. That 140mill accounts for a restructure and the buying out of contracts that quite frankly they had to get rid off. In place of those contracts they have signed up to huge ones that will see revenue jump in the coming years.

Redspider’s comment that the aim of the club is laughable shows a complete lack of business knowledge. Roman when he arrived at Chelsea walked into a mess of Ken Bates making. He banked on Chelsea either winning the league or the champions league in ’99. A bold, brave but also stupid strategy that went wrong. The did neither and they almost collapsed. In business you either win or loose, Ken Bates lost.

Since Roman has come in he has cleared out most of the aging over the hill staff that and replaced them and the back room as well. After that it was time to buy out some contracts and get out of ones that were worthless and replace them with money makers that will result in a healthy revenue stream. He has also replaced the youth setup and training facilities with state of the art ones that are now regarded as the best in the country so the future plan is in place.

He took over a business in debt, cleared it and is now restructuring. For anyone that knows about business, this is a slow, painful and costly process. To break even by 2009/10 is good going considering the wage bill and outlays that were necessary. Most business be it new or restructure usually follow a 3 year break even plan then follow through to projected profit. From a business point of view when you have cash reserves of 1billion and can easily take the hit what they are doing at Chelsea is actually quite brilliant.

One of the comments earlier that if this doesn't work Chelsea will collapse and thats not good for anyone, i must say i find rather ironic. Considering if Roman hadn't come in thats exactly what would have happened so which would you prefer?

redspider

iregk wrote:

From a purely business point of view the loss is colossal, 140mill is a hit in anyone’s language unless your Microsoft of course.
That 140mill accounts for a restructure and the buying out of contracts that quite frankly they had to get rid off. In place of those contracts they have signed up to huge ones that will see revenue jump in the coming years.
Redspider’s comment that the aim of the club is laughable shows a complete lack of business knowledge. Roman when he arrived at Chelsea walked into a mess of Ken Bates making. He banked on Chelsea either winning the league or the champions league in ’99. A bold, brave but also stupid strategy that went wrong. The did neither and they almost collapsed. In business you either win or loose, Ken Bates lost.

He took over a business in debt, cleared it and is now restructuring. For anyone that knows about business, this is a slow, painful and costly process. To break even by 2009/10 is good going considering the wage bill and outlays that were necessary. Most business be it new or restructure usually follow a 3 year break even plan then follow through to projected profit. From a business point of view when you have cash reserves of 1billion and can easily take the hit what they are doing at Chelsea is actually quite brilliant.

It looks like you need some ABC lessons in business and finance.

First, 140m is not large for Abramovich, his exact wealth can only be guessed at (een by MI5, MI6, Putin) but you are talking 10 billion. Put it another way, if somene that has 10,000 euro and they spend 140 euro, its peanuts to them. Chelsea are peanuts to Roman. He gained more than 2 billion last year with Sibneft dealings.

He is funding the business (Chelsea) from other wealth creating assests. Chelsea is running at an annual loss. Their stated claim is to have a run-rate of break-even by 2010. Not to have recovere all the investment money. So, that will means losses of in 2003, 04, ... 10. The memgt stated today in their press release that they may not even reach that!

In terms of the debt, you say it was paid off, true, but not from the profits of the Chelsea business. He has used his deep pockets to finance it.

He has not turned the finances around, it is costing Roman a fortune every year and they have forecast that it will continue to do so. In effect, he is running Chelsea at a loss and buying success, or trying to. The backdrop to all of this is that Roman has bought himself a lifeline and UK citizenship, pot6entially. His 85m yacht bribe to Putin has also bought him favouritism in Russia. He is no entreprenur. His background is as a gun-totting mafia dogsbody Oil smuggler.

if Abramovic stopped bankrolling Chelsea next year, they would be in a much worse situation than when Bates left them.

> considering the wage bill and outlays that were necessary

Those outlays (large purchases) and salaries were not necessary !!!

Abramovich isnt the first business man to run a club at a loss. We have the Newcastle's, the Blckburn in the 90's (Walker), the Wigan chap now, etc. The main problem is the scale of the Chelsea spending. I dont know their revenues, in 2002/03 it was 133m euro (source Deloitte). Lets say in the year reported it was 120m ukp. Their costs were 260m. There is no other club spending anywhere near that in the world.

Uefa will have to change the rules if Chelsea win the league 3 years in a row and say 2x CL's. It will be obvious to blindmen then, maybe even some of ye that doubt it on boards.ie.

redspider

iregk

Ok you spent an entire post apparently giving me some abc's on business without making 1 bit of business sence yourself. go back read my post again and you will see what your missing.

I'm not going to get into a tit for that, he said she said argument here, but I suggest you go back, re read my post and you will realise you have come back with a completely invalid post all together.

How can Uefa change the rules just because of Chelsea. Is this not what Real did for years? Why should they be different?

For some reason it was grand when Real were buying success (yes i agree looks where its got them!) but it was only when Chelsea started doing the same that it became a problem. Why? Because Real aren't a rival club, Chelsea are.

Rikand

Pigman II wrote:

They said the same thing about Blackburn. Don't worry once Abramovich dies everything will be back to normal.

At least Jack Walker was a Die-Hard supporter of Blackburn and wanted the best for his own club.
Chelsea is just Roman Abramovichs play-thing.

Guy:Incognito

ianmc38 wrote:

Isn't a football club a business? Should all companies running at a loss receive sanctions?

The FA/FIFA dont have any power over non football business as , say, ANpost doesnt have a team in the PL so its irrelevant. It's in their best interests to ensure clubs dont go under. They deduct points if clubs go into recievership, so whats wrong with pre-empting it?

The Muppet

redspider wrote:

They wouldnt go under straight-away. There is a difference between running at a loss and debt. Chelsea, although I haven't seen their financial accounts, dont have large debts. Abramovich is bankrolling them by putting in money. A good analogy is VC funding, or with listed corporates, a share issue. Celtic got more money in this way reently from Dermot Desmond.

redspider

Who would pay the inflated salaries Chelsea Pays to its players if Abromvich were to Leave. It would be leeds all over again if He left



What success did Bates buy for Chelsea?

ziggy

This post has been deleted.

besty

If someone like Brentford got this sort of cash into its coffers, it too would win the Premiership in a couple of seasons. It's ridiculous.

MrJoeSoap

£140m is worth it to stop the United/Arsenal bore that has been going on for well over 10 years pre-Abramovich.

KdjaCL

ziggy67 wrote:

I think Abramivich is better for the game than the likes of Glazer.

Abramomich is pouring money into football while Glazer is taking it out to service his debts.

There seems to be a proper business plan at Chelsea, calling for the authorities to step in if Chelsea win 3 leagues in a row & 2 CL's smacks of jealousy TBH.

Tell that to the English player Wright Philips that its good for the game he was bought so he coudnt play against Chelsea.

Obviously good for football when a team can buy players to ensure their rivals dont get them, and also great for youth teams everywhere.


kdjac

KdjaCL

MrJoeSoap wrote:

£140m is worth it to stop the United/Arsenal bore that has been going on for well over 10 years pre-Abramovich.

Didnt Arsenal and Utd make the the money they spent by being succesful on and off the pitch? Didnt Arsenal and Utd play attacking attractive football?
How is that a bad thing?


kdjac

Dempsey

What success did Bates buy for Chelsea?

FA Cup

MrJoeSoap

KdjaC wrote:

Didnt Arsenal and Utd make the the money they spent by being succesful on and off the pitch? Didnt Arsenal and Utd play attacking attractive football?
How is that a bad thing?


kdjac

The repitition was driving myself and many others insane, its great if you follow one of the clubs but from the outside it tends to be boring.

[Cue eL rant!]

KdjaCL

MrJoeSoap wrote:

The repitition was driving myself and many others insane, its great if you follow one of the clubs but from the outside it tends to be boring.

[Cue eL rant!]

How can attacking attractive football drive you insane? it was superb each teams league winning sides provided the ultimate in footballing entertainment...either playing keepie uppie in the other teams half or winning the Cl in the 92nd minute by just wanting it more...


Now look ....what Chelsea and long ball pool are at...are you and the others happy now?? Are you?? damn you....it was earth all the time!!!!!


kdjac

MrJoeSoap

KdjaC wrote:

How can attacking attractive football drive you insane?

It wasn't the football that drove me insane, it was United winning almost every year, every kid in school supporting them, and the sheer repitition. I loved watching Arsenal at their best, and they were a breath of fresh air (still are in many respects) but a league needs more than two competitive teams to maintain interest. Now that Chelsea have it sealed for the foreseeable future things have gotten stale again, but at least its not still Arsenal/United.

it was superb each teams league winning sides provided the ultimate in footballing entertainment...either playing keppie uppiy in the other teams half or winning the Cl in the 92nd minute by just wanting it more...

I loved it too, it just got stale.

Now look ....what Chelsea and long ball pool are at...are you and the others happy now?? Are you?? damn you....it was earth all the time!!!!!

I hate when people criticise or mock succesful teams for the way they play, just like Kaids did in the other thread saying Bolton will win by "two tries and a conversion". It's not like there is a certain way to play football. Not every team should try to play exciting and entertaining football, because it doesn't suit everyone. Teams should play to their strengths, and you can hardly argue with Chelsea or Liverpools results last season or this season.

Of course I'd prefer to watch Arsenal in full flow.

Pigman II

Have to say I hate watching Arsenal (admittedly unlike probably 99.9% of people). To me anyway they always look like they're more worried about scoring the perfect goal than putting the foot in and actually winning the game. I think that's why their away form is so bad this season. A lot of teams let them do their stuff at Highbury but don't give them an inch on their own patches.

KdjaCL

MrJoeSoap wrote:

Teams should play to their strengths, and you can hardly argue with Chelsea or Liverpools results last season or this season.

Yes pubs teams should not clubs who spent 250million to play a certain way or bought a reject Globetrotter to play a certain way. Attacking football and dodgy defending all the way, not the Greek way.




kdjac

Guy:Incognito

KdjaC wrote:

Yes pubs teams should not clubs who spent 250million to play a certain way or bought a reject Globetrotter to play a certain way. Attacking football and dodgy defending all the way, not the Greek way.




kdjac

Who are you to decide what way teams should play?. The object of teh game is to win , not look the best. Theres a place for all styles, otherwise we'd end up with a lot f out of work defenders and 5-4 scorlines every week, with Kevin Keegan the top manager in europe.

KdjaCL

Stekelly wrote:

Who are you to decide what way teams should play?.

I decide nowt i just buy what product suits me. I would prefer to watch the attacking attractive football than the dour ****e thats on offer the last 2 seasons. I wonder if i complain to sky if they will change it


The object isnt to win its to play, when the pressure to win becomes as it is now the product suffers like the last 2 seasons. Chelsea spent 250 million to beomce a dour team, pool bought a tall stick to play long ball. The only people happy with that are Chelsea and Liverpool fans. Both who have suffered for so long are willing to accept any kind of ****e football once at the end of the season "Winners" has their name on it.


kdjac

MrJoeSoap

KdjaC wrote:

I decide nowt i just buy what product suits me. I would prefer to watch the attacking attractive football than the dour ****e thats on offer the last 2 seasons. I wonder if i complain to sky if they will change it

Hehe, this from a Pats fan :rolleyes:

KdjaCL

MrJoeSoap wrote:

Hehe, this from a Pats fan :rolleyes:

Nail on head joe, i watch the PL as a football fan, i have to watch pats and if Roman was to buy us and win everything with **** football im sure i would get over it


kdjac

PHB

Ha, you complain about the league being boring, so Chelsea are a good team.

Chelsea have utterly ruined football for one reason only, nobody can do what United and Arsenal did anymore.
Chelsea have raised the bar so high, only the top four have any chance whatsoever in even keeping up with them, yet alone beating them.

A club, which has huge ambition, can not do what United did in England anymore, cause you get 90 points in a season with kids, a youth team. You have to spend big.

When United were spending huge money on players, they did so always making a profit each year, never ever ever ever making a loss anywhere near 140 million a year! A year!!

This will ruin football, but once Putin needs to clamp down on organised crime in order to get foreign business investment, which will be required before the next election, Ambrovimich is going to be screwed, and a passport in the UK will do nothing, as England and Russia have a very strong extradition treaty. Ultimately, Chelsea could well dominate for the next 3 years, but once that is gone, they are going to be going down, because AMbrovimich won't need to find an owner, it'll be forfeited, go into administration, and then its years for Chelsea in the championship or worse

iregk

There is a funny trend not just in this thread but in many others ive seen over the past, well since Roman took over. Its the "they are screwed when he leaves" party.

What makes you think he will leave? What makes you think this is just a play thing to him? You can say ah because he is a billionaire and this is pennies to him but in reality while that is the case its not the underlying fact here. I think people who are not Chelsea fan's keep repeating this as it makes it easier to stomach and offers some sort of light at the end of an otherwise pitch black tunnel.

Roman is work 7billion or what ever best guess is, nobody actually really knows! Now by hook or by crook he has that wealth through some very shrewd if not exactly moral means. Now he has come over and invested in Chelsea with a very large some of money. Altough he easily has the capital to cover any losses his investment makes people that do this and invest that kind of cash dont do it without looking for a return on his inlay.

My business is banking. Now we have investors that have capital up to the tune of hundreds of billions and invest around the same in our company that Chelsea paid for SWP. In other words their capital dwarfs Romans but their investment is dwarfed by his. They are screaming at us looking for a return on their investments. They aren't going to leave without getting one!

This isn't a play toy, this is a business. Football is not a play toy, football is a business.

Jimboo_Jones

I personaly would love someone like Roman to buy my club. I have no problem with someone pumping in huge amounts of their personal wealth into football. I'm sure most Man City fans didn't mind the 28 mil that they gave them for SWP

If you notice, most of the suporters who are so anti roman are supporters of the 'big three', and it must be harder for them as they now have seen the chance of their football team winning the league lessen. As my team are not in the position, I guess I'm not as concerned. Infact, I like the fact that its been shaken up a little.

I imagine that if he stays until 2010 cheski would have won a fair few titles and cups and will have gained a fair few glory hound fans and will be in a lot better position than when he joined. If they are not - at least there will be fond memories for their fans

Raskolnikov

I don't see anything wrong with Abramovich's business plan. From what I can see. he's taking some short term pain for long term gain. Should the club break even by 2010 without Abramovich's loans propping it up, then the investment will be a shrewd one.

In the short term, the £140 million loss doesn't reflect the fact that the club paid off a £25.5M sponsorship deal with Umbro and took a loss of £24M on Veron and Mutu. The sponsorship deal with Samsung, reportedly worth £50M also isn't included in the Chelsea accounts for last year. The club will still have made a substantial loss but in reality, the finances aren't as grim as they look. Another thing to consider is that most of the capital spending has been done, the debt has been wiped out, the core of the squad has been bought, the youth academy developed, etc.

In the long-term, as Peter Kenyon has stated, it's ambition is to make the club self-sufficient by 2010. What people forget, is that assuming everything goes to plan, then the valuation of the club will sky rocket. Given that Manchester United was quoted at being worth £800M at the time of the Glazer take over, Chelsea's valuation should certain approach that if not overtake it. Since Abramovich bought the club for only £60 million, has pumped £220 million into it, so between now and the time that Chelsea break even, he can afford to put another £520 million before his investment loses money.

Some food for thought.

Guy:Incognito

iregk wrote:

There is a funny trend not just in this thread but in many others ive seen over the past, well since Roman took over. Its the "they are screwed when he leaves" party.

What makes you think he will leave? What makes you think this is just a play thing to him? You can say ah because he is a billionaire and this is pennies to him but in reality while that is the case its not the underlying fact here. I think people who are not Chelsea fan's keep repeating this as it makes it easier to stomach and offers some sort of light at the end of an otherwise pitch black tunnel.

Roman is work 7billion or what ever best guess is, nobody actually really knows! Now by hook or by crook he has that wealth through some very shrewd if not exactly moral means. Now he has come over and invested in Chelsea with a very large some of money. Altough he easily has the capital to cover any losses his investment makes people that do this and invest that kind of cash dont do it without looking for a return on his inlay.

My business is banking. Now we have investors that have capital up to the tune of hundreds of billions and invest around the same in our company that Chelsea paid for SWP. In other words their capital dwarfs Romans but their investment is dwarfed by his. They are screaming at us looking for a return on their investments. They aren't going to leave without getting one!

This isn't a play toy, this is a business. Football is not a play toy, football is a business.

Well if thats the case he must be the stupidest billionaire that fell into his money by accident. Their plan is to start being self sufficient by 2010. Evenif they manage this running at an average loss of say €50 million between now and then, that'll be nearly €500m loss he'll have made since taking over (plus whatever he lost originally accquiring and improving the club). He's going to be a lonmg time even making the money back, never mind turning a profit that will be noticable to his bank balance, so the "he's in it to make money " arguement doesnt really hold water. There are few (if not none) chairmen that actually make money out of football, which is why most are fans of the club, they are in it for th egame, not the money. Their are far more reliable and easier ways of making money if thats the aim.

redspider

iregk wrote:

Altough he easily has the capital to cover any losses his investment makes people that do this and invest that kind of cash dont do it without looking for a return on his inlay.

My business is banking.

This isn't a play toy, this is a business.

It looks like you are missing the key point. Abramovich is running Chelsea at a loss and a continuing loss and he has no business interest in making money from his Chelsea investment.

Its not just a small loss, a loss that someone could normally carry during an investment phase in a business. This is a huge non-sustaining loss. He is not trying to make a proft from Chelsea. It is a play thing to him as he has enough funds from elsewhere to fund it. Indeed after 20 years it will remain to be seen if he covers his investments when calculated at NPV (net present values) and when discounted against low-return lower-risk investment classes such as deposits, etc.

No normal investor would invest something like:

2003 - 100m purchase + 60m debt
2004 - 80m loss
2005 - 140 m loss
2006 - NN m loss
2007 - NN m loss
2008 - NN m loss
2009 - NN m loss
2010 - maybe 0 loss, maybe ...

Thats an estimated investment of of 500 m with zero return!
Thats not business. Can you understand that?

Whilst I havent looked at the assets, indeed, they are substantial at Chelsea with its property, that does not dilute the thust of the point, Abramovich is not investing to make a return.

You also are aware, and as I already stated, that he is not the first businessman to run a football club at a loss. This aspect is not a precedent as for many the heart rules over the head. But for Abramovich, he was not a true blue fan for years and this is not a few million thrown at a football club. It will be half a billion. For him, its the fact that his de facto UK citizenship is helping to make him more untouchable is what he is buying. In other words, he has reason to run Chelsea at a loss.

Having said all that, if a businessman comes in and does what he is doing, its within the current rules. But such a level of losses is distorting the market and the sport on the pitch. He is buying success and has access to cash that Chelsea are beating the likes of Liverpool, Man U, Arsenal not by footballing guile but by money! For all football fans, that has to be dissapointing.

Man U and Arsenal did dominate for many years, and Liverpool did get the odd trophy as well, but this money came from the support base through TV rights, merchandise and match day tickets. Man U also run as a profit, their most recent was 46m, Liverpool also run as a profit.

It doesnt take a a banking or business expert to understand that Abramovich's scale of losses is unprecedented in the sport and the market is clearly distorted.

redspider

astrofool

It seems to be more like the situation that happened in the states when an airline declared chapter 11 bankruptcy, and used that fact to slash their prices to the bone, and put unfair pressure on the competition (the ones not running at major losses).

The difference here is that Chelsea are basically always goning to be running in a bankrupt situation, which can make it very difficult for the competition (i.e. other clubs), that do things within their means. Even Real Madrid when buying the galactico's, did so at the expense of their defence.

iregk

Some of the responses here are quite funny. Yes football is one of the worst businesses to invest in from a returns point of view. While most have lost others have gained hugely. The two M's of United fame immediately spring to mind.

The thing is everyone here is guessing. Nobody knows what his long term plans are so how can you honestly say its a play thing and he will get bored. For someone to completely restructure a business and re-invest in a lot of long term future plans doesn't tell me that they have short term bit of fun plan in mind. Does it to you?

Yes he is running at serious loss at the moment but its nothing that can't be sustained. The business plan at the moment is to break even by 2010, then onto profit. We have no idea what he is planning to do but at the moment it looks solid. Short term pain, long term gain. He is not going to walk away from this 800mill down. He will see this through and start to turn a nice profit for himself in years to come. He is only a young lad!!!

For others that lost money, Jack Walker etc... they did it for the love of a club. They knew they were going to take a loss but they did it because they love their club. Roman didn't love Chelsea, probably never even heard of them until shortly before taking them over. He did it purely as a business interest. He will make money of this no question about it.

Redspider, being a business man myself i can fully understand invest and return figures thanks very much. 500 with 0 return is perfectly normal business in some capacities.
Sony PS3 R&D= 1.5billion! Return as of yet=0 they are banking on future returns. Is that good or bad? At the moment sony are almost bankrupt due to the ps3 and other areas not making money anymore but they have future proofed the ps3 for at least a 6 year life span which in console terms is huge. They will recoup that as its all about future return not immediate return. Business is a slow process you do very little for the here and now and pretty much everything for long term gain.

Raskolnikov

iregk wrote:

Redspider, being a business man myself i can fully understand invest and return figures thanks very much. 500 with 0 return is perfectly normal business in some capacities.
Sony PS3 R&D= 1.5billion! Return as of yet=0 they are banking on future returns. Is that good or bad? At the moment sony are almost bankrupt due to the ps3 and other areas not making money anymore but they have future proofed the ps3 for at least a 6 year life span which in console terms is huge. They will recoup that as its all about future return not immediate return. Business is a slow process you do very little for the here and now and pretty much everything for long term gain.

That's the point I made in my post. Once the club breaks even, it's valuation will soar and he would more than make his money back should he choose to sell it.

iregk

Exactly Raskolnikov.

The Rooster

Is it known for certain that Roman puts all his money into Chelsea in the form of share capital (which in most circumstances he cant get back unless he sells his shares), rather than loans (which in theory Chelsea would owe him)?

redspider

iregk wrote:

football is one of the worst businesses to invest in from a returns point of view. While most have lost others have gained hugely.

Nobody knows what his long term plans are so how can you honestly say its a play thing and he will get bored. For someone to completely restructure a business and re-invest in a lot of long term future plans doesn't tell me that they have short term bit of fun plan in mind. Does it to you?

Yes he is running at serious loss at the moment but its nothing that can't be sustained. The business plan at the moment is to break even by 2010, then onto profit. He is not going to walk away from this 800mill down.

Roman didn't love Chelsea - He did it purely as a business interest. He will make money of this no question about it.

500 with 0 return is perfectly normal business in some capacities.
Sony PS3 R&D= 1.5billion! Return as of yet=0

The first thing to dispel is that very few clubs have beem making much money. None are seen as a good investment as currently whatever comes in in terms of revenue goes out in terms of costs for players, coaching staff, etc, and there is no magic formula. 100m doesnt guarantee you anything. There is no club with huge gains compared with outlay/investment.

When I say a "play thing" its not that I dont think he is interested in Chelsea, but his interest is not from a money point of view. He doesnt care if he loses money with Chelsea or not. For that reason, it is a play thing and even a long term play thing. His long term plan is to stay alive and enjoy his riches, I would imagine. I have no doubt that he wants to stay involved in Chelsea for as long as he wants/needs.

500m is a very serious loss. And the plan is to continue losing until 2010. That plan of course could slip, maybe 2012, or 2015, who knows. He doesnt care. By then he could easily be 800m down. I am aware that Chelsea may be worth a lot more by then. If their success happens on the field, it could mean a clun valued at 1b. So maybe he will be 200m up. But the figures could also easily be investment of 1000m and value of 800m, so 200m down. Also, football clubs are currently carrying footballers acquistions as assets and not costs! So only depreciated values come through as booked costs in the accounts.

Whether he will make money out of it or not will depend on how the calculations are done. If you take the costs and dont balance them for inflation and how other investments would have performed, then in 20 years the property values of Chelsea village alone would have probably increased by a huge amount.

Sony's R&D costs with their gaming console is not a comparable business. Of course businesses invest money and can wait for a long time to see if there is a return. For example, oil refineries are notoriously capital intensive and there is a long-term pay-off. But for Abramovich, who is so wealthy on other parts of his portfolio, the Chelsea project is play money for him and he can carry large losses which are distorting the market.

FIFA/Uefa can change the rules so that football clubs must be ran in a certain way and could eliminate this at a stroke. A move which I think would make for a more competitive system, and fairer.

But one key point from this is that Abramovich is not at Chelsea to make money and to run it as a business.

redspider

LostinBlanch

No, football is so awash with money and dodgy dealing that it has become a prime target for those wishing to "clean" their money. Make of that what you will.

astrofool

As I said before, it's like 'Brewster's Millions' where he has to get rid of the money.

Also, given the amount of bung's in football, any ill gotten money could also be channelled of this way into the football club, no questions asked.

ronbyrne2005

there should be a salary cap like all american sports.it would make the domestic leagues and european competitions more competitive and return football to a more egalitarian state

Guy:Incognito

ronbyrne2005 wrote:

there should be a salary cap like all american sports.it would make the domestic leagues and european competitions more competitive and return football to a more egalitarian state

For that to work it would have to be worldwide. Otherwise the money will move to whatever league doesnt have the cap. American sport is easier to implement these things in because it's all contained in one country under one governing body.