• Oligarch owed by holding company, not by Chelsea FC
plc
• Russian retains right to call in outstanding debt in future
Chelsea's owner, Roman Abramovich, channels his
loans to the club through a holding company, Fordstam Limited.
Photograph: Ian Kington/AFP/Getty Images
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.