Huge investment: Chelsea owner Roman Abramovich has
bankrolled the club
Chelsea paid out an incredible
£23million in compensation last season after parting company with
managers Jose Mourinho and Avram Grant.
The news comes as the Blues announced a massive £66m loss for
the year to the end of June 2008. But there is more bad news to
follow as this does not cover the costs of axing boss Luiz Felipe
Scolari, who was replaced by Guus Hiddink this week.
Chelsea's billionaire owner Roman Abramovich will again have to
foot the bill but eyebrows will be raised at the past claims of
Peter Kenyon.
The chief executive, who has worked closely with Abramovich
during the Russian's investment of £710m at Stamford Bridge, has
previously said that the club's aim is to break even by next
year.
Most of the £23m paid to former managers and coaches in the
latest figures went to Mourinho after his departure in September
2007. Mourinho, now at Inter Milan, was replaced by Avram Grant but
he was sacked at the end of last season.
However, the Blues will now have to fork out again to cover
Scolari's exit just seven months into his lucrative two-year
contract in west London. It is thought they will have to pay £7.5m
to the Brazilian boss.
The club's loss is a slight improvement on the £74m lost last
year and £80.2m in 2005/6. Chelsea lost a record £140m in
2004/5.
Chelsea's wage bill remains comfortably the biggest in the
Premier League at £148.5million 70.6% of their turnover. Manchester
United' by contrast was £106million in 2006/7, 43.6% of
turnover.
The club came fifth on the list of the world's richest clubs in
2007/8 but Deloitte's Football Money League is based on revenue and
does not take debt into account.
Gone: Jose Mourinho... Out: Avram Grant...
After the latest results, Chelsea attempted to soften
the blow by insisting that half of the interest-free loans from
Chelsea Ltd, controlled by Abramovich, have been turned into
equity.
Blues chairman Bruce Buck said: '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.
'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.'
Kenyon added: 'There is no doubt that the positive upward trends
of turnover and the continued reduction in losses shows that
Chelsea is building a strong business base to build on in what will
be challenging times.
'This is even more evident given that the results were adversely
affected by the exceptional items.
'We have set ourselves ambitious targets to be EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization) neutral on
June 30, 2010 and to require zero cash funding from the owner at
the beginning of the financial year 2009/2010.
'We have consistently advocated the aim of self-sufficiency
which has always been supported by the owner. We are hopeful of
being close to these targets in the timeframes we have set given
the underlying strengths of the business.
'Success on the field is a key part of this. But in line with
our long stated business aims, any squad restructuring in the
summer will be funded predominantly by sales as we have
consistently reduced our net transfer spend over the last five
years and will attempt to continue this trend.
'This is the fifth set of financial accounts since the takeover
and Chelsea has made huge progress during that period as a football
club and a business.
'In that time we have had significant on-field success, our
turnover has increased by 96 per cent, which ranks us fifth in the
world, and our fan base has increased hugely. That gives us great
confidence for the next five years.'
