Chelsea and Manchester United, the Premier League's two
representatives in tomorrow's Champions League final, owe creditors
£1.5bn between them. According to the latest accounts of Chelsea
Limited, the company which owns the football club, Chelsea owed
£736m to all its creditors. United's accounts, also recently filed
at Companies House, showed total creditors at £764m. Those
unprecedented figures will fuel concern that at this time of
English football's greatest club triumph its clubs are carrying too
much debt.
Covering the year to June 30, 2007, Chelsea's accounts show that
the club's largest creditor was the owner himself, Roman
Abramovich, who had poured £578m into the club, not as a donation
but as an interest-free loan. As stated by the chief executive,
Peter Kenyon, in February, Chelsea did not owe "external debt" to
any bank.
However, with Abramovich's £578m loan, introduced to sign
players and pay wages since he bought the club in 2003, plus
general amounts owed, taxes and some categories listed among
creditors for formal accounting purposes, Chelsea's creditors stood
at £736m in total.
Chelsea's director of communications, Simon Greenberg, confirmed
that the £578m, described in the accounts as "Other loan", is
indeed the loan from Abramovich. Greenberg reiterated that Chelsea
has no "external debt" and pointed out that the creditors included
season-ticket holders for 2007-08, whose money has technically to
be treated as owed until the season is over, "and other normal
operating creditors". The figure also included £36.3m still owed on
a Eurobond taken out by Chelsea's previous owner, Ken Bates, in
1997. That, the last of Chelsea's "external debt", was then repaid
last December.
Kenyon released headline figures from these accounts in
February, highlighting that the club made a record turnover,
£190.5m, and that its losses were down from £80.2m in 2005-06 to
£75.8m last year. Kenyon said then that the club was in a healthy
financial position, still aiming to break even by 2009-10, partly
because it did not owe money to outside creditors and retained
Abramovich's support. "With the company being external debt free
and our ownership clearly demonstrating continuing commitment to
the long term," Kenyon said, "I am very confident about the
future."
United's accounts showed the club's total creditors at £764m.
United does have "external debt" - £666m owed to financial
institutions, including £152m to hedge funds - taken on by the
Glazer family when they bought the club in 2005, then loaded on to
United itself. While United's loans incurred interest of £81m last
year, the loan to Chelsea by Abramovich is interest-free.
Abramovich has funded Chelsea's extraordinary acquisition of stars
and, although transfers showed a profit last year, he continued to
allow Chelsea to be run at a substantial loss.
Kenyon's role is to transform Chelsea into a club which can
survive on its own earnings. In February he acknowledged it was an
"ambitious" target to aim to be self-financing by 2009-10 but the
accounts bear out commercial progress in all areas. Having finished
runners-up in the Premier League, won the FA Cup and League Cup and
reached the Champions League semi-final, the club's sponsorship,
match-day and media income all increased to push total turnover 25%
up.
However, there is no doubt that the club remains wholly reliant
on Abramovich's continued funding. Chelsea's chairman, Bruce Buck,
has stressed that Abramovich "loves football" and will not "walk
away" from Chelsea.
If the owner's enthusiasm were ever to wane, and Abramovich
decided he did want his loan back, the accounts show that Chelsea
would have 18 months to find the money.