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.
