Chelsea in the Shit?

[Gribz 743]

The money Roman Abramovich has poured into Chelsea is in the form of an interest-free loan rather than a donation, according to reports.

 

 

According to recent accounts, the club owe a massive �£736million to assorted creditors, and The Guardian claims around �£578million of that figure is owed to Abramovich.

 

 

It was previously thought that the Russian had simply ploughed this money into the club as a donation, an assumption that was encouraged by chief executive Peter Kenyon, who emphasised that Chelsea had no 'external' debts when announcing reduced losses in February of this year.

 

 

The club announced record turnover of �£190.5million, bringing their losses down to 'just' �£75.8million from �£80.2million, but it is still a long way from the fiscal independence that Kenyon craves.

 

 

"With the company being external debt free and our ownership clearly demonstrating continuing commitment to the long term, I am very confident about the future," Kenyon said.

 

 

However, given that these funds are in every sense a loan, and therefore in theory could be called in, Chelsea would be in serious trouble should Abramovich ever tire of his plaything and decide he wants his money back.

 

 

The Guardian suggests that should that situation occur, Chelsea would have 18 months to pay back the money. Given that Kenyon optimistically expects the club to 'break even' by 2010, that might be a struggle.

 

Im quite confused how this works. Roman owns Chelsea correct? Well if Chelsea has to pay the money back to Roman then wont the money come from the owner - Roman??

 

If not, then Chelsea are going to make Leeds look like a success!!

 

If Chelsea dont win the CL tomorrow then it wouldnt surprise me if Roman walked.

[Gazza_8 233]

I fuckin' hope that's true! I'd love to see them sink the way Leeds have.

[calscot 0]

Im quite confused how this works. Roman owns Chelsea correct? Well if Chelsea has to pay the money back to Roman then wont the money come from the owner - Roman??

 

I would presume Ambrahamovic is the majority share holder of Chelsea as a limited company. In that case he is not liable for any Chelsea debt whatsoever, the company are. Owners of a limited company have "limited liability" for debts, hence the name. Debts would be paid for out of income and assets of the company, not Roman's pocket.

 

He has probably loaned Chelsea the money from another of his companies and therefore Chelsea owe that company.

 

If he called in the debt then Chelsea could not pay and so would be bankrupted and liquidated. All assets would be sold and whatever money raised would be shared by the creditors - including Roman.

 

However as he'd be lucky to get about 40p in the pound it's not really worth his while and he'd be better waiting for Chelsea to pay him back over a number of years from their income. However he'd be losing about the same amount of money in interest.

 

The only way out would be to get a buyer but with over 700M in debt to take over, no-one in their right mind would do this as they could not borrow on a company that has more liabilities than assets by about 2:1.

 

If I was a Chelsea fan, I'd be worried. We're in a better position as SDM swapped his money for equity rather than an interest free loan. However, our assets were still greater than our debt by about 50%.

 

I think it's good to see clubs that get into too much debt get into trouble as it's not fair on clubs who cannot compete with them due to keeping financial stability.

 

It's akin to an athlete taking drugs to compete and almost killing himself. It's not fair if others can't compete with him because they don't want to take the same risks.

 

There should be rules where a club cannot increase it's debts to more than half its turnover without incurring a deduction in points as a penalty.

 

That would have stopped us going too far a few years ago and Hearts would be hit big time. Gretna would never have been able to get into such dire straits and neither would Leeds.

 

The Man U takeover would also not be possible and Chelsea wouldn't have been able to buy the league.

[m_momo1 0]

I thought the topic read, "chelsea's new shirt" but all in all an interesting read

 

Seems like chelsea are fucked if roman walks. I wanted them to win yesterday because I personally hate ronaldo, him bubbling when he missed brought a tear off joy to my eye. But when they won he was still crying what a total fanny

 

I felt so sorry for chelsea if I was a player and had to walk pass the man utd players patting me on the back saying unlucky especially HIM and that anderson, lets say I would of had a ban from football for a few years

 

But congrats to AF his record speaks for itself

[calscot 0]

I wanted Man U to win as Fergie seemed to genuinely want us to do the quadruple...