Chelsea's Bleeding Even More

[prk166]

Nice to see kenyon's finally realized that his talk 2 years ago of being profitable in 5 years wasn't happening so the bar's been lowered to break even and moved back to 2010. Afterall, what choice do you have when in just one year your company's LOSSES go up by 60%. What's even more comical about this whole thing is that there losses last year nearly matched their revenues. At this rate they need to double their revenue over the next few years and manage to keep their operating costs increases to 0.00% just to break even.


http://soccernet.espn.go.com/news/story?id=356495&cc=5901

Chelsea chief executive Peter Kenyon insisted the club remain on course to break even by 2010 after posting record pre-tax losses of £140million.

[Walter3000]

Nice to see kenyon's finally realized that his talk 2 years ago of being profitable in 5 years wasn't happening so the bar's been lowered to break even and moved back to 2010. Afterall, what choice do you have when in just one year your company's LOSSES go up by 60%. What's even more comical about this whole thing is that there losses last year nearly matched their revenues. At this rate they need to double their revenue over the next few years and manage to keep their operating costs increases to 0.00% just to break even.


http://soccernet.espn.go.com/news/story?id=356495&cc=5901

Chelsea chief executive Peter Kenyon insisted the club remain on course to break even by 2010 after posting record pre-tax losses of £140million.


When you finally figure out what it all means in 2-3 months why dont you come back and explain it a little better ok.

[Big_Bad_Mcnabb]

They made massive losses this year against last year for 2 main reason. They cancelled their kit contract with Umbro which meant that they had to pay Umbro 25.8m.

They had also included the losses in transfer fees for both Juan Sebastien Veron and Mutu.

[prk166]

When you finally figure out what it all means in 2-3 months why dont you come back and explain it a little better ok.

Chelsea's losses are up 60% over last year is too difficult for you to understand? :confused: I don't get what your getting at.


They made massive losses this year against last year for 2 main reason. They cancelled their kit contract with Umbro which meant that they had to pay Umbro 25.8m.

They had also included the losses in transfer fees for both Juan Sebastien Veron and Mutu.

So what was the write off for those 2? 20m? 28m? Add that in with the umbro thing and you've account for what? 50m in losses? What about the rest?

[Matt Clark]

The point is that those additional losses are for one-offs like those mentioned here - in real terms their (nonetheless preposterous) losses haven't really risen that much from last year.

Plus, of course, the very concept of losses is a bit of an abstract with Chavski. They owe this money to a company owned by the same person that owns them.

But it would take a very dispassionate person indeed not to be cruelly fascinated by the spectreo of the implosion we'd have if Abramovich suddenly decided that buying into Extreme Fishing was more his thing.

Chelsea's finances are so shockingly idiotic outside of the context of his unique largesse that it would be quite some show to see them once again reintroduced to the normal rules of economics.

Mind you, I'm sure Brentford could do with the extra gates. :D

[Walter3000]

Chelsea's losses are up 60% over last year is too difficult for you to understand? :confused: I don't get what your getting at.




So what was the write off for those 2? 20m? 28m? Add that in with the umbro thing and you've account for what? 50m in losses? What about the rest?

You could actually take the time and look at all the "one time" losses, and compare them to the fact that the wage bill decreased as well as the transfer losses, but you were too excited to post about Chelsea and their losses to see the big picture.

[Alan_V]

All well and good, but I read theat they still have a couple hundred million for players available.

[yasik19]

start panicking.

[prk166]

You could actually take the time and look at all the "one time" losses, and compare them to the fact that the wage bill decreased as well as the transfer losses, but you were too excited to post about Chelsea and their losses to see the big picture.

Well, let's look at those things :

so-called 1-time losses
£25.5m - Umbro
£13.8m - Mutu
£9m - Veron

First off, who will be the next Veron or Mutu? It's common for clubs to let players go on a free, often after negotiating a "one-time" buy out of the contact. So while the Veron and Mutu buy outs are one time, it's likely that Chelsea will have this type of expense in the future.

That aside, Veron and Mutu's buyouts are £22.8m. That with the £25.5m for Umbro accounts for £48.3m of the increase in losses. But the increase in losses was £52.2m. So those don't fully account for the increas in losses, let alone the issue of how "one-time" some of those expenses are.

As for the wage bill, that was £108.9m. The previous year is was £115.5m. That is good to see it down by 5.7%. But revenues were only £146.6m. So their wage to turnover ratio is still much higher than the avergage for English clubs, 74% versus the avg of 61%.

So what is the big picture? How will Chelsea over the next 4 years managed to reduce their losses and increase their revenues enough to break even?

[Clan]

Winning the league cup will see it off in the right direction.

[Matt Clark]

So what is the big picture? How will Chelsea over the next 4 years managed to reduce their losses and increase their revenues enough to break even?

New stadium, sell off the leisure arm of Chelsea Village plc, reduce staff costs (24 of 31 squad members currently earn in excess of £2m per annum), increase commercial activity with greater presence in US and Far East ... all the usual.

Whether that will allow them to achieve what they need to in order to meet their own target is doubtful. To match their stated aims, they need to increase turnover by 30% in four years whilst not allowing costs, including these "one-off" incurrances, to rise in the same period.

One of the most intriguing problems they face is that it's clearly a lot harder to be financially efficient when you exist in this sort of wealth bubble than it would be if you were subject to the same economic rigours everyone else is.