Let's All Laugh At... Let's all laugh at Chelsea thread

Stuart Leathercock · Mar 14, 2022

barry said:
Unless they get another sports washer they'll have to cut their cloth accordingly.

I doubt it'll be an immediate mass exodus but they'll have to be more financially prudent fairly quickly, causing them to be part of the chasing pack, rather than a dead set contender.

I hope they fall into midtable obscurity or worse.

I'm not sure that is necessarily the case to be honest. Most of the investments that Abramovich made into Chelsea were in the initial years prior to FFP. Since that has come into line Chelsea have operated within those regulations. If you were looking at Chelsea as a private investor, all you would be interested in is the return on your capital. It is perfectly feasible that you could pay £2.5b for Chelsea now, invest the £30m of allowable losses over each 3 year period from your own pocket for (say) 12 years and then sell Chelsea for way more than the total cost of £2.62b of capital costs at that point. If (probably when) a form of the ESL comes about (or perhaps even a WSL) Chelsea's value would be massively bigger than £2.62b and, indeed, it will probably grow far bigger than that over the next decade anyway even without an ESL/WSL, just through organic growth of the Premier League, football and the likely monetising of streaming and social media.

Real_madyidd · Mar 14, 2022

Bluto Blutarsky said:
I simply asked what the mechanism would be for punishing the club - for the sins of the owner. Certainly the loans should be under scrutiny, and the club should be made to pay them back - or face sanctions for violating financial fair play. But if new owners can sort the financials - I don’t know how you can impose sanctions on the club itself.

Sorry, to make this clear for those that don't deal with sanctions lists normally. The club is owned, entirely, by somebody that is being sanctioned. This means it is illegal to do business with the club at all at this time. No sales, no purchases, no contract extensions- nothing. That is how the club is punished for being owned by a "bad guy". At the moment they have been given permission to keep playing football- that is very generous and not in keeping with normal sanctions.

There are no Sanctions against the club itself but it is stuck with an owner that is being sanctioned. There can be no "new owner" at the moment as that would involve doing business with a sanctioned person. If the club is seized by the government it could be sold to the highest bidder and there would be no FFP punishment unless they actually breach FFP.

spursfan77 · Mar 14, 2022

Matt Law on Sky yesterday said that the people administering the sale, The Raine Group, had had over 200 applications from interested parties. Sure, they'll be some nonsense in there but there will be a lot of bidders who will be sensible and probably pretty solid. Two hundred though, I couldn't believe it.

Trix · Mar 14, 2022

spursfan77 said:
Matt Law on Sky yesterday said that the people administering the sale, The Raine Group, had had over 200 applications from interested parties. Sure, they'll be some nonsense in there but there will be a lot of bidders who will be sensible and probably pretty solid. Two hundred though, I couldn't believe it.

Wouldn't surprise me at all if that number was correct. There will be a lot of people thinking they could get them at a very knockdown price, and flip them within a few years for a tidy profit. I'm sure the serious bids that'll actually be considered you'll be able to count on one hand.

Bluto Blutarsky · Mar 14, 2022

Stuart Leathercock said:
Again, loans existing or being written off have nothing to do with FFP. Remember that Chelsea's 'loans' were at zero percent interest so cost the club nothing. FFP is merely concerned with the level of losses made by a club over any 3 year period.

Right - but loans being written off are essentially owner investment into the club, and I believe there is a limit on the amount of money an owner can put into the squad over a certain period. I don’t know what that limit is, but I am comfortable it’s less that £1.5B

Stuart Leathercock · Mar 14, 2022

CoopsieDeadpool said:
Nope, still too dumb to understand I'm afraid.

They run at a loss, full stop!

Debt free? How can a club who owes someone over £1.5BILLION be debt free?

It just doesn't add up on any compass, let alone the moral one that they fall outrageously short on.

Because both entities are 100% owned by Abramovich (or at least were). In effect Roman Abramovich's left pocket has lent Roman Abramovich's right pocket money. Transferring money from his left pocket to right pocket (or back again) has no impact on his overall wealth so these sorts of zero interest loans between companies 100% owned by the same individual aren't considered as debt.

Stuart Leathercock · Mar 14, 2022

rossdapep said:
Honestly, if they allow that...

How can they not allow it considering what has been allowed at Newcastle and Sheffield United?

Trotter · Mar 14, 2022

jay2040 said:
Maybe best post in the Newcastle thread!

Or not at all. Has f all to do with football.

Trotter · Mar 14, 2022

Stuart Leathercock said:
Again, loans existing or being written off have nothing to do with FFP. Remember that Chelsea's 'loans' were at zero percent interest so cost the club nothing. FFP is merely concerned with the level of losses made by a club over any 3 year period.

Exactly.
If loans are written off or not has absolutely nothing to do with FFP at all.
Alll that FFP cares about is not making significant losses.
Chelsea have never been outside of FFP and have not broken any rules and won’t if their debt is written off either.
Just because their business model under Abramovich was different, and more successful than ours is jealousy basically.
We could have spent a good couple of billion more than we have during ENICs reign and still have been within FFP, we didn’t through choice, nothing else

Stuart Leathercock · Mar 14, 2022

spursfan77 said:
Matt Law on Sky yesterday said that the people administering the sale, The Raine Group, had had over 200 applications from interested parties. Sure, they'll be some nonsense in there but there will be a lot of bidders who will be sensible and probably pretty solid. Two hundred though, I couldn't believe it.

You need to understand the amount of money that is out there under the control of the uber wealthy (individuals and investment funds) and then look at the asset value growth of English football teams over the last 10 to 20 years.

Stuart Leathercock · Mar 14, 2022

Bluto Blutarsky said:
Right - but loans being written off are essentially owner investment into the club, and I believe there is a limit on the amount of money an owner can put into the squad over a certain period. I don’t know what that limit is, but I am comfortable it’s less that £1.5B

No there aren't. FFP simply allows a club a maximum loss on football operations over a 3 year period (I think £30m).

skiba · Mar 14, 2022

Bluto Blutarsky said:
Right - but loans being written off are essentially owner investment into the club, and I believe there is a limit on the amount of money an owner can put into the squad over a certain period. I don’t know what that limit is, but I am comfortable it’s less that £1.5B

Owner 'investment' is allowed under FFP. What the rules do is limit the amount that can be spent by placing rules over the amount of losses clubs can make. Enic could invest £1.5bn in Spurs today and it would be allowed. However if over the next few years that was spent on wages and transfers that our revenues can't support then we would fall foul of FFP.

As others have said, a significant amount of Roman's investment in Chelsea was before FFP and since it's introduction they have just stayed the right side of the rules. Covid has also meant the amount of allowable losses that can be made under FFP has increased and Chelsea have clearly taken advantage of this recently with their transfer activity.

Trotter · Mar 14, 2022

Bluto Blutarsky said:
Right - but loans being written off are essentially owner investment into the club, and I believe there is a limit on the amount of money an owner can put into the squad over a certain period. I don’t know what that limit is, but I am comfortable it’s less that £1.5B

Owner investment has happened each year the loan has been put in, not at the time the loan is converted to equity or written off, and has always been within the rules.

basically it is your misunderstanding of the rules, misunderstanding of when investment happens, misunderstanding of what accounting treatment does in respect of writing off loans or just plain clutching at straws, but nothing affecting FFP happens in respect of them writing off loans

Trotter · Mar 14, 2022

Stuart Leathercock said:
No there aren't. FFP simply allows a club a maximum loss on football operations over a 3 year period (I think £30m).

35m per year (so 105m over 3 year period) and you can add other things such as stadium and academy costs to that also, so can easily make 50m loss per annum realistically.
Plus in last couple of years Covid has been added.

Stuart Leathercock · Mar 14, 2022

Trotter said:
Exactly.
If loans are written off or not has absolutely nothing to do with FFP at all.
Alll that FFP cares about is not making significant losses.
Chelsea have never been outside of FFP and have not broken any rules and won’t if their debt is written off either.
Just because their business model under Abramovich was different, and more successful than ours is jealousy basically.
We could have spent a good couple of billion more than we have during ENICs reign and still have been within FFP, we didn’t through choice, nothing else

At the point prior to covid hitting we could've spent something like £300m (might even have been £400m) on football operations and still been the right side of the FPP line. We kind've had the perfect storm really where we were spending large amounts (of a mixture of club generated and borrowed money) on our capital projects but with a low wage bill and low transfer spend, while our revenues were going up year on year. I think a lot of investment companies would've made some investment at that time, commensurate with a percentage of the climb in valuation of their stake in the asset. Unfortunately ours didn't. I guess though this is all for a different thread.

On the subject of Chelsea though, I have argued several times in the ENIC thread that they were worth about £2.5b and would likely have numerous interested buyers at that amount, just as we would have numerous interested buyers if put up for sale at our commensurate valuation of around £1.5b (lower due to our large debt level). Several people scoffed at me for saying this but I think what we're seeing now is me being proven right, which is a double edged sword as in many ways I would've loved to have been wrong with Chelsea struggling to find a buyer.

Stuart Leathercock · Mar 14, 2022

Trotter said:
35m per year (so 105m over 3 year period) and you can add other things such as stadium and academy costs to that also, so can easily make 50m loss per annum realistically.
Plus in last couple of years Covid has been added.

Are you sure?....

Swiss Ramble's take on it

Singaspursofsixspence · Mar 14, 2022

Any chance we would be talking to Hyundai or 3 as potential sponsors given their recent disassociation with Chelscum? They’d still be keen to have “presence” in the EPL and what better brand than to associate with the ‘next wealthiest club in London’

Trotter · Mar 14, 2022

Stuart Leathercock said:
Are you sure?....

Swiss Ramble's take on it

Certainly has been the rules since FFP came in, until the CoVId update, 105m plus stadium and academy costs over 3 year period, with transfer fees depreciating over length of contract.
Since covid came in they changed things but by letting any covid losses slide has had no effect yet

Stuart Leathercock · Mar 14, 2022

Singaspursofsixspence said:
Any chance we would be talking to Hyundai or 3 as potential sponsors given their recent disassociation with Chelscum? They’d still be keen to have “presence” in the EPL and what better brand than to associate with the ‘next wealthiest club in London’

I would imagine both have already exhausted their marketing budgets with their sponsorship of Chelsea this season. I expect both are now waiting to see what happens next before they decide whether to continue their association with the club from next season onwards.

Trotter · Mar 14, 2022

Singaspursofsixspence said:
Any chance we would be talking to Hyundai or 3 as potential sponsors given their recent disassociation with Chelscum? They’d still be keen to have “presence” in the EPL and what better brand than to associate with the ‘next wealthiest club in London’

Can’t see it, and why would we ?
We have sponsors already, they earn more than we do, but then they have three times the worldwide fan base we do, and sell three times the shirts we do, so we wouldn’t get more than we are now really anyway

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