While Manchester United must balance the concerns of shareholders with those of fans, and Arsenal worries about rising borrowings to fund its new stadium, Chelsea’s Russian owner has played fantasy football for real.
But a new, more prudent mood is sweeping through the corridors of Stamford Bridge, the west London club’s home.
In an interview with The Sunday Times, Chelsea’s American chairman Bruce Buck has vowed to make the club profitable within the next five years.
He also warned rival clubs looking to exploit Chelsea’s power in the transfer market — as well as everyday suppliers — that the club will not pay over the odds. The message from Buck is clear: Abramovich is not prepared to be taken for a ride.
Buck, European managing partner at the American legal giant Skadden Arps, said: “We want to grow this business with imagination and creativity, but also with fiscal prudence. Roman is willing to make substantial investments in Chelsea Football Club. But that does not mean it’s unlimited.”
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The size of the task facing Buck and chief executive Peter Kenyon is clear when one considers how much has already been spent on new players since Abramovich took over last July.
A total of £112m went last summer on acquiring world-class players such as Hernan Crespo, the Argentinian striker, Real Madrid’s Claude Makelele and Juan Veron from Manchester United. Another £24m has been spent since on Scott Parker from Charlton, who cost £12m, and Paulo Ferreira from the Champions League winners FC Porto.
Although 10 will be sold or released in the next few weeks, at least three more new faces are expected, including, possibly, England and Liverpool star Steven Gerrard for about £30m.
This followed years of heavy investment by previous chairman Ken Bates on players and developing the club into a hotel, restaurant and leisure business.
Bates’s plan was to diversify into other areas to maximise use of the Stamford Bridge site, a prime piece of real estate near Fulham Broadway tube station. But the combination of rising player costs and capital development proved too much.
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The last set of accounts for Chelsea Village Plc, the football club’s former parent company, reveals the extent of the crisis. It made a pre-tax loss of £26.5m for the year ended June 30, 2003 on turnover of £110m. The club had net debts of £75m but the real figure was rumoured to be even greater.
It was reported that the Co-op Bank and other Chelsea directors had given Bates and the plc a July deadline to repay £20m or face administration.
That was when Abramovich made his play for Chelsea. Within days the £140m deal was done. The debts were wiped out and Bates was £17m richer from the sale of his 23% shareholding. Chelsea Village Plc was delisted from the Alternative Investment Market, and Abramovich went on a spending spree the like of which European football had never seen.
Almost 12 months on, Buck said the club has been assessing the future model of the company. And, in a damning indictment of Bates’s dream, he said that the hotels and restaurant side of the Chelsea Village project will no longer play a major role. “Our business model is centred on what happens on the pitch,” he said. “It assumes that success on the pitch leads to a significant increase in revenues from the Champions League and ticket sales, as well as from merchandising.
“We believe Ken Bates had a business model that was flawed. His view was that hotels, restaurants, health clubs, travel agencies and other recreational businesses should be established within the stadium grounds and sell those products and services to football fans.
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“What the football fan wants is football. For example, we found that only three season-ticket holders were members of the Chelsea Sports Club.”
Some of the ideas being considered include converting the Chelsea Village complex’s three restaurants into American-style sports bars where fans can have a drink and a meal while watching live football or replays of Chelsea games.
The other area Buck believes can be improved is Chelsea’s international brand profile.
“We have to offer the football club to a broader fan base both home and abroad,” he said.
“This helps to build up a support and affinity for the club, even if they never make it to a match at Stamford Bridge.”