(WFI) English Premier League leaders Chelsea have wiped out virtually all of their outstanding £340 million ($546m) debt and revealed reduced losses for a fourth consecutive year.
“The group results reveal that following previous conversions of half of the debt, the remainder of the interest-free loans from the parent company, whose ultimate controlling party is Roman Abramovich, have been converted into equity making the group effectively debt free,” a statement on the club’s website said.
The wiping out of the debt means Chelsea can comply with future UEFA regulations on financial fair play in European football.
Chelsea chairman Bruce Buck said: “The club’s debt load has been reduced almost to nil in order to provide more long-term stability for the club.
“The reduction will also enable the club to comply with any regulations on debt levels which are being discussed by the football community.”
UEFA president Michel Platini announced in the autumn he would exclude
clubs from participation in the Champions League after 2012 unless they
reduce excessive spending and live within their means. Spending on
transfers and wages will not be allowed to outstrip revenues from
football-related income such as ticket sales and television deals from
the 2012/2013 season.
Chelsea’s losses for the financial year were cut from £65.7m to £44.4m even though group turnover was down from £213.1m to £206.4m.
The club said “disciplined management of capital expenditure” had reduced the cash spend from £107.4m down to £16.9m. This is largely down to limited business in the transfer market. The completion of the club’s training centre at Cobham saw net capital expenditure fall from £85.1m to £4.2m.
The club statement said: “Revenues remain stable despite the economic climate and reflect the strength of the team, its continued success and the attractiveness of the FA Premier League allied with the continued allegiance of our fans and commercial partners.”
Chelsea chief executive Ron Gourlay said the club was still aiming to be self-sufficient “and we will achieve this by increasing
our revenues as we continue to leverage off our brand. We are reducing our costs by controlling expenses, including salaries and wages”.
The financial results include the “exceptional” £12.6m compensation payments to former Chelsea manager Luis Felipe Scolari, who was sacked last February, and three of his coaching staff.
Portsmouth’s financial problems continue
Portsmouth FC have been issued with a winding-up petition by HM Revenue and Customs.
The petition was presented on Dec. 23 but a full court hearing is not scheduled to take place until February. The club, which is currently operating under a transfer embargo due to their cash problems, must strengthen its financial position otherwise it could go into administration.
Portsmouth today said it was shocked and surprised the winding petition had been issued “in respect of VAT, PAYE and National Insurance Contributions which either have been, or are about to be paid, or are disputed”.
“The club is disputing the VAT amount outstanding and has formally notified HMRC of this. We expect HMRC to withdraw their demands forthwith,” the club said in a statement Wednesday.
“Otherwise we anticipate a hearing being held in early January 2010 during which we will request that the High Court order HMRC to withdraw their demands.”
The English Premier League club, 90 percent owned by Saudi property tycoon Ali Al Faraj, are bottom of the table. They have twice failed to pay players’ wages on time this season.
Premier League chief executive Richard Scudamore has told Portsmouth chiefs the transfer embargo will remain in place until the club can find at least £10 million ($16m) to meet the demands of their creditors.
The club added in its statement that since the takeover by Ali Al Faraj in October, “extreme efforts have been made to reach payment arrangements with HMRC to allow the owner time to deal with inherited debt”.
“To date the new owner has injected a total of £9.7m of new funds to HMRC – £5.7m paid and security to the value of £4m.
“It is well known that the business has been in a difficult position following former owners’ decisions and the current owner is committed to resolving this and moving forward.”
Written by Mark Bisson ([email protected])
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