SBD Global/January 3, 2014/Franchises

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  • Chelsea Posts Loss Of £49M In '12-13 Fiscal Year, But Still Reports Record Revenue

    Chelsea recorded a record revenue of £256M in the '13 fiscal year.

    Chelsea had a loss of £49.4M during the '12-13 fiscal year "after income was held back by elimination from the Champions League in the group stage," according to Peter-Joseph Hegarty of BLOOMBERG. The London-based team "still had record revenue" of £255.8M for the year through June 30, "during which it won the second-tier Europa League." Sales "were boosted" by a 19% increase in commercial income to £79.6M. The previous year’s profit of £1.4M came after a “significant’’ player trading surplus and an "exceptional profit" on the cancellation of Sky Broadcasting shares in its digital media operation, "factors absent from the latest year" (BLOOMBERG, 1/2). In London, Owen Gibson reported Chelsea has "insisted they remain on track" to comply with UEFA's Financial Fair Play rules, "despite plunging to an annual loss" of £49.4M. The figures show that, for all the club's "long-stated ambition to operate at break-even" following a decade in which they have been subsidized by Owner Roman Abramovich to the tune of more than £1B, "they remain loss-making." Last year, Chelsea "posted a first profit of the Abramovich era and claimed it marked a milestone in their journey towards self-sustainability," though it later emerged that the profit of £1.4M owed much to a one-off £18.4M share windfall. For the 12 months ending in June, however, the results "show a return to heavy loss‑making ways" (GUARDIAN, 12/31).

    PLAYING FAIR: REUTERS' Tony Jimenez reported FFP regulations state that a club "can have a deficit of no more than" €45M ($62M) a year. However, Chelsea Head of Communications Steve Atkins said that "because of complicated accounting rules," Chelsea's actual loss was around £34M. Chelsea said, "The latest financial result combined with the previous year's profit of 1.4 million pounds means for the first monitoring period for FFP regulations -- which spans the 2011/12 and 2012/13 seasons -- we will fall comfortably within the break-even criteria set by UEFA. We have the fifth highest revenue of all football clubs in the world according to the latest published Deloitte figures" (REUTERS, 12/31). In London, Roger Blitz reported Chelsea Chair Bruce Buck said that under Abramovich’s ownership Chelsea’s long-term objective "had been financial sustainability." Buck: “We are pleased therefore that we will meet the stipulations set down by UEFA in their first assessment period.” UEFA "will spend the next few months assessing each club’s finances over the last two seasons before announcing in the Spring which clubs have failed to comply with its regulations." Earlier this season, UEFA said that at least five clubs "were at risk of breaching its rules." Clubs "expected to come under particular scrutiny" are Qatari-owned Paris St. Germain and Man City, owned by the Abu Dhabi ruling family (FINANCIAL TIMES, 12/31).

    MEETING GUIDELINES: In London, Jeremy Wilson reported UEFA’s "acceptable variation for the next monitoring period," the three accounting years from '11 to '14, is also £37.5M. It means that Chelsea must not lose more than about £4.5M in the current financial year, '13-14, "to comply with FFP." The challenge then "gets even harder," with UEFA "only accepting losses on a rolling three-year basis" of a maximum of £25M ($41M). Given that these new '12-13 accounts will form the first year of that equation, Chelsea "will actually have to make an overall profit" of around £9M ($14.8M) over the next two years "to meet the Uefa guidelines" at the end of the monitoring period in '16 (TELEGRAPH, 12/31).

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  • League Championship Side Bolton Wanderers Posts $83M Loss Following Relegation

    League Championship side Bolton Wanderers has "revealed the full cost of relegation from the Premier League" by revealing that the club now stands £163.8M ($276.7M) in debt following a record loss of £50.7M ($83.4M) during the financial year ending in June, according to Mark Ogden of the London TELEGRAPH. The Wanderers were "relegated after eleven consecutive seasons in the top flight" at the end of the '11-12 campaign. The figures "signpost a worrying future for the club, with the huge financial cost of relegation being borne out after just one season in the Championship." A £2.3M "outlay on compensation for former manager Owen Coyle and his staff following their dismissal" in Oct. '12, and "subsequent fees involved in securing the services of Crystal Palace manager Dougie Freedman, proved to be dwarfed by millions lost due to falls in commercial revenue." Despite still receiving a £16M parachute payment from the Premier League, Bolton's turnover from June '12 to the following year dropped from £58.5M to £28.5M, although staff costs fell from £55.3M to £37.4M. Sponsorship revenue dropped from £4.3M to £1.4M, while a 28% "decline in attendances at the Reebok Stadium resulted in gate receipts" amounting to £3.8M -- £1.9M less than in the club's relegation season (TELEGRAPH, 12/31). Also in London, Jamie Jackson reported Chelsea, ManU and Fulham have a "greater debt than Bolton, yet the north-west club is the only one of these outside the Premier League." The "eye-watering loss in a single year means Wanderers have the unwanted distinction of becoming the fifth club" to have lost more than £50M over 12 months (GUARDIAN, 12/31).

    'SIGNIFICANT' LOSSES: The BBC's Nabil Hassan reported Sheffield Hallam University sports finance expert Rob Wilson described Wanderers' losses as "significant," adding that it "highlighted the harsh reality of life outside the Premier League." Wilson: "A £50 million loss over the course of the year is massive, especially when you consider their turnover is something like £28 million. At £150 million it is a worry now." Broadcast revenue "was more than halved" from £42M to £19M -- with that figure "thought to include" their £16M parachute payment (BBC, 12/31).

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