Chelsea Announce Financial results for 2005-6
Chelsea today announced a loss of £80.2 million for 2005-6, which for most companies would be bad news. But for mega-rich Chelski, this is good news, because the year before they lost £140 million! Last year’s loss is the best result since Roman Abramovich took over the club in 2003, who now expects Chelsea to break even by 2009-10. Roman himself has pumped £500 million of his £10.5 billion fortune into the club and but following Chelsea’s drop to number two in the premiership race has seen his own league position as the wealthiest Russian slip to number 2 behind the “Aluminum King” Oleg Deripaska (£10.6 billion).
How did Chelsea manage to lose so much last year? Firstly they had to pay £25 million to Umbro to end their sponsorship deal and then nearly £23 million to pay off Mutu and Veron, as well as spending more than £100 million on new players most notably Andriy Shevchenko, Shaun Wright-Phillips, Michael Essien and John Obi Mikel. Salary payments climbed as a percentage of sales, to 76 percent from 74.3 percent, or £114 million from £108.9 million in 2005.
Expect Chelsea to look even healthier next year, as the £100 million, 10 year sponsorship deal with Adidas finally kicks off as well as continued money from other big sponsor Samsung. Asia’s largest chipmaker is paying about £10 million a year, according to sponsorship consultant Sport+Markt AG. Of course player salary remains a massive part of spending, not just for Chelsea but for every Premiership club – almost half of all clubs income goes to paying wages, and Chelsea can expect England captain John Terry and fellow Three Lions star Frank Lampard demand more than £120,000-a-week contracts to bring them level with top earners Michael Ballack and Andriy Shevchenko, which will not help their financial plans.
Chelsea are looking further a field to generate future revenue, namely to the USA and Asia. Chelsea played pre-season matches against teams including A.C. Milan in the US, and last month launched a Chinese language Web site. “Awareness levels of Chelsea are at a par with the top European clubs,” Chief Executive Peter Kenyon said. “That adds up to revenue.” Chelsea also has become the first premiership team to sign a deal with YouTube to make available archive footage as well as daily news on its own branded channel, at www.youtube.com/chelseafc which will further broaden the reach of Chelsea FC.
Return to Football and Money News article.