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chasman62
10-02-2012, 12:30
Released their financial report for 2010-11 yesterday. Announced a nearly 70 million pound loss on revenue of 222 million. Included 'special items' (basically paying off sacked managers and compensation to Porto for AVB) of 42 million pounds.

This is an utterly ludicrous way of running any kind of business. The only thing that makes them marginally less in the crap than some other teams is that the debt is continually converted to equity by Abramovich so they dont pay interest on any of this debt.

Made me smile because today my company will release its financial returns for last year...and if ours looked like theirs we wouldnt be in business at all.

This simply cant go on much longer before the whole thing implodes on itself.

Timberwolf
10-02-2012, 13:30
What does it mean, 'converted into equity'? I hear it all the time and I assume I know what it means. But I actually don't!!!

StefanWolves
10-02-2012, 13:39
What does it mean, 'converted into equity'? I hear it all the time and I assume I know what it means. But I actually don't!!!
Think it basically means writing the debt off with money from his own back pocket

Probably wrong though

Boss Hogg
10-02-2012, 13:39
What does it mean, 'converted into equity'? I hear it all the time and I assume I know what it means. But I actually don't!!!

When rich owners put money into a club it is often in the form of a loan - this way, like with all loans, it can be repaid - either on demand, when the investor asks for it or according to any terms imposed when the money was first invested. However, if the money is converted into equity (ie shares) then it never gets repaid. You would then only get your money back if you sold the shares for a big sum.

Its exactly what Sir Jack did for us - converted all his loans into equity. however, Sir Jack graciously sold the club not for mega millions to get all his money back but for just 10 - so he effectively gave us lots of free money which he never got back.

AW
10-02-2012, 13:57
It's disgusting. When I'm in charge of the FA I'll sort it all out.

Dewsburywolf
10-02-2012, 14:19
Is this just conclusive proof that the financial fair play rules won't work. If certain club owners are just prepared to write off mega money "loans" to their clubs then they're never actually going to be in debt to anyone & therefore will remain solvent no matter how much debt they run up? Or is this a different matter altogether?

:confused: :confused: :confused:

Gornal
10-02-2012, 14:30
It's disgusting. When I'm in charge of the FA I'll sort it all out.

Did you think it was disgusting when Sir Jack did exactly the same with Wolves?

Boss Hogg
10-02-2012, 14:53
Is this just conclusive proof that the financial fair play rules won't work. If certain club owners are just prepared to write off mega money "loans" to their clubs then they're never actually going to be in debt to anyone & therefore will remain solvent no matter how much debt they run up? Or is this a different matter altogether?

:confused: :confused: :confused:

You're right Dewsbury, the financial fair play rules are just a sham as the big boys can get around the system by converting loans to equity or signing ludicrously big sponsorship deals. If FIFA/UEFA were serious they would look at salary caps and/or limiting wages costs as a % of turnover (to say 70%) as these are areas much harder to fiddle.

Dewsburywolf
10-02-2012, 15:17
If FIFA/UEFA were serious they would look at salary caps and/or limiting wages costs as a % of turnover (to say 70%) as these are areas much harder to fiddle.

To be honest isn't that what they were (in part) meant to be doing anyway? Don't certain clubs (Pompey in the past - Bolton now??) use 90+% of their incomings to pay player wages (hence teams like us not paying such obscene player salaries) & then go into debt to cover other outgoings?

chasman62
10-02-2012, 16:53
When rich owners put money into a club it is often in the form of a loan - this way, like with all loans, it can be repaid - either on demand, when the investor asks for it or according to any terms imposed when the money was first invested. However, if the money is converted into equity (ie shares) then it never gets repaid. You would then only get your money back if you sold the shares for a big sum.


This is basically correct. Ambramovich converted interest-free loans which he provided to fund the club into an increased equity position should the club then be sold on, so they appear to be effectively debt-free. Even though there were promises made 2-3 years ago when he wiped off about 350 million in debt using this mechanism, that this would be a one time deal and represented a new start toward financial prudence, Chelsea show absolutely no meaningful signs of living within their means.

One could argue that this is a marginally better situation to be than Manchester United, unless RA gets utterly bored with the whole enterprise and flogs it off for whatever he can get for it. MUFC are a potentially highly profitable business being run at a loss to service debt on the other holdings of their owners. They truly are the 'golden tit' in the Glazers' empire.

Its exactly what Sir Jack did for us - converted all his loans into equity. however, Sir Jack graciously sold the club not for mega millions to get all his money back but for just 10 - so he effectively gave us lots of free money which he never got back.

Not sure he would have got even a fraction of his money back given the state of the club when he finally yielded control, but yes it is fundamentally the same principle. The only difference is in the staggering scale of the losses and the fact that despite all this immense expense, Chelsea face the very real prospect of losing 20 to 30 million pounds in revenue next year should they fail to reach the Champions League, and thus needing the Russian oligarch to absorb 100 million pounds that year rather than 70.

ice cream head
10-02-2012, 17:14
He isn't breaking any laws and he can easily afford it so i'm not sure why it's disgusting? As already said, Sir Jack did the same thing and yet he's a saint?

johnybig32
10-02-2012, 17:34
How is anyone supposed to topple the big clubs when they are able to do this? What chance does anyone below Lpool stand?

AW
10-02-2012, 17:44
Did you think it was disgusting when Sir Jack did exactly the same with Wolves?

The act itself isn't necessarily disgusting, it is the amount in question that is. The amount of money being banded about like this whilst there are people in this country struggling to have a living off tens of pounds a week.

ice cream head
10-02-2012, 17:59
How is anyone supposed to topple the big clubs when they are able to do this? What chance does anyone below Lpool stand?

Ever since business took over, football (at the highest level) ceased being a game. Business isn't a sport, it isn't fair and the weak aren't given a chance. Like the law of the jungle, where only the biggest and strongest survive and prosper. Everything else just withers and dies.

johnybig32
10-02-2012, 18:02
Withers and dies.

I can see that happening to one of bigger clubs if they continue as they are. They cant go on.

Teams like us, who are doing it right, surely wont wither and die.

AW
10-02-2012, 18:04
Withers and dies.

I can see that happening to one of bigger clubs if they continue as they are. They cant go on.

Teams like us, who are doing it right, surely wont wither and die.

We may not wither and die but we aren't going to suddenly become king of the jungle.

ice cream head
10-02-2012, 18:15
Withers and dies.

I can see that happening to one of bigger clubs if they continue as they are. They cant go on.

Teams like us, who are doing it right, surely wont wither and die.OK, maybe not wither and die. But while the big cats (and I include Moxey in that) are allowed to earn vast sums of money for simply surviving in this circus, what incentive is there for them to even try to change the rules, never mind trying to compete? Football isn't really a 'sport' anymore. While clubs have multi billionaire owners (Man City, Chelsea) or their brands earn mega money all over the world (Lpool, Man Utd, Arsenal) they will continue to win everything and increase their wealth. So not only will they 'go on' but they'll get bigger too.

gordonchas
10-02-2012, 18:22
Ever since business took over, football (at the highest level) ceased being a game. Business isn't a sport, it isn't fair and the weak aren't given a chance. Like the law of the jungle, where only the biggest and strongest survive and prosper. Everything else just withers and dies.

But this thread is about Chelsea and that's proof that football ISN'T a business. If football in England was a business and certain owners weren't prepared to subsidize it to the tune of many millions of pounds, Manchester United would win the league by ten points every season.

The world's two biggest football clubs aren't even "businesses" in any meaningful sense, they're still effectively members' clubs.

In an era before even I was born (!), the biggest clubs had a lot more competition from much smaller ones, purely because of the maximum wage. But that was (rightly) deemed unfair to players. So any attempt to impose limitation, however well intentioned, will be problematic. At least FFP is a start.

ice cream head
10-02-2012, 18:28
But this thread is about Chelsea and that's proof that football ISN'T a business. If football in England was a business and certain owners weren't prepared to subsidize it to the tune of many millions of pounds, Manchester United would win the league by ten points every season.

.

The PL (of which Chelsea are a member) is a business.

derbyrameater
10-02-2012, 18:30
Asking for tax experts on this one.

Can RA claim it as a loss so he offsets that against other profit?

gordonchas
10-02-2012, 18:39
The PL (of which Chelsea are a member) is a business.

It's about money. But no club is being run like a business.

WonderWolf
10-02-2012, 18:44
It's about money. But no club is being run like a business.


What about WWFC?

Edgmond Wolf
10-02-2012, 19:51
What about WWFC?

Yeah good point we are!!

gordonchas
11-02-2012, 07:26
Wolves is a model example of a club spending in line with its income.

However, this is not the same as complaining about football being a 'business'.

For a start, Wolves is only in this debt-free position because the previous owner wrote off around 70m in debt and the current one added 30m in capital.

Secondly, the majority of the club's income comes from a source over which it has no independent control, TV.

And, even when the club decides to spend in line with its income, we've seen all too well the pressures that exist from supporters to spend more in order to improve the league position. What other business has to put up with that?

Some of MM's more strident posters should love the PL model, politically speaking. The owners make nothing and all the money goes to the players.

Football is partly about prestige and power. It's not, never has been, and never will be a business.

WonderWolf
11-02-2012, 08:17
Wolves is a model example of a club spending in line with its income.

However, this is not the same as complaining about football being a 'business'.

For a start, Wolves is only in this debt-free position because the previous owner wrote off around 70m in debt and the current one added 30m in capital.

Secondly, the majority of the club's income comes from a source over which it has no independent control, TV.

And, even when the club decides to spend in line with its income, we've seen all too well the pressures that exist from supporters to spend more in order to improve the league position. What other business has to put up with that?

Some of MM's more strident posters should love the PL model, politically speaking. The owners make nothing and all the money goes to the players.

Football is partly about prestige and power. It's not, never has been, and never will be a business.

Yes it isn't a business per se but it is being run like one should be i.e. prudently.

Regarding profit, if the club is not in debt and is spending only 49% of its turnover on wages (not sure if this includes all wages at the club) surely there must be some?....where is it and who has it? :dong::D

BTW thank God for SJH, may he live long and healthy!...

Let's get that statue up!:wavey:

wallace
11-02-2012, 08:21
so am i right in saying football ownership is about rich boys playing games with their toys and we go and watch it, a bit like the romans with their gladiators?

WonderWolf
11-02-2012, 08:24
so am i right in saying football ownership is about rich boys playing games with their toys and we go and watch it, a bit like the romans with their gladiators?

Yes.

Jack Bauer
11-02-2012, 08:45
Is this just conclusive proof that the financial fair play rules won't work. If certain club owners are just prepared to write off mega money "loans" to their clubs then they're never actually going to be in debt to anyone & therefore will remain solvent no matter how much debt they run up? Or is this a different matter altogether?

:confused: :confused: :confused:

FFP refers to losses not debt.

Apocalypse Now
11-02-2012, 10:37
Asking for tax experts on this one.

Can RA claim it as a loss so he offsets that against other profit?

Absolutely, he will be able to group relief on the losses to offset other profits elsewhere in the group.

Bemused by the "special payments".given they do this about every 18 months not sure there is anything special about it.

Big Nosed Wolf
11-02-2012, 13:44
Until football rids itself of the GL and make the owners/oligarchs accountable to the fans it will never be 'fair'.

WWFC is run along OK lines but there is much confusion in the ranks.

Morgan wants to compete with the corporate nonsense going on at the usual culprits. It won't work and he is beginning to realise that I suggest - hence the stalled redevelopment. Wolves is not -and never will be -a 'big' club in the sense that it applies to the top six or so.

It is a HUGE club in the traditional sense of the word though and that is where it's strength lies. It is a proper football club - something which the current regime just does not grasp and is not developing the club with this strength in mind. A museum is fine but it's no good looking back nostalgically while the club is taken away from it's roots.

The corrupt way the game is governed will see our type of club strangled unless and until enough care enough to demand change.This includes primarily the fans along with owners such as Morgan who is supposed to be a converted WWFC fan. Mmmmmm....

Football clubs are community institutions which need administering on business lines.

Big Nosed Wolf
11-02-2012, 13:55
so am i right in saying football ownership is about rich boys playing games with their toys and we go and watch it, a bit like the romans with their gladiators?

Yes you are!

I include our own owner in this. Not as extreme as some but along the same gene pool.

This is why he thought it a good idea to go and slate the players after Liverpool. He, like many, are wannabe managers/players.He just has the money to be able to indulge himself. It just so happens he has enough moral fibre not to put the club in peril financially.

SJH was a bit of a one-off although has has been stated he still wrote off millions to help the club along the lines of Chelsea etc. The big difference was SJH UNDERSTOOD what the club meant as he was born into the Wolves support thing. He also never saw himself as a manager or player, but as a supporter first and foremost.

derbyrameater
11-02-2012, 14:17
Absolutely, he will be able to group relief on the losses to offset other profits elsewhere in the group.

Bemused by the "special payments".given they do this about every 18 months not sure there is anything special about it.

Thanks for the confirmation.