?37m debt - A drop in the ocean.

[Sherlock]

Heart of Midlothian FC - ?37m

Chelsea FC - ?736m

Manchester United - ?764m

 

According to a Gurdian article anyway....

 

Chelsea and Manchester United, the Premier League's two representatives in tomorrow's Champions League final, owe creditors ?1.5bn between them. According to the latest accounts of Chelsea Limited, the company which owns the football club, Chelsea owed ?736m to all its creditors. United's accounts, also recently filed at Companies House, showed total creditors at ?764m. Those unprecedented figures will fuel concern that at this time of English football's greatest club triumph its clubs are carrying too much debt.

 

Covering the year to June 30 2007, Chelsea's accounts show that the club's largest creditor was the owner himself, Roman Abramovich, who had poured ?578m into the club, not as a donation but as an interest-free loan. As stated by the chief executive, Peter Kenyon, in February, Chelsea did not owe "external debt" to any bank.

 

However, with Abramovich's ?578m loan, introduced to sign players and pay wages since he bought the club in 2003, plus general amounts owed, taxes and some categories listed among creditors for formal accounting purposes, Chelsea's creditors stood at ?736m in total.

 

Chelsea's director of communications, Simon Greenberg, confirmed that the ?578m, described in the accounts as "Other loan", is indeed the loan from Abramovich. Greenberg reiterated that Chelsea has no "external debt" and pointed out that the creditors included season-ticket holders for 2007-08, whose money has technically to be treated as owed until the season is over, "and other normal operating creditors". The figure also included ?36.3m still owed on a Eurobond taken out by Chelsea's previous owner, Ken Bates, in 1997. That, the last of Chelsea's "external debt", was then repaid last December.

 

Kenyon released headline figures from these accounts in February, highlighting that the club made a record turnover, ?190.5m, and that its losses were down from ?80.2m in 2005-06 to ?75.8m last year. Kenyon said then that the club was in a healthy financial position, still aiming to break even by 2009-10, partly because it did not owe money to outside creditors and retained Abramovich's support. "With the company being external debt free and our ownership clearly demonstrating continuing commitment to the long term," Kenyon said, "I am very confident about the future."

 

United's accounts showed the club's total creditors at ?764m. United does have "external debt" - ?666m owed to financial institutions, including ?152m to hedge funds - taken on by the Glazer family when they bought the club in 2005, then loaded on to United itself. While United's loans incurred interest of ?81m last year, the loan to Chelsea by Abramovich is interest-free. Abramovich has funded Chelsea's extraordinary acquisition of stars and, although transfers showed a profit last year, he continued to allow Chelsea to be run at a substantial loss.

 

Kenyon's role is to transform Chelsea into a club which can survive on its own earnings. In February he acknowledged it was an "ambitious" target to aim to be self-financing by 2009-10 but the accounts bear out commercial progress in all areas. Having finished runners-up in the Premier League, won the FA Cup and League Cup and reached the Champions League semi-final, the club's sponsorship, match-day and media income all increased to push total turnover 25% up.

 

However, there is no doubt that the club remains wholly reliant on Abramovich's continued funding. Chelsea's chairman, Bruce Buck, has stressed that Abramovich "loves football" and will not "walk away" from Chelsea.

 

If the owner's enthusiasm were ever to wane, and Abramovich decided he did want his loan back, the accounts show that Chelsea would have 18 months to find the money.

[Sherlock]

Couple of interesting points...

 

Chelsea's accounts show that the club's largest creditor was the owner himself, Roman Abramovich, who had poured ?578m into the club, not as a donation but as an interest-free loan....Chelsea did not owe "external debt" to any bank.

 

If the owner's enthusiasm were ever to wane, and Abramovich decided he did want his loan back, the accounts show that Chelsea would have 18 months to find the money.

[Erik]

Its all about scale.

[Jam Tarts 1874]

Fair enough. Man Utd's turnover is 24% of their total debt, Hearts turnover is 28% of the total debt, so I suppose technically we are better off :-)

[hughesie27]

What is the point you are triying to make? Both teams are going to get ?20 million pounds at the start of next season just for still being in the premiership. Half of Hearts debt!

Both team wil lalso play in the CL final tommorow night. Gaining at least another ?10 million from that I assume. leaving Hearts in ?7 million of debt?

[Boof]

Well then...shouldn't we be trying to get into the CL final?

[Sherlock]

What is the point you are triying to make? Both teams are going to get ?20 million pounds at the start of next season just for still being in the premiership. Half of Hearts debt!

Both team wil lalso play in the CL final tommorow night. Gaining at least another ?10 million from that I assume. leaving Hearts in ?7 million of debt?

 

I'm not trying to make any point.

 

This is a football forum and i thought some members might be interested in this football article.

 

I'll use the sarcasm smilie after any further "drop in the ocean" comments by me, just for your benefit.

[davieholt]

Well then...shouldn't we be trying to get into the CL final?

 

What a good idea !

 

Someone should suggest it to Vlad

[Geoff Kilpatrick]

This article will not get widely reported but it's a fact that things like debt will never be highlighted if you are successful.

 

When you fail, it becomes a convenient stick with which to hit the club.

 

The difference between United and the other two is that United clear an operating profit. They need to because the debt is effectively owed to the owners in Chelsea and Hearts' case.

[Winston Ingram]

Article struck me this morning as well. Even discounting Man Utd (a bigger worldwide brand than Chelsea).. Chelsea's model seems very similar once again to Hearts.

 

If you broke down the relative scale of debt/income proportionately, I'd imagine the two clubs would be built on the same model...

 

There is no way Abramovic could recover that money.. so do people believe he is genuinely in love with Chelsea, or on an ego trip? Heard such questions before...?!

[ToadKiller Dog]

What it shows is that if the golden bubble of the EPL was to go POP ,A good few would be in serious poo.

Clubs at the epl need rich TV and sponsership money that gets cut back then whoops look at on a smaller scale what happened to the championship when itv digital collapsed,some sides still struggling to get over that .

If this global down turn was to hit a real depresion a good few clubs ,us maybe also would be in serious muck.

[rudi]

Article struck me this morning as well. Even discounting Man Utd (a bigger worldwide brand than Chelsea).. Chelsea's model seems very similar once again to Hearts.

 

If you broke down the relative scale of debt/income proportionately, I'd imagine the two clubs would be built on the same model...

 

There is no way Abramovic could recover that money.. so do people believe he is genuinely in love with Chelsea, or on an ego trip? Heard such questions before...?!

 

Massive ,huge difference is that it is Abramovic's own money that he is using,Vlad is using other peoples and Abramovic owns Chelsea where as we are owned by a PLC.

[Geoff Kilpatrick]

Massive ,huge difference is that it is Abramovic's own money that he is using,Vlad is using other peoples and Abramovic owns Chelsea where as we are owned by a PLC.

 

No we aren't!

 

We're owned by a holding company that nobody knows anything about bar comments on its assets.

[rudi]

No we aren't!

 

We're owned by a holding company that nobody knows anything about bar comments on its assets.

 

A holding company who has share holders,no.

[Geoff Kilpatrick]

A holding company who has share holders,no.

 

Yes.

 

Our esteemed owner owns 2/3rds of them.

 

Doesn't mean that it has to be a plc though.

[rudi]

Yes.

 

Our esteemed owner owns 2/3rds of them.

 

Doesn't mean that it has to be a plc though.

 

Okay,true enough.

 

Fact still remains that it's not his money that Hearts are playing with.

[Geoff Kilpatrick]

Okay,true enough.

 

Fact still remains that it's not his money that Hearts are playing with.

 

No, but it's his assets!

[Lovecraft]

What is the point you are triying to make? Both teams are going to get ?20 million pounds at the start of next season just for still being in the premiership. Half of Hearts debt!

Both team wil lalso play in the CL final tommorow night. Gaining at least another ?10 million from that I assume. leaving Hearts in ?7 million of debt?

 

Is it not ?40 Million?

[Coco]

Chelsea and Manchester United have players worth tens or even hundreds of millions of pounds. They have fully developed grounds. They have a franchise value.

 

Hearts (in the smaller scale of course) have none of those things.

[rudi]

No, but it's his assets!

 

Have to disagree,IMO Vlad has spent very little if anything of his own money in Hearts,I don't think he would loose out financialy if it all went t1t5 up,infact I think he could and probably has made a few quid out of Hearts already.

[Geoff Kilpatrick]

Have to disagree,IMO Vlad has spent very little if anything of his own money in Hearts,I don't think he would loose out financialy if it all went t1t5 up,infact I think he could and probably has made a few quid out of Hearts already.

 

Disagree. The loss to UBIG would more than offset this.

 

In fact, the easiest way for Vlad to get out would be to take a haircut on the debt and equity as opposed to trying to liquidate the assets.

 

Hence why I think he's here for the forseeable future.

[rudi]

Disagree. The loss to UBIG would more than offset this.

 

In fact, the easiest way for Vlad to get out would be to take a haircut on the debt and equity as opposed to trying to liquidate the assets.

 

Hence why I think he's here for the forseeable future.

 

Ach well you have your views on it I have my own,but the last statement sent shivers down my spine.

[Winston Ingram]

Geoff is right; given that Vlad controls UBIG, it amounts to the same thing.

 

Coco; football clubs cannot count players as balance sheet assets anymore for the simple reason that players have a right to wind down their contracts and leave for nothing. And if a club were in financial difficulties, they could recoup nothing like players' true values.

 

It would be complicated, but a comparison of Chelsea's debt compared to ours in relative terms would very be interesting. As I said, the model seems exactly the same to be but Chelsea are obviously playing for higher stakes.

[Dr. Bapswent]

As alluded to above.

 

The discussion of debt can only be done sensibly when taking inot account the assets and financial revenue created by the clubs.

 

Man Utd and Chelsea both have hundreds of millions in players.

 

They both have hundreds of millions in stadium complexes.

 

They both have hunderds of millions in sponsorship and merchandising.

 

They both have hundereds of millions in revenune through the gate each year.

 

Hearts debt is a fraction of that, but Hearts assets, revenue, sponsorship, merchandising and player value is also a fraction.

 

If its looked at relatviely, I dont think there is too much differnce between the clubs.

 

The only HUGE difference is the fact that Man Utd and Chelsea were competing to win the league and are both in the CL final.

 

We are in the bottom 6.

[Coco]

Geoff is right; given that Vlad controls UBIG, it amounts to the same thing.

 

Coco; football clubs cannot count players as balance sheet assets anymore for the simple reason that players have a right to wind down their contracts and leave for nothing. And if a club were in financial difficulties, they could recoup nothing like players' true values.

 

It would be complicated, but a comparison of Chelsea's debt compared to ours in relative terms would very be interesting. As I said, the model seems exactly the same to be but Chelsea are obviously playing for higher stakes.

 

My point was not about balance sheet assets.

 

But about the potential to sell the players if need be. If Manchester United were in financial trouble - do you think that any club would be able to buy Ronaldo on the cheap? Assuming all clubs are not in financial trouble the answer is clearly not. Whereas our rubbish players would of course go for ?0 for the most part.

[rudi]

Geoff is right; given that Vlad controls UBIG, it amounts to the same thing.Coco; football clubs cannot count players as balance sheet assets anymore for the simple reason that players have a right to wind down their contracts and leave for nothing. And if a club were in financial difficulties, they could recoup nothing like players' true values.

 

It would be complicated, but a comparison of Chelsea's debt compared to ours in relative terms would very be interesting. As I said, the model seems exactly the same to be but Chelsea are obviously playing for higher stakes.

 

Not really,that is assets, those assets could go at any time one turn off events could crash all his assets ,Abramovic does have a personal wealth,Vlad doesn't.

We are in the lap of the banking gods if there is a massive crash we go with it,I wouldn't think Vlad has put in place any"what if" plans to save Hearts if his company folds,or he passes away or anything like that, not he way Eddie Thomson has done at Dun Utd.

[Winston Ingram]

My point was not about balance sheet assets.

 

But about the potential to sell the players if need be. If Manchester United were in financial trouble - do you think that any club would be able to buy Ronaldo on the cheap? Assuming all clubs are not in financial trouble the answer is clearly not. Whereas our rubbish players would of course go for ?0 for the most part.

 

In a word, yes. Teams in financial bother never recoup the full value of their players. Leeds a prime example.

 

Although we are at the theoretical of theoreticals here. As I said, I think Man Utd are a different issue because of worldwide branding, income streams etc which are on a different level from any other club in the UK.

 

Chelsea and Hearts, however, appear to be run on similar basis. High salaries, outgoings etc in return (in theory!!) for European success... The one difference is that Abramovic hires the best people available (Kenyon, Mourinho) and lets them get on with it. Vlad thinks he can do the whole thing better himself!

 

The key here is relative scales, but you must admit there is a viable comparison?

[Winston Ingram]

Not really,that is assets, those assets could go at any time one turn off events could crash all his assets ,Abramovic does have a personal wealth,Vlad doesn't.

We are in the lap of the banking gods if there is a massive crash we go with it,I wouldn't think Vlad has put in place any"what if" plans to save Hearts if his company folds,or he passes away or anything like that, not he way Eddie Thomson has done at Dun Utd.

 

So the close to ?30 million which has been paid out to players in wages since Vlad arrived, was this just plastic or "asset" money? It actually existed, you know...

[rudi]

So the close to ?30 million which has been paid out to players in wages since Vlad arrived, was this just plastic or "asset" money? It actually existed, you know...

 

Other peoples money, that went on our debt.

We are owned by one of Vlads company's yet we pay another of his company's interest on his debt,great init.

[Winston Ingram]

Other peoples money, that went on our debt.

We are owned by one of Vlads company's yet we pay another of his company's interest on his debt,great init.

 

You've answered your own question then, mate. UBIG's money.. money (not assets).. paid these things and was given to Hearts in the form of loans (this is detailed in the accounts). ie exactly the same as Abramovic has done with Chelsea..

[Sherlock]

You've answered your own question then, mate. UBIG's money.. money (not assets).. paid these things and was given to Hearts in the form of loans (this is detailed in the accounts). ie exactly the same as Abramovic has done with Chelsea..

 

Not quite.

 

Chelsea's loans are interest-free.

[Coco]

In a word, yes. Teams in financial bother never recoup the full value of their players. Leeds a prime example.

 

Although we are at the theoretical of theoreticals here. As I said, I think Man Utd are a different issue because of worldwide branding, income streams etc which are on a different level from any other club in the UK.

 

Chelsea and Hearts, however, appear to be run on similar basis. High salaries, outgoings etc in return (in theory!!) for European success... The one difference is that Abramovic hires the best people available (Kenyon, Mourinho) and lets them get on with it. Vlad thinks he can do the whole thing better himself!

 

The key here is relative scales, but you must admit there is a viable comparison?

 

I don't know enough about Chelsea or Manchester United to comment on whether their business model makes any sense.

 

The Hearts business model of course does not make any sense. I have looked at hundreds of business models and have rarely seen anything as bizarre as how Hearts are run financially.

[I P Knightley]

 

The key here is relative scales, but you must admit there is a viable comparison?

 

When I first saw the thread I thought, "what a load of baws" but reading through it, I have to agree with you.

 

The question is whether it's sustainable.

 

Manyoo are in a different position: 78,000 gates, folk around the world buying Manyoo kits (not always from official outlets - as I found last week in West Africa -but not buying Chelsea or Arse kits), image rights, sponsorship, youth system, etc.

 

Financially, Chelsea are like a great big Hearts. Salaries at ?130k per week where we might top out at ?13k; modest home gates; massive debt (as a %ge of turnover or operating income) recallable at the whim of a big-ego dictatorial figure. However, they've got themselves over a big hurdle by spending so huge. They are serious competitors on the European scene and, success breeding success, are likely to continue that way for a while. They could afford to lose a couple of high earners and still have a league-winning, CL-last 8 squad and start to generate sufficient profits to begin reducing their debt.

 

Hearts, on the other hand, have not had the courage of any convictions VR may have had, to persevere. We've dipped our toe in the water and, despite showing signs of success, it seems that ambitions were overcome by trepidation. What was needed (among sorting out some personality issues) was sustained support of a policy bringing in higher earners, bigger names and cementing a position at the top table.

 

Sadly, the failure to do so has left Scottish football looking pathetic again and a direct result of that is that TV money is not as forthcoming as it might have been had HMFC (or any other club) been in a position to mix it with the OF for more than one fleeting season.

[Winston Ingram]

Legend; you are bang-on. However, UBIG have provisions in place which mean they could have recalled any of their loans already, and they have never bothered to do so. The loans are effectively means for parent company giving subsiduary company money, no evidence they plan to call them all in at any given time in the near or not so near future.

[Billy52]

No, but it's his assets!

 

What assets? the land bought in ubigs name, players registrations, tynecastle?

 

All owned by a holding company in his name!

 

The only money spent has increased the club OVERDRAFT and that cocky little ******* told a shareholders meeting that some of the expenditure was' confidential'.

 

Abramovich owns his club and has given them an interest free loan. Vlad has simply racked up our overdraft at his bank, earning interest for some third world money laundering scheme which will no doubt become apparant very shortly.

 

The sooner we wake up and start to challenge the financial situation the better. It may be a 'family owned' company taken off the stock exchange but there are still independent shareholders out there who can ask questions although by hearing what went on at the AGM none of them have the bottle to ask them. How can anything in the accounts be 'confidential from the shareholders. Foulkes, deans Roberson and the Mcgrails must have some interest where were their questions??

[Billy52]

When I first saw the thread I thought, "what a load of baws" but reading through it, I have to agree with you.

 

The question is whether it's sustainable.

 

Manyoo are in a different position: 78,000 gates, folk around the world buying Manyoo kits (not always from official outlets - as I found last week in West Africa -but not buying Chelsea or Arse kits), image rights, sponsorship, youth system, etc.

 

Financially, Chelsea are like a great big Hearts. Salaries at ?130k per week where we might top out at ?13k; modest home gates; massive debt (as a %ge of turnover or operating income) recallable at the whim of a big-ego dictatorial figure. However, they've got themselves over a big hurdle by spending so huge. They are serious competitors on the European scene and, success breeding success, are likely to continue that way for a while. They could afford to lose a couple of high earners and still have a league-winning, CL-last 8 squad and start to generate sufficient profits to begin reducing their debt.

 

Hearts, on the other hand, have not had the courage of any convictions VR may have had, to persevere. We've dipped our toe in the water and, despite showing signs of success, it seems that ambitions were overcome by trepidation. What was needed (among sorting out some personality issues) was sustained support of a policy bringing in higher earners, bigger names and cementing a position at the top table.

 

Sadly, the failure to do so has left Scottish football looking pathetic again and a direct result of that is that TV money is not as forthcoming as it might have been had HMFC (or any other club) been in a position to mix it with the OF for more than one fleeting season.

 

Ask Brooks Mileson about that one!! Compare him and the madman. At least mileson wanted success for his team and not to line his pocket with player sales!

[Sherlock]

What assets? the land bought in ubigs name, players registrations, tynecastle?

 

All owned by a holding company in his name!

 

The only money spent has increased the club OVERDRAFT and that cocky little ******* told a shareholders meeting that some of the expenditure was' confidential'.

 

Abramovich owns his club and has given them an interest free loan. Vlad has simply racked up our overdraft at his bank, earning interest for some third world money laundering scheme which will no doubt become apparant very shortly.

 

The sooner we wake up and start to challenge the financial situation the better. It may be a 'family owned' company taken off the stock exchange but there are still independent shareholders out there who can ask questions although by hearing what went on at the AGM none of them have the bottle to ask them. How can anything in the accounts be 'confidential from the shareholders. Foulkes, deans Roberson and the Mcgrails must have some interest where were their questions??

 

No land has been bought in UBIG's name. The land required for the stadium redevelopment has yet to be purchsed.

 

The only property surrounding Tynie that has changed hands since VR came to Hearts has been the old TO which was bought from Waldo's old company by a Lithuanian company (but not UBIG or UKIO).

[I P Knightley]

Ask Brooks Mileson about that one!! Compare him and the madman. At least mileson wanted success for his team and not to line his pocket with player sales!

 

Again, slightly different. VR had an infrastructure (of sorts) to build upon; Mileson was essentially building something from nothing. In a way, I think Gretna were unlucky to be successful so quickly. It may have been a similar story for HMFC but I'm fairly certain that Vlad never had a five-year plan.

[topcat]

What it shows is that if the golden bubble of the EPL was to go POP ,A good few would be in serious poo.

Clubs at the epl need rich TV and sponsership money that gets cut back then whoops look at on a smaller scale what happened to the championship when itv digital collapsed,some sides still struggling to get over that .

If this global down turn was to hit a real depresion a good few clubs ,us maybe also would be in serious muck.

 

Actually that didn't just hit the English Football League clubs. It triggered a collapse in the price of TV sports rights across the board.

 

This was illustrated by the SPL knocking back Sky's initial offer before the collapse with talk of setting up their own channel "SPL TV" only to find themselves crawling back and accepting a deal worth only half as much as had been on the table already. Even the Premiership's next negotiated rights deal was significantly less lucrative than had been forecast before ITV Digital collapsed.

 

Worst Hit of all were Leeds United but in a way we're still recovering

 

It was on the back of this bubble that CPR's market speculation proved to be so badly timed especially as the collapse depressed transfer fees especially in the section of the market where the likes of Hearts were operating so it wasn't as if he could sell his way out. Though even in a boom you can't imagine him turning a profit on Goran Petric.

[shaun.lawson]

Actually that didn't just hit the English Football League clubs. It triggered a collapse in the price of TV sports rights across the board.

 

This was illustrated by the SPL knocking back Sky's initial offer before the collapse with talk of setting up their own channel "SPL TV" only to find themselves crawling back and accepting a deal worth only half as much as had been on the table already. Even the Premiership's next negotiated rights deal was significantly less lucrative than had been forecast before ITV Digital collapsed.

 

Worst Hit of all were Leeds United but in a way we're still recovering

 

It was on the back of this bubble that CPR's market speculation proved to be so badly timed especially as the collapse depressed transfer fees especially in the section of the market where the likes of Hearts were operating so it wasn't as if he could sell his way out. Though even in a boom you can't imagine him turning a profit on Goran Petric.

 

Exactly. It was strange, though: in September 1999, financial analysts everywhere were convinced the football boom would continue, and that telecommunications were the place for investors to speculate on: hence, at least in part, our tie-in with SMG. Literally six or nine months later, it was clear the bubble had burst. It was the worst timing imaginable.

 

In fairness, that was also the first season the CL expanded to two group phases - and I remember watching a game early on, and feeling that it just wasn't anywhere near as big a deal as European nights had always felt in the past. That was my very first sense that something didn't smell right in terms of football and money; equally though, I can't pretend I wasn't excited by the SMG deal, and got as carried away as many others did. We've been repenting at our leisure ever since.

[The cruckie cookie]

Don' like discussing cash really so here is the players take on things

 

Man Utd

 

Rooney, Giggs, Ronaldo, Evra, Scholes, to name but a few

 

Chelsea

 

Lampard, Terry, Essien, Drogba, Ballack to name but a few

 

Hearts

 

Miko, Neilson, Zaliukas, Berra, Elliot, Mole to name but a few

 

Mon the Hearts