Despite their fantastic domestic record of late, a team packed with World renowned players and a bank account that most teams can only dream of, Chelsea’s current owner Roman Abramovich faces a complex issue over the next few seasons. The problem is that Chelsea are likely to end every season deeply in debt on their club balance sheet, despite the large sums of money that Mr Abramovich has put into the team.
While Chelsea’s massive soccer merchandise sales may bring in cash, as will the transfer of a player or two, sponsorship deals and prize money, the problem is that Chelsea’s costs far exceed the revenue generated and so far it has been the owner that has absorbed these debts. UEFA’s uptake of tough new rules regarding the eligibility of teams entering their competitions with reference to being financially profitable, means that Chelsea have a need to find a long-term solution to this problem.
The process of reducing the clubs debt started last summer when several high-income first team players were allowed to leave the club for new pastures. Players like Michael Ballack, Joe Cole and Deco were not offered new contracts while Ricardo Carvalho was sold to Real Madrid and manager Carlo Ancelotti chose not to replace them with renowned players, instead promoting youth from within the club. These cuts certainly minimised the annual wage bill, but other actions still need to be taken in order to reduce the debts still further.
The initial level of investment made by owner Abramovich was targeted at giving Chelsea a boost to becoming the biggest club not only in English soccer, but also European and world soccer. Depending on your opinion, this claim is currently held by either of the Spanish giants Barcelona or Real Madrid, or Chelsea’s English rivals Manchester United, and the cause of Chelsea being unable to match these three giants of the beautiful game is due to two main reasons:
- The size of Stamford Bridge in comparison to the size of the competing big three.
- The fact that Chelsea trails behind the other three in terms of merchandising, worldwide.
The easiest issue to address; the seating capacity of the stadium and the income it generates, could well be set to be addressed sooner than expected. Reports have stated that Stamford Bridge may soon be replaced as the home of Chelsea Football Club. While no firm details have been confirmed by any sources at the club, rumours are circulating that Mr Abramovich has been considering moving the club into a purpose built new ground, of at least 60,000 capacity, and such a move is required if Chelsea are to realistically hope to achieve the status of the world’s biggest club.
A new ground, designed for soccer and with a much improved capacity, will have an instant effect on Chelsea’s financial health. A higher capacity, if the fans can fill it, will mean Chelsea turning over far more a year from spectators. The increased revenue from a new stadium will be enormously beneficial in helping the club follow the new guidelines UEFA wants in use in time for the start of the 2012 season. A new ground will also give Chelsea the opportunity to sell the naming rights for a considerable sum of money, as neighbors Arsenal did when they chose to name their own new stadium after main sponsors Emirates Airlines.
A new stadium would also have an effect on improving levels of merchandising sales that the club generates as the new ground would give the club increased publicity, particularly in the far larger customer markets in Asia and the USA.
If Chelsea are ever to complete their owners ambitions, the time has surely come for them to stop paying high transfer fees and wages and spend it on the infrastructure of the club. If Mr Abramovich is prepared to upgrade Chelsea onto the equal level as Real Madrid, Barcelona and Manchester United, then it is required he invests his money in a new stadium as that is the next step that the Londoners must take in order to achieve the levels of greatness to which they are aiming for.