Chelsea Thread - 2022/23 | Pochettino confirmed as new manager

[terraloon]

Who knows what happened there. I'm not totally convinced it was genuinely written off.

But the salient point is that the debt was partly incurred via Roman's original purchase of the club and then increased as he put money in to fund their spending, which they struggled to fund out of revenue/cashflow. But the media never picked up on that and we were the ones targeted (wrongly) over continual owner investment.

And unless things have changed dramatically at Chelsea, it's hard to see how they can sustain their current level of spending without their cashflow being propped up by their new owners.

Indeed.

The RA takeover included settling of the EURO bond and of course giving goof ole Ken a wedge and of course subsequently buying up a significant amount of real estate in one of the most expensive areas in the UK

People keep talking about the debt and yes that’s a matter of record but that debt was to support losses that had been subject to FFP scrutiny.

We don’t yet know how the finances and cash injection that followed the takeover will be reflected in accounts

But it’s the the debt that is of greater interest because it’s quite possible that the debt was actually settled and the £1.6 ish billion was repaid to Fordstam and that company along with all RAs other UK assets are frozen

The new owners clearly believe that there is greater value attainable from commercial that along with increasing gate receipts but I read an article that they believe the real value is likely to be generated from the likes of TV and enhancements in technology

 

[terraloon]

Great post generally but this is a brilliant point and one that hadn't really occurred to me before.

If a loan was made to an employee, the difference between the interest rate applied to the loan and what was considered to be a market interest rate would be treated as a benefit in kind, with the employee paying tax on that at the relevant rate.

I agree that FFP should have treated it as a disguised expense, and disallowed it from the FFP calculation. Applying a notional 5% to that £1.6bn gives an additional "expense" of £80m a year.

What about the scenario where debts are converted to equity ?

 

[terraloon]

Isn't there an argument that is was more of a deemed capital contribution? That's the way it would have been treated for tax purposes wouldn't it? If it wasn't and it was forgiven, then the forgiveness would be taxable? I know there are compensating losses, but some of them would have expired? This sort of thing was a long time ago for me and I may be mixing up jurisdictions....

That's why I am a little suspicious of this "forgiving debt" talk. Isn't it more likely it was capitalised at the end and just not taken into account in the purchase consideration?

But then again. What do I know?

None of us do but as always some join up dots ( yep I am in that number ) to suit our own agenda

 

[moomba]

What? How does the media attention around City in 2008 have any impact my point that literally fans of all clubs think and say the exact same thing City fans say about the press and governing bodies?

I think there's plenty of evidence around to say we're not treated the same as others in the media, you don't have to look too hard.

FWIW, Chelsea suffered from muchnthe same reaction when Abramovich took over.

 

[domalino]

Isn't there an argument that is was more of a deemed capital contribution? That's the way it would have been treated for tax purposes wouldn't it? If it wasn't and it was forgiven, then the forgiveness would be taxable? I know there are compensating losses, but some of them would have expired? This sort of thing was a long time ago for me and I may be mixing up jurisdictions....

That's why I am a little suspicious of this "forgiving debt" talk. Isn't it more likely it was capitalised at the end and just not taken into account in the purchase consideration?

But then again. What do I know?

You would struggle to find a more self interested, more litigious group of people than the owners of the 20 PL clubs and their upper management. These are people who try to get each other banned over £25,000 going to an academy player's parent.

So it's very hard to imagine them just letting Chelsea get 1.5Bn written off, unless it was in a way expressly allowed by the rules.

 

[Shirley]

What? How does the media attention around City in 2008 have any impact my point that literally fans of all clubs think and say the exact same thing City fans say about the press and governing bodies?

If you didn’t read the media in them days then you wouldn’t be aware.

One example, Mancini was sat in the stadium when Mark Hughes was sacked.

 

[Vialli98]

I think there's plenty of evidence around to say we're not treated the same as others in the media, you don't have to look too hard.

FWIW, Chelsea suffered from muchnthe same reaction when Abramovich took over.

I don't remember the media scrutiny around Chelsea in 2003. I was just a young lad really and it was before the internet truly took off. But I'm sure a United or Arsenal fan, even Liverpool fan, could cite you plenty of materialthat they perceive to be evidence of a clear agenda against their club.

 

[Vialli98]

If you didn’t read the media in them days then you wouldn’t be aware.

One example, Mancini was sat in the stadium when Mark Hughes was sacked.

City got bad press in 2009, okay I can believe that. But it still doesn't really have anything to do with the point I was making. But anyway, I guess we can agree to disagree and put a pin in it? :)

 

[domalino]

You can have whatever length of contract you like. You’ll only be able to amortise the cost over five years.

How is this going to work with contract renewals?

Obviously the current system - we sign Grealish in 2021 to a 6 year deal, amortised to £16.6m a year. When he get's his contract renewed in 2024 and signs another 5 year deal, the remaining 50m gets spread over those 5 years, 10m/year.

So every player at every club who's been there more than 5 years still has a yearly amortisation.

If UEFA are saying you have to amortise down every signing to 0 within 5 years then it's going to pretty much cap transfers at <100m, but then if you keep a player past 5 years, you're not paying anything but wages, which really changes all the calculations around retaining them or selling them.

 

[terraloon]

You would struggle to find a more self interested, more litigious group of people than the owners of the 20 PL clubs and their upper management.

So it's very hard to imagine them just letting Chelsea get 1.5Bn written off, unless it was in a way expressly allowed by the rules.

That’s why I personally don’t think it was “ written off” in the way people suspect

I start to get way out of my depth very quickly but toward the end of RAs tenure he had to inject cash into the club via one of his holding companies and I seem to remember that was turned immediately into equity.

The company that ran the club was in effect debt free. It is only this company that the names of the likes of Bohley appear as directors.
In RAS day sat at a next level was another company called Fordstam the money from RA was injected from another company to Fordstam who ultimately held 100% of the shares in the football club.


I personally have a suspicion that Bohley et al bought the shares in the Football Club ( not Fordstam)and on paper paid the holding company the £2.5 ish billion and its at level the debt and proceeds of sale are held and like all other RAs assets are frozen