The expensive sacking of Luiz Felipe Scolari as Chelsea manager shows just how important the Champions League has become to top Premiership clubs. It is not the iceing on the cake, it’s a big slice of the cake in both financial and prestige terms. Chelsea have already made about £40m from the group stage this season and a return to the final would be worth that much again.
The expensive sacking of Luiz Felipe Scolari as Chelsea manager shows just how important the Champions League has become to top Premiership clubs. It is not the iceing on the cake, it’s a big slice of the cake in both financial and prestige terms. Chelsea have already made about £40m from the group stage this season and a return to the final would be worth that much again. With poor financial results expected on Friday, Chelsea do not want to drop out of the top four in the Premiership. Getting rid of José Moirinho cost Chelsea £20m, whilst sacking Avram Grant cost only £5m. Abramovich has offered to pay up the remaining 18 months of Scolari’s contract which means that he will leave Stamford Bridge with at least £7.5m.
UPDATE: BIG LOSS AT CHELSEA – 13/2/09
Chelsea remains some way short of its target of breaking even by 2010 after revealing a £65.7m loss for the financial year to the end of June 2008. The losses, down almost £20m from the £74.8m recorded the previous year, include £23.7m in compensation payments to managers José Mourinho and Avram Grant. Scolari’s pay off of £7.5m, which could grow to £10m when his support staff are added in, is not included in these figures. The £66m continues the downward trend since the club posted record losses of £140m in 2005, and would have been 43 per cent down on the previous year without the pay-outs. The biggest barrier to reaching the break even target is a squad that needs rebuilding and has saddled the club with a wages-to-turnover ratio of 70 per cent, among the highest in the league. The club intends to finance the bulk of summer transfers from day-to-day revenue or from the proceeds of player sales, but major acquisitions will still require assistance from Roman Abramovich. Turnover was up 12 per cent to £213.1m largely due to the increased value of the Premiership’s television deal, which brought the club £46m during the season, and the run to the Champions League final. With the stadium at capacity and commercial deals for the next year already signed it will be harder to secure comparable turnover increases in 2008-9.
Roman Abramovich has converted £369.9m of his loans to the club into equity, leaving £339.8m as an interest free loan. This move has already attracted one media enquiry to us, asking if it would make the club easier to sell. The short answer is that however Abramovich’s money is set up, he could sell the club if he wanted to, but we don’t think he does. The official Chelsea line is that the change in the form of his investment demonstrates his commitment to the club, although it is doubtful whether many will be impressed by that claim. One benefit is that it could defuse European criticism that Chelsea is a heavily indebted club, although that criticism of any English club generally overlooks the fact that they own an important asset in the form of their stadium, whereas stadia on the continent are often municipally owned. However, it could draw some of the sting from criticisms of the club by the likes of Uefa boss Michel Platini. The club points out that since the takeover by Abramovich, turnover has increased by 96 per cent.