Date: 28th November 2014 at 4:35pm
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Roman Abramovich - ChelseaLast week Chelsea FC announced that they would make an £18.4 million profit on a record turnover of £318.9 million for the period 1st July 2013 – 30th June 2014. Not only is this the first time that the Club has broken through the £300 million barrier but it reflects a 25% increase on the previous year’s turnover, and only the second time since the arrival of Roman Abramovich that the Club have recorded a profit.

Big deal? What does this have to do with Chelsea supporters who by and large only care about the players and performances on the pitch; the trophies in the cabinet and the tales to tell journeying from Stamford Bridge to the Vincente Calderon following the team they love in the collective pursuit of glory?

Well any supporter old enough to remember lobbing loose change in to a bucket emblazoned with “Save the Bridge” might be shedding a tear, grateful that the days when the club were perennially facing bankruptcy seem to have disappeared forever. In fact you don’t have to be that old a supporter to remember a time when we were one week from disappearing altogether – and that was when Roman Abramovich arrived with his tank firing wads of money at the lawn of every other Premier Club (according to David Dein).

Of course if you were an Arsenal supporter receiving news of profitability, you would be salivating at this success (far more important than a trophy!), pouring over the spreadsheet whilst drinking a latte! But to many Chelsea supporters it seems more of an embarrassment – after all what does profitability have to do with football – it’s not a business, its football!

Well, sadly, football has very much been hijacked, commoditised and turned in to a business, but I’m not entirely sure that Chelsea’s ascent into profitability necessarily means that their motive is purely to make a profit for its own sake.

There are many reasons why Chelsea supporters should welcome this news (although whisper it quietly).

The fact that the club has recorded losses approaching £700 million in total since Roman’s arrival seems to indicate that the fear of bankruptcy is now a distant memory and the prime motive is clearly not profit. But any entity making losses this deep should be slightly unnerved no matter how deep the owner’s pockets or what their motives may be.

Abramovich stated years ago that one of his main aims was to get the Club in to a situation where it breaks even. Chelsea’s match day revenue is fixed – limited by the capacity of Stamford Bridge and the fact that they already get 99% capacity during the season. The only two areas where the Club can claw back the huge amount of money lavished on players and the Academy is from Broadcast revenue and from commercial activities.

Clearly there has been a dividend from the massive hike in the Premier League broadcast deal, and continued success on the pitch, especially in Europe adds to this. The Club has also made great strides growing ‘the brand’ globally increasing revenue from its commercial activities by 50% from the previous year and putting it in a position where it is getting close to the revenue generating power of clubs such as Barcelona, Real Madrid, Manchester United and Bayern Munic4449229h.

But the one area that I believe has made an impact on the club’s finances is its adherence to the rules of FFP, meaning that the club can only spend what they make. Again, whilst most supporters don’t care about the implications of FFP, one only has to look at the impact that breaking its rules has had on Man City and PSG this season, to see that it can have a negative impact on success on the pitch – something that all supporters care about!

Chelsea’s clever use of buying and selling academy players – not all of whom would make the grade at Chelsea anyway, has and will continue to generate revenue for the Club (until Platini and UEFA deem this contrary to FFP rules!), and in many respects the profit accrued this year can be attributed to the sales of Mata, De Bruyne and Bruma.

This strategy is at the heart of how the club, I think, is now being very well run – for profit or not. There is no doubt that Chelsea has an Academy the envy of most clubs in the world. The scouting network and ability to secure this talent has been unparalleled in recent times bringing in and developing an exciting crop of young players. The club also seem to be unwilling to be ‘mugged’ off by paying well over the odds for established players.

Hopefully this will lead to balance on the pitch as well as balance in the accounts. They won’t all make the grade, but there is a hope that the best of the best of the youth will – and that is not something Chelsea supporters have been able to say with any confidence in the Abramovic era. And if they don’t, the money generated through the sale of players who don’t make the grade will be re-invested and so the process continues.

We might feel uncomfortable with it, but the importance of the Club making a profit is directly related to fulfilling the requirements of FFP, and more to the point our ability to continue to have success on the pitch.

In fact revenue generation and success on the pitch are symbiotic, and the Club know and recognise this. Ron Gourlay said as much to me two years ago, that if Chelsea does not generate revenue through its worldwide commercial activities then they don’t have the funds to re-invest back in to the team. If the team are not successful year in year out then they do not generate the Broadcast and commercial income needed to buy the players to be successful. They go hand in hand. It has been one of the fundamental reasons why many managers who don’t meet the Club’s incredibly high benchmark of success are so quickly dispensed with. The Club would call that risk management.

3899146If anything, re-investment is the key to all of this, and that is why Chelsea supporters should embrace the Club making a profit. We will do so in the knowledge that all of the profit the club makes will be re-invested back in to keeping the Club successful on the pitch and continue winning trophies, and ultimately that is what matters.

It is worth reminding ourselves what Roman Abramovich said when he purchased Chelsea FC back in 2003 for proof that football success rather than profit is the sole motive: “The goal is to win. It’s not about making money. I have many much less risky ways of making money. I don’t want to throw my money away, but it’s really about having fun, and that means success and trophies.”

I, for one, am thoroughly looking forward to another ten years of watching some of the world’s best players, winning more trophies and enjoying the journeys over land and sea following the team I love. Hey, I might even have a cheeky latte to celebrate!

First published in International Business Times UK Sport

 

One response to “Profit – what’s the motive?”

  1. Kassim says:

    Chelsea will gain more profits 2 geda with Trophies!