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Abramovich Clears Chelsea Debt


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Telegraph

Roman Abramovich clears Chelsea debt

Chelsea owner Roman Abramovich has dipped into his £10 billion fortune again this week, this time to write off a £36 million Eurobond taken out by former chairman Ken Bates.

With Manchester United and Arsenal heavily indebted and Liverpool struggling to raise bank loans to pay for their new stadium, the move by the Russian billionaire means Chelsea are now the only one of the Premier League's four most powerful clubs to be effectively free of external debt.

Abramovich writes off Chelsea's vast annual losses by arranging interest-free loans to balance the books. According to the club's 2006 accounts, Abramovich has so far loaned Chelsea £270 million to cover losses on top of the £440 million he has spent on acquiring the club in a £140 million takeover, buying players and building a new training centre at Cobham.

Sources said that while their accounts showed the loans as debt, the club's hierarchy are confident Abramovich will never demand them to be repaid as they are converted into shares in Chelsea Football Club Ltd.

The initial £75 million Eurobond was issued by investment bank UBS Warburg (now UBS) in 1997 to help Bates buy the freehold of Stamford Bridge from the estate of the former director Matthew Harding, who was killed in a helicopter crash a year earlier.

The money was also used to refinance Chelsea's other debts and to pay for the redevelopment of the stadium and construction of a hotel and other leisure facilities on the Chelsea Village site.

The bond came with stringent repayment conditions, however, and a nine per cent annual interest charge which used to cost Chelsea about £7 million a year.

In fact, the club's new chairman, Bruce Buck, has said that the club's huge debts and the need to meet the 2003 bond repayment was one of the reasons Bates decided to sell out to Abramovich.

Speaking in 2005, Buck said: "I personally was surprised. They had a £75 million Eurobond outstanding and it was perfectly clear to the markets that they might have trouble making the July payment.

"Trevor Birch [the chief executive at the time] had been in discussions for some time about restructuring that bond. The financial community, as opposed to the football community, knew there were some real issues."

Abramovich paid off half the outstanding amount due on the 10-year bond when he took control of the club four years ago but, despite having more than enough money to pay off the rest of the loan, he decided to wait until the full amount was due to be repaid this month in order to avoid heavy early repayment penalties.

The move will silence critics, such as the sports minister Gerry Sutcliffe, who last month attacked Chelsea over their indebtedness, claiming they were "£250 million in the red" and adding their financial position was "unsustainable".

Edited by Tri-Blue
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Roman is a good man and is only doing what he thinks is best for the club. I wish he would take a leaf out of Mandaric's book and consult fans before making huge decisions.

At the end of the day why should he? He bought the club to run it how he wants to.... He has brought to us the best in terms of players and training facilities ect.. and has now completely cleared our debt.

FIFA ect.. should be kissing our ass for being such a big club running without any debt.

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At the end of the day why should he? He bought the club to run it how he wants to.... He has brought to us the best in terms of players and training facilities ect.. and has now completely cleared our debt.

FIFA ect.. should be kissing our ass for being such a big club running without any debt.

We all know thats not gonna happen any time soon.

*laughs at the FA as they prepare another fine for Ballack breathing as he came on as a sub*

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And some people think Jose is more important to Chelsea than Roman...

Personally I have never denied RA's importance to bringing us to where we are today as a club, but footballing wise.......Thats a whole different story. Yes we needed his money to buy the players, but you need someone who can make them tick. Thats were Jose came into his own

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Of course we wouldn't have. We were going down the drain in terms of finances; had Ranieri not got us into the Champions League the summer Abramovich came in, we would have probably done a Leeds. I'm absolutely serious that's the difference. Abramovich made this club swim when it could have so easily sunk.

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Without a doubt Roman stepped in when we needed him most, his money not only saved the club but also allowed us to make the step up to realistically compete for the top honours. We also wouldnt have had a manager of Jose's calibre at the club to actually achieve something with the funds given, not just in terms of instant success but also in terms of the clubs future. So fair play to Roman for what he's given us. All Im saying is, I dont think everything he's done has been 100% positive and always in Chelsea's best interests. Personally, I respect what he's done for the club but Im not prepared to just kiss his arse while blatantly ignoring the fact he's made some glaringly bad decisions along the way.

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Without a doubt Roman stepped in when we needed him most, his money not only saved the club but also allowed us to make the step up to realistically compete for the top honours. We also wouldnt have had a manager of Jose's calibre at the club to actually achieve something with the funds given, not just in terms of instant success but also in terms of the clubs future. So fair play to Roman for what he's given us. All Im saying is, I dont think everything he's done has been 100% positive and always in Chelsea's best interests. Personally, I respect what he's done for the club but Im not prepared to just kiss his arse while blatantly ignoring the fact he's made some glaringly bad decisions along the way.

Nobody's perfect. Fact is, we're in a much better position with Abramovich than without so he gets my respect.

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