Blues reveal record £140m losses

Chelsea have revealed league-record losses of £140m for their championship-winning year. However, pre-tax figures for 2004-05 show a 6% reduction in player wages and a 4.1% increase in football revenues.

The Premiership champions, who remain firmly on course to retain their title this season, insist they are moving in the right direction - with the objective of becoming profitable by the end of the decade.

In 2003-04, they posted losses of £88m - which far exceeded any record deficit at a British club. But Chelsea chairman Bruce Buck had stressed the last financial year saw the club absorb "exceptional charges" - including the £25m paid out to kit suppliers Umbro in return for freedom from that deal, and the termination of £13.8m striker Adrian Mutu's contract.

The Umbro payment, Chelsea insist, will be a successful investment - because in its place has come a £100m adidas 10-year deal, while the club have also struck a £50m shirt sponsorship contract with Samsung.

Neither the adidas nor Samsung deal figures in the accounts for the year ending June 30 2005.



Chelsea's wage bill was reduced from £115.5m to £108.9m, while transfer fees, and the additional fees involved in buying players, fell from £175.1m to £101m. Chief executive Peter Kenyon said: "These figures reflect the continuing restructuring of the business which we began in 2003-04.The overall loss increase is, in the main, down to some exceptional items that were necessary in order to help us achieve our strategic business aim of break even by 2009-10. In simple terms we have taken some pain now for long-term gain.

"For example, we terminated the Umbro contract which had a huge impact on these figures, but we have not yet seen any of the financial benefit of our new adidas contract. Similarly these figures do not include any of the monies from our new sponsorship deal with Samsung, which was the biggest in Premiership history. With continued success on the field and the resulting growth stemming from that of our fan base, memberships and revenues, we are confident of achieving our targets."

Turnover dropped from £152.1m to £146.6m, with the PLC putting that down to the sale of Chelsea Village Travel, the club travel agents. Chelsea reported a 'group operating loss' of £6.3m, an improvement on the figures for 2003-04, when it stood at £13.1m, however that does not take into account depreciation, amortisation and exceptional items.

As well as the loss of Mutu's value, Chelsea have also announced a write-off of £9m on Juan Sebastian Veron, indicating they accepted a £6m fee from Internazionale for a player signed for £15m from Manchester United. They also spent £5m on academy recruitment, which follows the arrival of head of development and scouting Frank Arnesen from Tottenham.

Owner Roman Abramovich's vast personal fortune means the debt is far from a problem for Chelsea - but the club still intend to become a profitable operation. They are following a business plan initiated after Abramovich's arrival in 2003 by Buck, Kenyon and managing director Paul Smith - and remain confident they are still on course. "We sat down and said we wanted this club to be profitable. Peter and Paul were directed to put together a business plan that would make us profitable," added Buck. "Having said that, Roman has a reasonably long-term view - and the business plan that was put together was a five-year business plan. We are doing a lot of things to make the club more efficient and towards profit-making in five years' time."

Chelsea have spent £240million on players since Abramovich's takeover, and last year's Premiership title was their first for 50 years.