Chelsea Gets $29 Million Boost as BSkyB Shares Are Canceled
European soccer champion Chelsea benefited from an exceptional 18.4 million-pound ($29.5 million) boost when the London team achieved its first profit under billionaire owner Roman Abramovich last year.
The gain from the cancellation of shares owned by British Sky Broadcasting Group Plc (BSY) helped the team in November to report a profit of 1.4 million pounds for the year ended June 30, 2012, after a 67.7 million-pound loss in the year-earlier period. The club, owned by Abramovich since 2003, credited on-field success and player sales for record revenue of 255.7 million pounds. It didn’t refer then to the cancellation of shares.
Chelsea’s accounts, published by Companies House today, show that the team made a profit on the cancellation of 15 million pounds of “non-equity preference shares” previously owned by BSkyB and the “write back of 3.4 million pounds of accrued preference share dividend associated with these shares.”
BSkyB waived its claim on the preference shares following the sale to the club of a 35 percent stake the company had in a joint venture called Chelsea Digital Media on Feb. 8. BSkyB in a filing on July 26 said it had a 7 million-pound profit on the disposal of its holding. Chelsea Digital Media, now 100 percent owned by the club, is responsible for the team’s website, television channel and mobile products. BSkyB owned 9.9 percent of the team before Abramovich’s buyout.
The Russian has spent more than $1 billion to help Chelsea win three Premier League titles and last season become the first London team to win Europe’s elite Champions League. His largesse has come at a cost with the 108-year-old club having an average loss of 77.6 million pounds during the previous seven seasons under Abramovich, according to Bloomberg calculations.
Today’s filing showed the team made a player-trading profit of 28.8 million pounds from the sales of Yuri Zhirkov, Slobodan Rajkovic, Alex and Nicolas Anelka. The Blues also booked an exceptional 4.7 million pounds after managing to claw back funds earmarked to pay off fired former managers Andre Villas-Boas and Carlo Ancelotti when they found new jobs. Chelsea’s policy means axed coaches continue to be paid until they find new employment.
Chelsea is among top European clubs trying to ensure they meet new fiscal requirements set by the continent’s soccer body UEFA. Teams that fail to keep losses below 45 million euros across three seasons face sanctions that include a ban from the Champions League.
“The football club needs to balance success on the field together with financial imperatives of this new regime,” Alan Shaw, Chelsea’s club secretary, said in a statement published in its accounts. “The results recorded in this financial year put us in a good position to meet the assessment criteria for the initial periods.”
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