At a FIFA conference in Zurich, the Chelsea F.C. CEO gave his take on the current global crisis and how he thinks it’ll effect football clubs as a whole…including Chelsea.
A couple of things he said caught my attention:
“A lot of people misunderstand debt. Chelsea are not in the same position as other clubs. We pay no interest on our debt as we have no external debt.
‘Our “debt”, such as it is, is to the owner. He has invested the money in the club. And while that is currently in the form of loans, this can be turned into equity. I think our financial structure does give us some strength and competitive advantage.
‘There is nothing inherently bad in financing one’s business through debt. It’s the ability to make the repayments that is the issue. We don’t have those repayment issues. Companies all over the world are financed predominantly by debt, this is normal in business.”
His specific comments about Chelsea’s debt do carry some weight. The fact that they owe money to the club owner, Roman Abramovich, and not a financial institution do give the club a much better outlook than others.
His comments about “nothing inherently bad in financing one’s business through debt” tick me off for a personal reason. I’ve been doing a lot of personal finance reading and research for the past three years and view all debt as the eighth deadly sin. I may not own a multi-billion dollar club but if I did, I know that I would run it without using debt. Just the way my head’s screwed on.
Story courtesy of the kakibangku blog.
Tags: Chelsea FC, Peter Kenyon, Roman Abramovich