Chelsea look to sell before buying as losses revealed

Chelsea chief executive Peter Kenyon has warned that any summer signings will have to be financed by the sale of players if the club is to break free of the financial muscle provided by owner Roman Abramovich.

On Friday the Premier League giants, who have suffered managerial upheaval in the past two years, announced losses of 65.7 million pounds (95.7 million US) for the year to June 2008.

In a statement released Friday on the club’s website Chelsea confirmed it had achieved “record group turnover and reduced losses for a third successive season”.

That was offset by the fact 23.1 million (33.6 million US) had been paid in compensation to former first team managers – Jose Mourinho and Avram Grant – and five coaching staff.

The figure does not account for compensation paid to Luiz Felipe Scolari, who was sacked as manager earlier this week.

The figure released Friday is lower than last year’s figure of 74.8 million (108.9m US), which was in turn an improvement on the 80.2 million (116.8m US) loss announced the previous year. The club announced record losses of 140 million (204m US) in 2004/2005.

The London club, owned by Russian billionaire Roman Abramovich, increased group turnover by 11.9 percent to 213.1 million pounds (310m US) from 190.5m (277.6m US) in 2006/07.

Chelsea chief executive Kenyon said: “There is no doubt that the positive upward trends of turnover and the continued reduction in losses shows that Chelsea is building a strong business base to build on in what will be challenging times.

“This is even more evident given that the results were adversely affected by the exceptional items.”

A report Friday by the BBC claims that Abramovich’s investment in the club since 2003 has reached 710 million pounds (1.03bn US), although Kenyon insists the club still hopes to become self-sufficient’ within the next 18 months.

But he admitted that means there will be very limited funds available for new signings.

Kenyon added: “We have set ourselves ambitious targets… to require zero cash funding from the owner (Abramovich) at the beginning of the financial year 2009/2010.

“We have consistently advocated the aim of self-sufficiency which has always been supported by the owner. We are hopeful of being close to these targets in the time-frames we have set given the underlying strengths of the business.

“Success on the field is a key part of this. But in line with our long-stated business aims, any squad structuring in the summer will be funded prominently by sales as we have consistently reduced our net transfer spend over the last five years and will attempt to continue this trend.”

Abramovich has reduced the debt the club owe to him personally by half, turning the 369.9 million pounds (539m US) of his loans into shares in the club.

It still means however that Chelsea owe him 339.8 million pounds (495m US) as an interest-free loan.