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Last Updated: Tuesday, 1 February, 2005, 23:35 GMT
Chelsea 'vision' under the spotlight
By Alex Kleiderman
BBC News business reporter

Olivier Tebily of Birmingham (left),  and Arjen Robben of Chelsea
Chelsea is striving to build a new fan base
Chelsea's on-the-pitch fortunes have been transformed by owner Roman Abramovich's cash injection but the club's ambition to turn its accounts around in five years is likely to prove a challenge.

While success is bound to bring increased television revenue and sponsorship money, building a new fan base also appears key to Chelsea's goals.

But it will also have to rely on revenues from outside the tried and tested opportunities related to gate receipts.

The club's 42,000-capacity Stamford Bridge stadium is smaller than many of its rivals - limiting its options to bring in huge extra revenues from current ticket sales.

Despite that, Chelsea spent 174m on new players last season, compared to 77m at Manchester United, but the London club says it is "now being run properly".

One avenue under exploration may be to increase the number of executive boxes and hospitality packages on offer.

"It will need to find imaginative ways to satisfy its fan base and find new ways for its global fan base to come into 'contact' with the club," says Michael Stirling, of London law firm Field Fisher Waterhouse, who advises football clubs on investment.

Summer tours

Chief executive Peter Kenyon is vowing to make Chelsea, which saw a loss of 88m last year, break even by the 2009-2010 financial year.

Chelsea have not won the league championship trophy for 50 years, but revenues in the 2003-2004 period increased by 40% to 152m, following the club's Champions League run and higher merchandise sales.

Building a squad of top players for manager Jose Mourinho does not come cheap, however, and Mr Kenyon intends to cut the 115m wage bill as a proportion of turnover, from 76% to 55%.

Jose Mourinho, Peter Kenyon
Jose Mourinho and Peter Keynon are taking Chelsea into new areas

The club has just agreed a 100m eight-year shirt deal with Adidas and is said to be lining up a new sponsor after an agreement with Emirates comes to an end this season.

It hopes to build up a supporter base and merchandise sales in China and US, and its Chelsea TV station will be key to such growth.

While at Manchester United, Mr Kenyon had the vision to woo international fans with summer tours abroad.

Chelsea last year joined the likes of Manchester United and AC Milan for a series of games in the US and Canada and future tours look a certainty.

'Supremely ambitious'

Chelsea says its commercial budget is not based on winning a trophy - but on securing a place in the lucrative Champions League.

Chelsea has a vision and is working towards it
Michael Stirling, Field Fisher Waterhouse
But Mr Stirling says: "If a club is doing well supporters will go to matches, use pay-per-view TV and buy merchandise. If the club is failing, sales go flat very rapidly."

He also points out the leading English, Spanish and Italian clubs are all chasing the same markets abroad.

Football finance expert professor Tom Cannon of the Ideopolis research group has described Chelsea's aims as "supremely ambitious".

Its commercial exploits abroad are unlikely to prove profitable enough to increase income by significant amounts over the next five years, he says.

Manchester United arguably have the largest fan base of any football club in the world, but have failed so far to produce a "genuine revenue breakthrough" in Asia and the US, he claims.

"Manchester United's revenues are massively to do with a stadium of nearly 68,000 seats and having the most executive suites in the Premiership," he says.

'Definite strategy'

Professor Christine Oughton, of the Football Governance Research Centre at the University of London's Birkbeck College, believes Chelsea does need to maximise all income streams over the next five years.

"Peter Kenyon's strategy appears to be for Chelsea to increase its revenues from cup runs but it really has to win a number of Premiership titles and Champions League titles to become financially viable and that's quite a big asking," she says.

Michael Stirling, meanwhile, does see a commercial rationality in Chelsea's ideals.

"Contrary to what many commentators have said in the past that Roman Abramovich's ambitions and interest defies commercial sense, there is a definite strategy that is emerging to take football into the 21st century.

"The difference between clubs that succeed and those that don't is not having the ideas but being able to implement them. Chelsea has a vision and is working towards it."

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