KEN BATES delivered his customary dismissal of those who question Chelsea's financial stability when he announced this week that Chelsea Village plc, the company which owns the football club and the development around Stamford Bridge, had lost pounds 11m in the financial year ending June 2001. The Chelsea chairman scorned "lurid" media comments about the company's indebtedness.
Bates proudly listed the businesses on the Chelsea Village site: the football club, the now complete 42,500-seat Stamford Bridge stadium, "two hotels, eight restaurants, a sports bar, piano bar, a pub/club, a nightclub, health club, visitor attraction, 14 function rooms, 20,000 sq foot of retail, 24,000 sq foot of offices, a business centre and an underground car park".
Chelsea Village's accounts show pounds 106m in debts payable in the long term and pounds 65m owed to other creditors, a total of pounds 171m. Take out cash held and money owed to Chelsea, and the net debts stand at pounds 127m. The accounts do not separate the football club from Chelsea Village's myriad attractions, so it is not clear which account for the losses. But Bates was defiant that, with Stamford Bridge redeveloped to fulfil his vision as the "Covent Garden of West London", Chelsea would eventually prove the doubters wrong. "We can look ahead to the next decade with optimism," he said.
Chelsea pay high wages in long-term contracts to foreign stars and managers: the accounts include pounds 2m for replacing coaching staff after Gianluca Vialli, the manager, was sacked early last season. Whether the entertainment complex which girdles Stamford Bridge will prove to be a support or a drain on the football club remains to be seen.
What looks less likely to be cleared up, though, is who ultimately stands to gain. More than a quarter of Chelsea Village, 26.6 per cent, is still owned by an anonymous shareholder, managed in Guernsey, the Channel Islands tax haven. Guernsey, where Ken Bates once ran the bus company, has a 20 per cent basic rate of income tax but no capital gains tax, which applies in Britain to the increases in the values of investments such as shares. Investigation by a concerned group of supporters, the Chelsea Action Group, has found a further nine per cent held by British-based nominee companies. These companies hold shares as a management service for pension funds, stockbrokers and individuals, and do not identify the ultimate beneficial owners of the shares.
"We are deeply concerned because we want to know who owns our club," a CAG spokesman said. "Ken Bates has never revealed who the shareholders are and the Football Association rules on club ownership appear to be completely inadequate."
When Chelsea floated on the Alternative Investment Market in 1996, more than two-thirds of the shares were held by a company called Rysaffe Limited, based on the 18th floor of a tower block in Hong Kong. The shares were administered by a management company, Saffery Champness, based in Guernsey. In December 1996 Rysaffe transferred the shares to Swan Management, another Guernsey-based company, in order, according to Chelsea's stockbroker, "to show the investing world that Ken Bates has no interest in this stake". Despite repeated requests, Bates has never revealed publicly who the actual owners are.
The cluster of nominee companies was discovered by the CAG's inspection of the microfiche pages of Chelsea Village's list of shareholders. Concerned about the nominee companies, the CAG looked for more information by entering their names in Internet search engines. They found the shareholders list for the controversial animal experimentation company, Huntingdon Life Sciences, had been published on the web; around 90 of the nominee companies held shares in both Chelsea Village and HLS. …