6 10 2011

Chelsea Football Club’s sudden and unexpected offer to the Chelsea Pitch Owners appears reasonable at first glance but on closer inspection more detail and guarantees must be sought…..

When Chelsea Pitch Owners (CPO) came into being in 1993, it was as a way of the fans safeguarding the future of their club at a time when the property developers were hovering over the prime piece of SW6 real estate that is Stamford Bridge.

The basic premise was simple and very effective, if the fans own the pitch and the land on which the stands are built then the ground can’t be sold (at least not without their say so).

In 1997 CPO bought the freehold (supported by a £10 million loan from the club) and have since leased the land back to Chelsea FC at a peppercorn rent. CPO has sold 15,000 shares at £100 each and, declaring my interest, I am one of those shareholders.

On the face of it Chelsea’s offer to the fans seems reasonable. Chelsea’s future is far more secure than it was in the 1990s now that Roman Abramovich has brought his £Billions to the club and Stamford Bridge’s capacity for further development is limited by the geography of its location. So, if the club want to develop a new stadium and move, they will need to own the current ground in order to sell it.

The CPO was set up entirely for the purpose of safeguarding the well-being and future of the club. The club seems to be suggesting that our time has now passed and I know many other CPO shareholders who agree (and lots of others who don’t).

My personal position is one of doubt. I need a lot more information before I can believe that CPO selling the freehold back to the club is in Chelsea FC’s best long-term interest.

Chelsea FC’s last end of year accounts show an operating loss of £68.6m against a turnover of £205.8m. The financial picture is improving but not at a rate of knots and without Abramovich’s ownership the club would be in trouble.

Abramovich appears to be here for the long haul and has publicly spoken of passing the club onto his son in the future. Yet my unease is not calmed. We have seen tragedy at Chelsea before, most recently the death of Matthew Harding, so we understand that nothing is forever thus begging the question, what plans do the club have in place should tragedy strike? It would be good business practice in most organisations to have continuity and succession plans, even company wills, in place.

Have Chelsea taken care of such details or is the strategy one of enjoying the good times and crossing collective fingers that they don’t turn bad? For without ownership guarantees there is no guarantee of the club’s best interests being served by a future owner. Such worries are currently safeguarded by the CPO ownership of the Stamford Bridge freehold.

Of far smaller concern to me is the club’s offer to buy shares at the same price (£100) fans paid for them. The intention was never that shares in CPO were in any way about profiteering but if we are to trust the future of our club to those making the offer one would hope they are good enough at finance to realise that with inflation their offer is one which asks the fans to lose money on the deal – as if football fans aren’t fleeced as it is these days!

My ‘investment’ in CPO shares was never meant as an interest free loan and I would expect a modest adjustment to the offer to counter the effects of inflation. That £100 buys much less than it did on the day a reserve team player called Rati Aleksidze and an emerging youth team player called John Terry presented me my share certificate on the pitch at Stamford Bridge (see picture).

One final thought, the main thrust of the club’s perceived need to buy the shares in order to develop and move to a ground with a larger capacity; if the well-being of Chelsea Football Club is the primary motivation and the fans have served the safeguarding of the club’s home so well for nearly two decades, why the need to buy?

Why not include the CPO in the development plans and when the time comes to sell Stamford Bridge we do so on the understanding that we will then pay the funds raised to the club in return for the freehold of the new ground?

To me, that makes sense from a business, from a football and from a fans perspective and continues to safeguard the future of the club regardless of the fates that fortune’s fickle finger might deal us.

It is not enough to simply be Carefree. It is up to the CPO to KTBFFH! (Apologies reader if you don’t understand, Chelsea fans will).

© Jim Cowan, Cowan Global Limited, October 2011

Read more blogs by Jim Cowan

Twitter @cowanglobal



11 responses

7 10 2011
Jez Walters

Until Chelsea make a commitment to tell us either (a) where they want to move to or (b) extend the 2020 deadline, then it’s a FIRM NO. Unless, of course, you want to give Abramovich permission to sell Stamford Bridge in 2020 and move to Twickenham whilst pocketing £750 million. Vodkas all round!

Look, the issue here is not about a stadium move, it’s about firm guarantees for the fans who own Stamford Bridge and the brand name Chelsea FC. Is that too much to ask? No, unless there is a darker agenda at work…….

8 10 2011

Hi Jez,

Agreed. That is what I am saying; that until guarantees are in place the vote should be ‘no’.

As an alternative, the club should involve CPO in any discussions with regard moving grounds and maintain the fans ownershop of the feehold at any new stadium with the move pre-approved by CPO.

That’s good for the club, good for the fans, good for football and makes sound business sense.



9 10 2011
Adil Pastakia

OK Chelsea since 1970 going to games since 1977 and CPO share holder.

Lets not forget one thing here Football is big business and whilst I am very grateful for Roman’s investment we as fan have to secure the long term viability of OUR club beyond the immedate future and look beyiond to anticipate future threats against our club. CPO owns some of the most prime real estate in SW london of any football club world-wide. Its not CFC that owns this it is CPO that owns it together with the brand Chelsea Football Club – Roman took over essentially Chelsea Village when he bought into CFC. Since football is BIG business and CPO actually owns assests that are extremely valuble and those assets should be fully leveraged by CPO to maintain stakeholder interest in any plans the club have to move. I am not against a move away from SB but the club have to convince me they have explored all avanues and enter a discussion period with fans to being them onside. One way is to set up an exhibition in the Chelsea Musem to show all the different options they have explored and come clean about their favoured option – they may get to a quicker resolution this way than the cloak and dagger tactics played to date. Since this is big business lets take a look at the raw numbers shall we. If earls Court was valued at £400 million then I would suggest that the freehold interest that CPO owns is valued at over £100 million in commercial property terms. With 15,000 issued shares this would put CPO value at over £6000/share and the buy back is £100/share ……Now what I have suggested on the facebook site is that the Board of Directors act in the shareholders interest. CPO shareholders should not subsidise our Russian benefactor to the tune of nearly £6000/share but insist CFC purchase the freehold interest at market rate, the money then raised will be used by CPO to but the freehold interest of the new proposed site and allow continued use of the name Chelsea Football Club with ammedments to the articles of association of CPO. CPO was designed to keep developers from developing the stadium and Ken bates was visionary in defining CPO’s mandate. However circumstances have changed we cannot economiocally expand SB because of site restrictions and health and safety issues on maximum capacity and the fact there is one exit only onto Fulham road. If we stay at SB we face becomming a diminsihing force and rely even more on RA’s wallet. A move does make sense but the club have it in its grasp to define the relationship between football club and its supporters – building a new stadium in partnership with CPO is the only way I would ever agree to a move. Look at the way Barcelona and I beleive Real Madrid are run – they are owned by fans – so why shouldn’t the “Management Team” redefine the realtionship between the fans and the club. At the end of the day if RA needs an exit strategy he could always list some of the shares on the stock market – just like Man Utd are doing. The underline principal of CPO should be to retain freehold interest of the stadium and rights to the name Chelsea Football Club where ever CFC end up playing. For that to happen CPO should only sell freehold interest at market value and not look to subsidise a Russian Billionaire to the tune of at least £6000/share which is what I beleive we are being asked to do. Afterall RA has made his fortune acquiring valuable assets at knockdown prices – and looks as if he has his sites set on one in SW London. Lets take the emotion out of this and look at this from a business perspective – I am sure this is how the management team are looking at this and we as CPO shareholders need to reflect in similar manner. If we get market rate for the site then it ensures our continued involvement in safeguarding our club for generations to come.

11 10 2011

Hi Adil,

Thanks for taking the time to offer your thoughts so fully. I agree with what you say but suggest you overlook one vital element when describing the Board of Directors responsibility to the shareholders; that it is a legal responsibility. If they do not act in the best interest of the shareholders they are i breach of one of the legal requirements of all company directors.


23 04 2012
douglas jardine

Jim, everyone in the CPO has been debating this, including you, on a false premise.
What if the question was, yes, SB can be expanded to accommodate circa 60,000 fans, but the Club would prefer to sell the land for a vast profit, you get your £100 back, the owner gets his $1bn “investment to date from 2003” repaid – everyone’s happy.
Would so many CPO shareholders then be in such a hurry to hand back their share certificates?
Why don’t you ask the Board of the CPO, 4 out of 5 of whom are Club placemen it seems, to fund a proper study by real architects to check and see if 60,000 can’t be fitted into the expanded stadium?
After all, if the CPO owns 12.8 acres of freehold, why is IT not investigating what can and can’t be done with its own, sole asset??
Then if it turns out, surprise, surprise, that the stadium can be expanded, what would your vote be then?

23 04 2012

Hi Douglas,

Thanks for raising some excellent points.

Since writing the blog LBH&F have stated that in their opinion Stamford Bridge can be redeveloped and that they would not block planning which, of course, puts a whole new complexion on the matter – only the Board at CFC now insist Stamford Bridge cannot be redeveloped. There are questions as to how easily this redevelopment could be done, whether we could still play at Stamford Bridge in the meantime, whether the Blue Light services would okay any plans (the only exit route for 60,000 fans would be onto Fulham Road), etc.

My preferred route would be for us fans to retain ownership of the freehold whether at Stamford Bridge or at a new ground. That offers security few, if any, other clubs have. Whether we do or not the question of continuity/succession planning is still a very important one. If we remove Roman Abromovich from the equation Chelsea FC loses £75m a year. That no one can show me any planning to cover this loss should disaster strike worries me as a fan and as a strategy consultant is something I would always advise clients to cover, even in a profitable going concern.

On my own area of expertise, both “sides” have displayed poor understanding of strategy, the (so-called) professionals on Chelsea’s Board more than CPO.

To answer your question, in an ideal world we would stay at the Bridge. My granddad played there and my dad loved the place (both now sadly long gone). Unfortunately I am not close enough to discussions or either Board to claim to be fully informed as to what is realistic and what is not, although I would be more than happy to become involved and to advise either side on the proviso the long-term good of the club was the central consideration.

24 04 2012
douglas jardine

thanks for your considered response. My initial reaction is that, although your points about both Boards, of Club and CPO, handling a sensitive situation really poorly, amateurishly in actuality, the main thrust of your argument needs to have a different basis.
The club has already acknowledged that the stadium can be expanded to a minimum of 55-58,000, but it has stated that the “payback” period is too long; this point of money is important because under the Financial Fair Play rules introduced by UEFA in two seasons time, all stadium capex is to be ignored – the FFP is only judged on operating costs.
The FFP angle is just being used as a smokescreen by the Club in its attempt to cash in from the sale of the site.
The CPO Board is five men, of whom four are club placemen; not only is this against the mem and arts of the CPO (1993 as you will recall), but all company directors as you point out have a legal duty to protect the interests of shareholders.
Recommending to its shareholders that they sell their sole asset at a loss (value of £100 today v value of £100 in 1993) to the tenant, who will then sell it at a vast profit, without sharing any profit with the CPO shareholders, is not the way for the CPO Board to behave.
As for the club’s claim of “payback periods”, is this really serious from a club which has just spent £10m on the fit-out of a jazz club under the east stand where there is zero chance of ever making a profit…
Never mind the other vanity purchases acquired in and around the club..
I also presume you are not familiar with the scandal of shares being bought in October 2011, in the run-up to the EGM vote, by directors of the Club, their wives, sons’ girlfriends, other employees of the club and others with a financial connection to the club but no previous evidence of supporting the team; then in Nov 2011 the Chairman made an official statement “we do not know who bought the shares”. lie detector test for the solicitor, anyone?
not to mention various other share-buying characters who seem to have broken various company and professional regulations in buying shares at that time.
so, to recap, the Board of CPO have not lifted a finger to carry out any studies for themselves as to the potential of expanding the site, instead they rely, as landlords, on what their tenants tell them. and nobody ever engaged seriously with the local authority, who are positively behind any intent to expand the existing stadium, for a host of reasons, including the adverse economic impact of the club leaving, which the club does not seem to understand or care about. the stadium is expandable, to about 58,000, with all the hospitality income required to sustain the club to an income level on a par with old trafford and the emirates, due in no small part to the best location in the world for a football stadium, in central london.
all the club see, however, is the pound signs flashed before them by unscrupulous, ill-informed and ill-informing “property advisers”.
help save the bridge!
call for cowan!

23 09 2012
douglas jardine

jim, you were saying?

24 09 2012

Hi Douglas,

Is there a question there?


15 10 2012
douglas J

Hi Jim yes, thank you, my question is, would you please like to stand as a director for the CPO board, since someone who is clean is required to sweep out the augean stables.
If you actually read the mem and arts of the company, everything frankham the chairman and his Master Mr Buck are doing is, in fact, in breach of the very regulations set in place to govern CPO PLC in the first place.
Why are they still being allowed to get away with it?
Ask Edmund Burke…

17 10 2012

Hi Douglas,

I have been asked by a few other CPO shareholders to stand for the board. I will admit to being reluctant given (a) the vitriol aimed at the existing board at the last meeting, (b) how busy I am with work and (c) the time I need to maintain my charity work – however have been persuaded to consider it.


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