The Statement
The year under review has been both successful and challenging, with radical restructuring being set in motion throughout the Group.
On the football field Chelsea qualified for Europe for the sixth successive season finishing sixth in the FA Premier League reaching the final of the FA Cup and the semi final of the Worthington Cup.
Claudio Ranieri, continued to implement his policy of encouraging youth with Joe Keenan, Carlton Cole and Robert Huth making their debuts in the first team.
Elsewhere saw the completion of the Stadium with the opening of the West Stand and the North East corner infill, the Health Club and the World of Sport. Even with the increased stadium capacity the demand for match tickets remains strong. In 1999/2000 our home attendance was 33,102. Last year this had risen to 38,903 and to date in the current season we are averaging approx 40,500 in the Premiership.
It is a sign of our progress that Merchandising, Car Parks and Travel were all profitable and the Hotels and Night Club converted an operating loss in 2001 of £57k to an operating profit of £847k.
Turning to the financials, Group turnover increased by £21.7m to £115.3m, an increase of 23%. Gross profit nearly trebled from £11.6m to £29.1m and Earnings before Tax, Interest and Depreciation (EBITDA) were £12.8m against a deficit of £2.5m in the previous year. It is pleasing to note that, in the year, the Group virtually broke even prior to player amortisation and trading of £16.1m. Our property portfolio also increased in value by £5.6m (2001 £4.2m).
The decision of Colin Hutchinson, managing director of Chelsea Football Club to take early retirement, together with the resignation of his financial controller became the catalyst for a complete change of direction in taking the Group forward. A thorough review of our modus operandi was undertaken from sales and marketing through to operational procedures, finance, IT and Human Resources.
At the same time Michael Russell, the Group Chief Executive, left to pursue other interests.
After carefully considering all options it was decided to recruit outside the football industry. Accordingly Trevor Birch was appointed Group Chief Executive with responsibility both for the football club and to ensure the complete integration of all parts of the business into a comprehensive whole, breaking down departmental barriers which had grown with the Group’s rapid expansion.
In turn, we appointed Lorraine O’Brien as Group Commercial Director and Simon Arthur as Director of Operations. Just five months into their appointments the first results are beginning to appear. We have an enthusiastic, hard-working team of people who are being given the freedom to express themselves and demonstrate their abilities.
Commercially, sales in all subsidiaries are growing at increased rates in parallel with containment of costs and improved standards which can only feed through to the bottom line in due course.
In common with the rest of the football industry the biggest problems facing the Group are players wages and transfer fees. Past extravagances are being reversed with new reporting systems and more transparency in decision making but it will take time for contractual obligations to unwind, following which the Group can then look forward to solid growth and profitability.
With the Village development including the Stadium, which started back in 1993 now completed, management can focus on delivering the product and producing sustainable growth.
The last twelve months have been exciting, challenging and very hard work. Throughout this time the staff as always have been industrious, committed and loyal for which I thank them. With the vision and leadership from the new top management team Chelsea Village will become a successful leisure orientated complex and Chelsea Football Club a continuing power in the footballing world.
KEN BATES 16 October 2002