Chelsea still hope they can secure Battersea Power Station site for new stadium

Chelsea have not yet given up on one day building a new stadium on the Battersea Power Station site despite the club yesterday losing out on the preferred bidder status to two Malaysian developers, SP Setia and Sime Darby.

The 39-acre site in Wandsworth was Chelsea's first choice to build a new 60,000-capacity stadium which the club strongly believe they need in order to compete with the biggest clubs in Europe and comply with Uefa Financial Fair Play regulations. Privately, they acknowledge that yesterday's decision to give the Malaysian developers preferred status was a serious blow but not the end of their interest.

It means that the Malaysians will be given a period of 28 days in which they have access to the finer details around the site – including its legal and planning status – upon which they can make a decision as to whether their plans are financially viable. At the end of those four weeks, they will make a decision as to whether they expect to go ahead.

SP Setia and Sime Darby, who joined forces on the project, said they have an agreement with the site's owners to buy it for £400m. It was a sealed-bid process and the stance of joint administrators and receivers, Alan Bloom and Alan Hudson of Ernst and Young, has always been that they would take the best financial offer.

It is not inconceivable that the Malaysians could decide to drop out of the process having done their due diligence on the site. It is also possible that at a later stage they could invite Chelsea to become part of their plans for the redevelopment. Nevertheless, it is a major setback for the club which has only two viable sites in south-west London if it is to leave Stamford Bridge, Chelsea's home for their entire 107-year history.

The Malaysian developers said yesterday that they planned a "multi-use" regeneration that would create a "new vibrant centre for south-west central London". The four chimney stacks will be preserved and, as with Chelsea's submission, they have committed to building the Northern Line Tube extension.

Chelsea's developers, Almacantar, have devised detailed plans of a new stadium incorporating the Battersea Power Station although the images of it have never been released by the club.

Should they lose out on Battersea, the club will be left only with the northern end of the Earls Court site, to the north of Stamford Bridge, as a potential new location for a stadium. To move there, however, they would need to persuade current owners CapCo to abandon their current plans to build around 7,000 homes on the site.

Chelsea also have to negotiate buying back the freehold of the Stamford Bridge stadium from Chelsea Pitch Owners shareholders, largely made up of the club's supporters, who rejected a move by the board to buy back the freehold in October. A club spokesman said: "We are disappointed not to be selected as the preferred bidder for Battersea Power Station, as we believe we can create an iconic and architecturally significant stadium on the site."