Fans demand to know who owns Chelsea  

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 £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 £106m in debts payable in the long term and £65m owed to other creditors, a total of £171m. Take out cash held and money owed to Chelsea, and the net debts stand at £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 £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 Chelsea Village and HLS.

It is, though, impossible to draw any meaningful inference from this coincidence. Most of these nominee companies are run by major City institutions. They represent so many individual shareholders that it would be more striking if such coincidences did not occur. A spokesman for one, the Bank of New York (Nominees) Ltd, which owned, at the date of the search, 250,000 shares in Chelsea Village and 10.5m shares in HLS, said they administered "trillions of pounds" worth of shares, adding: "It is possible statistically for us to be holding shares in every UK listed company."

A spokesman for Chelsea refused to comment at all yesterday, saying: "We do not comment about shareholders. Anybody can buy shares in Chelsea."

Nevertheless, the CAG remains concerned about who owns Chelsea and has called, in particular, on the FA to investigate. The FA does almost nothing to regulate who can own shares in its member clubs or to ensure transparency. The sole rule, against so-called "dual ownership", is concerned with the integrity of football competitions rather than finance. It applies to the FA Cup, and states that a person who owns 10 per cent or more of one club cannot own shares in another. The Premier and Football Leagues have similar rules. The Premier League did enforce the rule last year against BSkyB, which was forced to reduce its 11 per cent stake in Manchester United after buying 9.9 per cent stakes in several other clubs.

However, the CAG has written several times to the FA chief executive, Adam Crozier, pointing out that the FA cannot effectively enforce its own limited rule if it cannot identify the shareholders of a club. Yesterday an FA spokesman refused to say whether the FA takes any steps to investigate the identity of shareholders. "There is a rule which prevents dual ownership," he said. "Anybody found to contravene it should make themselves known to the FA and could face penalties."

Football clubs throughout the country may soon find themselves compelled to disclose details of shareholders as a side effect of proposed legislation in the wake of the terrorist attacks in America on 11 September. Addressing concerns that terrorists could hide their sources of funds in this way, the Chancellor, Gordon Brown, said in the House of Commons on Monday: "We are consulting on a new requirement for proper disclosure of the beneficial ownership of companies." A Treasury spokesman said this would apply to shares held in the UK and offshore and that measures would be taken shortly.

The question of the ownership of Chelsea may become a side issue in a court case being brought by David Johnstone, a Chelsea supporter who is suing Bates for libel. Johnstone, the deputy chairman of the Chelsea Independent Supporters' Association, alleges that he was libelled by an article written by Bates in the programme for Chelsea's match against Marseilles in March 2000. In it, Bates announced the £40m sale to BSkyB of 9.9 per cent of Chelsea, then referred to the CISA's call on the FA to investigate the ownership of the Swan Management shares. Bates said the owners were "the same people who backed my appointment in 1982 when I completed the purchase of Chelsea FC and became chairman. If they are now sitting on a nice profit on their 18-year- old investment, good luck to them". As for the CISA, he said it was a "spiv organisation", which made "a small fortune by selling Chelsea memorabilia and merchandise". Bates is defending the action.

Whether the makeover at Stamford Bridge will eventually turn Bates a profit will be revealed over the next few years in an unforgiving marketplace. Who his backers are may prove a little more difficult to discover.

davidconn@freeuk.com