Estimating the Options, Part One

Today, we’re trying something a little bit different. Just to explain, as everyone who cares about these things knows, on Friday 2nd March 2012 Chelsea FC released a fascinating report called The Future of Stamford Bridge (FSB) which focused on the efforts the club had made over the past eight years to expand the stadium and which also explained just how difficult all the available options are. At the time, CFCTruth welcomed the statement and praised its clarity and its openness in laying out the specific difficulties of expanding the Bridge.

Amongst a wealth of other useful information, the club’s document contains a very detailed breakdown of the specific costs associated with expanding Stamford Bridge to a 55,000 stadium (through the enlargement of the Matthew Harding Stand and the Shed End). But while the FSB  referred to the costs of building a 60,000 stadium at Stamford Bridge (“in excess of £600 million” apparently)  it did not provide a similarly detailed cost breakdown for this option and certainly did not even hint at the what the comparative costs of Chelsea FC moving to a new stadium might be.

But CFCTruth is convinced that trying to understand these comparative costs is a key part of the debate over the future of Stamford Bridge. And so we have spent our time since the publication of the FSB examining the financial estimates included in the statement and have used this data, along with the best information we could find from elsewhere, to make informed estimates of the potential cost of Chelsea’s various alternative stadium options.

So this is what we have done. For this exercise, we have assumed that all the associated logistical and planning issues can be overcome (big assumptions but necessary in this case). And as these costs could vary dramatically depending on different factors, we have chosen to present the ‘best case’, ‘worst case’ and median estimates for each option. The comparison between the estimates for each different option is fascinating. Later pieces will look at what Chelsea can earn from a new stadium at SB - we must try to factor in the compressed nature of any stadium there and how many of the additional revenue drivers can be included in a redeveloped SB.

Stamford Bridge Extended to a 55,000 Capacity Stadium (using the club’s figures)
	MHS	Shed End	Total
Total Project Income	£0m	£0m	£0m
Total Project Expenditure	£177m	£98m	£275m
Net Total Expenditure	£177m	£98m	£275m

Stamford Bridge Rebuilt to a 60,000 Capacity Stadium
	Best Case	Worst Case	Median
Total Project Income	£0m	£0m	£0m
Total Project Expenditure	£561m	£877m	£719m
Net Total Expenditure	£561m	£877m	£719m

New 60,000 Capacity Stadium Built at Battersea
	Best Case	Worst Case	Median
Total Project Income	£862m	£542m	£702m
Total Project Expenditure	£864m	£1,489m	£1,177m
Net Total Expenditure	£2m	£947m	£474m

New 60,000 Capacity Stadium Built at Earls Court
	Best Case	Worst Case	Median
Total Project Income	£667m	£208m	£438m
Total Project Expenditure	£647m	£1,146m	£897m
Net Total Expenditure	£20m profit	£938m	£459m

Two things stick out for us when looking at these figures. If we take the median estimates as a rough yardstick, building a 60,000 stadium at Stamford Bridge looks to be much more expensive than building one elsewhere. Even if you take the 'Best Case' figure for the Stamford Bridge option this is £90m-£100m more expensive than even the median estimates for either Earls Court or Battersea.

What also struck us was that despite the protestations from certain quarters that the CPO offer was just a 'land grab' and a scam so that Roman could 'claw back the money that he has put into the club', selling Stamford Bridge and building elsewhere really does not make Roman or the club any significant profit at all. What it could do, however, is to greatly subsidise the cost of building a new stadium in another location by bringing down the potentially huge costs to something more manageable.

Why give these figures any credence? That is a fair question. But these are not just figures plucked out of the air. If you click on this link you will be able to examine the estimates we have come up with for yourselves with along with explanations of how and why we came up with the figures we did in the relevant comments section. However, it is important to note that we are in no way suggesting that these figures are the last word on the issue or that they have been somehow leaked to us by the club. The figures are, as we quite openly admit, estimates (albeit relatively educated ones). For that reason, we would like to invite all interested parties and especially those people with expertise in the field of quantity surveying and large-scale developments to help us improve the accuracy of the figures. The cells in the spreadsheet that are highlighted in green are the ones we feel need the most attention but you may know better...

Just to be clear, we are not trying to advance any particular agenda here - you know our position on the stadium and CPO issues but with these financial estimates our sole intention is to try to capture a reasonably accurate picture of the financial costs associated with each of the various stadium options which might be available to the club.  And by sharing these figures to try to move the debate forwards.

So please take a look at the spreadsheet, read the estimates carefully and then tell us what you think via cfctruth@gmail.com. And where we can, we will use the information you provide to improve the quality of the estimates.

Next: In Part Two of this article we will seek to analyse what the different estimates tell us about the financial viability of each of Chelsea FC’s various stadium options.

Something to keep an eye on

As you are aware, we aim to help Chelsea fans - and not just CPO shareholders - to see the wider picture on the matter of Chelsea's future. What we have tried to do recently is demonstrate to those still harbouring suspicions about Chelsea's intentions at Stamford Bridge that the council (LBHF) have some very questionable motives when it comes to their public position on the club's ability to stay where it is.

Questions we have persistently asked include;
'Why, if the council think a 55-60k stadium is acceptable and possible at SB do they not think it is possible at Earl's Court, a site more clearly suited to such a project?'

The answer can be found in many blogs we have posted and it boils down to this; if the council do not sell WK and GG estates (land that is critical to the CapCo and general EC masterplan) they will not get a large wedge AND will have to pay back £10 million. If the estates are not sold then CapCo can redraw the masterplan and we strongly suspect their first phone call will be to the cash-rich-ready-to-move-quickly Chelsea Football club.  So the council want to keep the possibility of Chelsea being able to move as remote as possible. What better way to do so than tell fans the club is lying to them about what is possible at SB? As long as fans vote 'No' to a share buy back, the way is kept clear for the council.

So we are therefore interested to come across this blog:

http://richardosband.blogspot.co.uk/

This chap does his homework and is revealing a great deal about the practice between CapCo and LBHF over the development. The things he exposes tend to show quite how desperate are the council on this matter and what they are prepared to countenance when getting into bed with CapCo. We particularly love the fact that CapCo's auditors are carrying out the due diligence for the council on this one!  It is WELL worth ten minutes of your time to read through some of this stuff. 

This gentleman was very much involved with the issue until he resigned in protest at some of the practices he was seeing.  This is what he said on the matter;

' I have some time ago resigned as a Member, Director and Company Secretary of the West Kensington and Gibbs Green Steering Company Ltd and I explained all my reasons at length on w14london.ning.com. I severed all connection with the Steering Company and Steering Group after I found out about the option scam."

Anyway, some interesting stuff that may well give you something of an insight - especially when you hear the council make baseless statements about what sort of stadium is possible at SB.

Campaign 55?

We were interested to hear news of a new group called Campaign 55. Fair to say it sounds like the new face of SayNoCPO and on the surface of it this would appear to be a more reasoned and measured approach. Ultimately, however, we are dealing with a group that is essentially saying "stay at Stamford Bridge whatever the cost". They posted an essay on the web so we thought we would examine it.

"After the EGM, Say No continued to put pressure on the board of Chelsea Pitch Owners in connection with outstanding issues such as the disputed/misold shares, which are the subject of a report currently being compiled by Gray Smith of the CPO board, and also the "marriage value" of the ground and the shares."
It is our information that Gray Smith has now - eventually - completed his report. We don't think people should get too excited about it......at all....And we do wish you would stop talking about marriage values. It does you no favours at all.

"SNCPO stalwarts Clint Steele and Dave Spring have stated their intention that going forward Say No's position is intrinsically opposed to any disbanding of CPO, and any move away from Stamford Bridge. "
Have they? Well we always sort of knew that but it is nice to hear them say so.

"However, Campaign55 is intended as a progressive movement."
Glad to hear it.

"I've reported and blogged on CPO issues for TheChels over the last couple of years and have been a member of SNCPO. One of the most frequent allegations against SNCPO (mainly by CFC Truth, themselves a shadowy group with no public spokesperson)"
Ermm, don't think we have said much about this issue in relation to SayNo? Our criticisms have been more general than that. CFCTruth is a conduit for information. As such telling everybody who we are would merely lead you back to who gave us the information. And what would you do without those juicy nuggets we bring you huh?

"However, we want this group to represent as many fans as possible and we are looking to affiliate with as many supporters' groups as possible. We might be the shareholders, but we want to get views of the fans in the street, the pub and the blog, and pass these on to the board."
A worthy aim. Although we should note quite how virulently SayNo people were attacking the club for including a question on this matter in the fans questionnaire. Why should we take the views you collect any more seriously? Just playing Devil's Advocate here you understand.

"The choice of Campaign55 as a name took a lot of deliberation and involved not just the steering group, but members of the wider SNCPO group. It's our belief that the club should ideally be looking to expand Stamford Bridge to a capacity of 55,000. We genuinely feel that the 60,000 capacity being mentioned in recent communications from the club is not a realistic ambition. With the exception of the true marquee games like Manchester United and Barcelona, it's becoming easier and easier for fans who can still afford tickets to pick up the inevitable "spares". "
We think you need to study the principles and models of pricing, marketing and capacity before making rudimentary comments such as these.

"However, if, after full consultation with Chelsea Pitch Owners and Hammersmith & Fulham Council, it can be proved beyond all reasonable doubt and economic viability the ground can't be extended"
Well we would argue that the club have certainly done that already. We ourselves have also done some very detailed financial analysis that goes beyond what the club issued and which we intend to publish when the time is right. It should also be noted that LBHF (so a little mole at the council tells us) have now cancelled the scheduled meeting with CPO board and moved it back a week. There may be nothing in this of course.....but worth noting....

"then Campaign55 would support moving to a new 55,000 seater stadium within the historic Chelsea FC catchment area, i.e. Earl's Court or Battersea."
Aha! But wouldn't we all? The issue, however, is how feasible and possible that might be. And what if it is not possible at either of those sites? A rather closed and inflexible statement we would say and one devalues the notion of a reasonable and sensible organ for debate actually.

"We are also taking steps to liaise with Hammersmith & Fulham Council in order to make the voices of our fans heard."
We would strongly suggest that LBHF will say to you whatever it is they think you want to hear and you ought to tread extremely carefully, approaching them with a critical and suspicious eye. Our many blogs have revealed the political and financial motivations behind their behaviour and you would be well advised to take heed of them. You could very well end up having your Percies royally pulled and your bottoms soundly spanked.

CFCTruth is very keen to see fans involved in this process. But another single issue group with proscriptive aims is not going to help the club much. It is not reasonable for us fans, who wish to see CFC develop and succeed, to put ever moving targets and demands in front of the club and in so doing expect them to engage in ruinously expensive, infeasible and time wasting flights of fancy; "pay up Roman you can afford it".

We require the shareholder base of CPO to expand to include thousands of fans and members and we need facts and a collective open mind in order that we make a decision in the best interests of the club. Whatever that decision ends up being. We might just as easily set up a group, claiming open mindedness, honesty and reason that is called "Campaign Gold plated stadium with free seats for all" but it wouldn't be very sensible, reasonable or possible, now would it?