Thursday 24 May 2012

A statement of fact

As Battersea continues to be the subject of speculation in the newspapers, we were interested to hear reports that the allegedly highest bidder actually wants to turn the power station into a multi storey car park. On the surface of it, this is something to be pleased about since we don't expect this fits with the vision of anybody concerned for the status of the building. The proposal also wants to increase the number of flats previously agreed by almost double. However, this is political and there is a lot of money involved - never a good recipe. As such we would be surprised at nothing whatsoever.....

On other matters. We have seen recent comments that have attempted to associate Steve Frankham, chairman of the CPO board, with CFC Truth.

We would like to make something explicitly clear. CFCTruth is a loose conglomeration of shareholders and fans. These fans have connections and indeed we receive and share information and contributions from a growing number of people. We do not have committees, boards, memberships or articles of association. We are a blog and a twitter feed, both of which act as a medium for the communication of our information and analysis and to which a good many people have contributory access. We are one voice from many mouths. Our blog has had tens of thousands of visits and our twitter account continues to attract followers. This fully justifies our belief that there is a need for such information and analysis. You agree or you disagree. That is it. And we answer to nobody since we ask for nothing in return.

We have made very clear in the past that we intend only to ensure the full story of the issues surrounding any Chelsea move away from Stamford Bridge is known and not polluted by hysteria, misinformation and corrosive alarmism. Our role (self-appointed though it may be) is to bring news and information we may have heard and to offer some form of analysis of complicated issues. To do that we have used information in the public domain and some that is not.

We do not in effect have a particular "choice" of outcome and have been explicit in stating we will not acquiesce to anything and everything the club proposes. It is true to say that we do not subscribe to the conspiracy theories around the club and have a more open and perhaps benign view but this too is based on logic and calm reflection. There has, therefore, been a particularly depressing - but probably not unexpected - consequence to this and that is a childish assumption that CFCTruth must be in some way associated with or connected to either the club, the CPO board or both. This is an utter nonsense and must cease.

This is not a moment to assess Frankham's role as chairman, a post he has only briefly held in this second tenure. That is for another time and we expect that soon his mettle and his motives may well be tested by any new proposals put by the club. We feel that as things stand, he has achieved some useful objectives, particularly in relation to LBHF. But the suggestion that he is connected to CFCTruth is ludicrous.

To summarise;

CFCTruth is not a campaign group and does not ask people to "sign up"
CFCTruth does not claim to represent anybody - fans or shareholders - beyond ourselves
CFCTruth has not declared a "desired" outcome for CFC's plans for a future stadium
CFCTruth does not campaign for proxy votes to use at EGMs or AGMs
CFCTruth is not in any way affiliated with CFC or the CPO Board.
CFCTruth is a conduit for information. Readers are free to interpret that information and analysis as they see fit.

It is for these reasons that CFCTruth has become so popular with shareholders and fans; because we do not have an agenda beyond presenting the clearest picture we can and because we often present very good information in an independent and logical fashion. It is a shame that such negative interpretations of that aim should become so prevalent and tinged with bilious aggression and absurd conspiracy.

You can rest assured that should the club or the CPO board, in our opinion, take a wrong turn, we will make our feelings on that matter known too.

Wednesday 16 May 2012

A waiting game

It has been heartening to see various commentators in the property and national press come out strongly in favour of Chelsea's plan for Battersea. The growing incredulity at the comments of individuals in the Mayor of London's office has been good to see and we have to surmise that there is some concern at the seriousness of Chelsea's offer. As we told you a good while ago, Greenhalgh of LBHF is off to Boris's team to work alongside Lister on crime. His presence over there is a bit of a concern since there is little love lost between he and CFC but we think that a planning decision on an eventual stadium will have to be a pragmatic one....

Nevertheless we firmly believe that whilst a very complex financial and political game is about to ensue, Roman Abramovich is deadly serious about his plans. We say this with the caveat that we also believe Earl's Court is not a dead duck just yet. The next few months are likely to be a very exciting time but whatever happens, we are extremely pleased to see Chelsea taking the bull by the horns and determining their own future aggressively. Obfuscation, disinformation and delay by LBHF must no longer dominate proceedings.

Rumours about the design being proposed for Battersea circulate constantly but whatever version you hear about, the one persistent refrain is just how amazing it looks. Like all Chelsea fans, we can't wait to see it. Fingers crossed for the bid - it will be a long road.

Discussions are now turning to what sort of offer the club may eventually make for CPO shares and the form it will take. Financially, we feel there is absolutely no situation that would, or should, see anything but a straight £100 per share offer. It seems likely that the club will only ask for the shares once something concrete is on the cards. That should allay most people's fears about ending up "anywhere" (never a credible claim in any case). We notice that "conditional sale" is raising its head again but obviously, were the club to set out the actual plan and location, that would also be dealt with. The transfer of something akin to CPO to a new stadium is a more vexed issue. We do not believe it is necessary and can understand why the club will think so too. It is simply illogical to suggest that at some point in the future (remembering no other club has such a strange construct) that a speculator would buy a club worth several hundred million, wipe a stadium that cost close to a billion off the face of the earth and build flats in its place.

It occurred to us that the club may take a leaf from the book of those claiming extraordinary theoretical values for the existing CPO shares and put a similar value on any future shares in a transfer of CPO-like rights. Given the attacks on the club regarding the Stamford Bridge values, one might not blame them if they suggested a share price of "£70,000" each share. It works both ways. If fans conveniently forget what CPO was about in the first place and use supposed share values to throw mud at the club then surely it is right for the club to themselves place a value on any future investment? We don't think for a moment they will and it is something of a nonsensical idea but but it is an interesting thought because by reversing the scenario, it helps put into context the ridiculous arguments we continue to hear on this matter.

Thursday 10 May 2012

A bit about Sir Oswald Stoll

In light of the recent statement by CPO and their discussions with LBHF, we thought we would dig about a bit and started at the obvious place; the Sir Oswald Stoll Foundation themselves.

We asked them to give us their comments and views on the LBHF suggestion that CFC should try to buy the flats. We asked several questions about the matter.

"This is the first we have heard of this", was the somewhat surprised response.

We pointed them to the CPO statement and got a further terse reply;

"We will not be commenting at this time".

Oh. OK then. We will keep digging.

Ringing endorsement for Battersea from the AJ

We are pleased to see this editorial from the Architects Journal

"Lister and Johnson should open the door for Chelsea FC's regeneration vision

It was shocking to hear Edward Lister, London deputy mayor for planning, pooh-pooh the new Chelsea football stadium plan for Battersea Power Station. This is the most thrilling and plausible vision for the regeneration of the beleaguered building yet.

The exclusive early concept sketch by KPF, who are working with Rafael Viñoly on the bid, shows a design that both maintains the integrity of the original building, while giving this stunning white elephant a brilliant legacy. If built, it could join FC Braga by Eduardo Souto de Moura as one of the most architecturally atmospheric stadia in the world.

Who would not want to see a match or live concert in this iconic venue? It feels exactly right, evoking the kind of old-meets-new mash-up that Britain does best, transforming masterpieces of Victorian industry into fun palaces, from Liverpool's Albert Dock to Manchester's G-Mex, London's Tate Modern to Newcastle's Baltic.

If it had been completed in time to host the London Olympics, the Battersea stadium would have stolen the show. You can already imagine it on film, jump-cutting from Big Ben, to the Gherkin, to the London Eye, to Battersea stadium.

And it would certainly do for the surrounding area what the Olympics have done for East London - the Blues, owned by Roman Abramovich, have already offered to contribute towards the £900 million cost of a Northern Line spur to Battersea, and the footfall of 60,000 fans, creating opportunity and dynamism for local businesses and people, is not to be sniffed at.

Which makes Lister's comments, made after Boris Johnson was re-elected mayor of London, appear nonsensical. 'I don't think the site is suitable for Chelsea, and nor do a lot of people. It's not a goer,' he said, claiming the infrastructure was not 'geared up' for a football club. The plans will need the mayor's backing to go ahead.

Lister's stance is rich considering he presided over Wandsworth Council for nearly two decades and accomplished nothing but further decay of the Grade II*-listed structure. If it's traffic he's worried about, Lister should not have backed previous plans for a conference centre, 3,700 homes, offices, shops and restaurants in 2009. The daily throng of commuters would have placed far more pressure on the local transport infrastructure.

And if it's the profile of the prototypical football fan that he objects to, he should understand that Chelsea hosts just 30 games or less a year. Which means 335 days a year, Battersea would be a nice, quiet, iconic landmark. Compare that to the previous housing scheme, and a football stadium looks like a very good neighbour - or indeed, the very best kind of flatmate, who pays all the bills, and is rarely home.

Let's hope Lister reconsiders his knee-jerk reaction to Battersea in light of the punishing vote against the Conservatives at the polls last week. Voters want investment and vision. This latest plan for Battersea sounds like a real opportunity knocking. Lister and Johnson should open the door."


Some deeply worrying talk on our Twitter timeline about land and share profits. Quite apart from the staggeringly inflated notions of what Stamford Bridge is worth (1 billion according to one) we are disturbed at the constant references to what CPO shares are "worth". This sort of thing has to stop because it seriously undermines those who have genuine concerns about Chelsea leaving Stamford Bridge. 

CPO shares cannot be traded and are worth only what you paid for them.

It seems remarkable to us that, setting aside the discomfiting idea that people seem intent on financial gain, those same people believe Abramovic and the club should not seek to make the club's growth self financing. The idea that Abramovic may purchase the Battersea site for about five hundred million, build a stadium that will cost several hundred million, make an enormous contribution to the Northern Line extension AND still have enough left over to repay himself the nearly 1 billion he has ploughed into Chelsea thus far is nonsensical. 

And just for the sake of argument, if he WERE able to recoup his historical expenditure from the long term development of Battersea, would that be an unreasonable thing? None of this would happen for several years in any case but it seems to us that some fans would like Chelsea FC to remain a financial basket case dependent on the largesse of a capricious billionaire (whose largesse is becoming increasingly curtailed) But as long as they made a few quid....How ironic.

The way people are talking, you would think that Abramovic just wants to sell SB, make back his money and go away, leaving us homeless.  That was the suggestion from many at the EGM which was outrageous and silly. Now there is another site on the horizon, the emphasis has changed somewhat but the accusation  of malice aforethought remains.  What is becoming increasingly obvious, however, is that there are some fans who would happily sign up to almost anywhere or anything should Mr Abramovic make an eye-watering offer for their shares. How sad that this should be the case but they should at least be bloody honest about it.

Wednesday 9 May 2012

Power to the people.....some facts

Since Chelsea announced the Battersea power station bid there has been quite a bit of speculation and misinformation going around.  Let us try to deal with some of it.

On the stadium design

Yes, we are all frustrated that the club are not yet prepared to publish designs but the designs are most certainly there and they are apparently fabulous and innovative. We should remember that the bid was based on the study carried out by Almacantar, Vinoly  and KPF. That feasibility study obviously convinced the club of the possibilities.

The bid is at an early stage and it would not be appropriate for the club to start trumpeting their plans before it is even accepted. When the time is right, and should the club purchase the site, it is likely that designs will be published to accompany the next step; consultation and planning permission. When certainty enters the process, that would also seem the right time for the club to approach CPO again. What should NOT be doubted is the feasibility of a stadium at Battersea in terms of construction and space. The club would simply not be making this bid otherwise; it is a bid to which they may have to make an enormous financial commitment  in the relatively near future.

The Bridge

We understand that this huge show of intent has given some fans the idea that the club has set its face against expanding SB. Consequently, there have been some strange theories that have essentially concluded that SB is a far more feasible site than the 39 acres on offer at Battersea.
The recent statement from CPO which exposed the paucity of LBHFs case left most of us in little doubt as to the enormous risks of trying to develop the Bridge. The council tacitly admitted, via their crass urgings that the club should try to buy Sir Oswald Stoll Mansions, that in order for an expansion to be remotely possible, the space occupied by those flats is needed. Very little needs to be added to their other argument that the club should charge fans more to get in.

We should think very carefully about what any sort of expanded stadium would be like. If a magic wand could be waved, we think virtually all Chelsea fans would prefer to stay at SB. But in all honesty, any expansion, even to 50,000 would not only be a waste of time and money, but it would be a squashed, unpleasant, unproductive stadium - and a pig to build - that could not include the facilities required to produce a sustainable model for the future.  Surely it is far better for the club to consider a purpose built, spectacular stadium that would be the home of CFC for future generations. Us old gits do need to let go sometimes perhaps? That may be an unpopular view but the club - the club we all demand be successful and at the top of the game - are wrestling with a mammoth business conundrum and we feel they deserve our support. Still, that is a decision for the future.

The costs

This has also been causing some confusion. The basic argument appears to be that purchasing and building at Battersea would cost far more than building a new stadium at SB. Well, in the first instance, we know that building that stadium of 55k (not 60,000 - the council have intimated they would only "look" at 55k) is virtually impossible on all sorts of levels. And that extra 5,000 is quite significant, quite apart from the other benefits of a new build at Battersea.

But of course, the enormous difference is that Chelsea have entered into a joint venture with a large property developer and as such will reap the rewards of the full development at Battersea. That means, it would be fair to presume, that their partner Almacantar will be making an investment into the purchase too. The project is supposed to be self-funding and the long term residential, retail and leisure aspects of the site is where the money will come from, along with the sale or development of Stamford Bridge. This is a very significant new dimension to anything we have considered before. We cannot expect Abramovich to shell out several hundred million. We might like him to or think he could afford it, but that is surely unreasonable.  What we do not know is whether Chelsea and Almacantar will run the development at SB too or whether they will simply sell to another developer. The proceeds from the sale will not be as significant as people expect. Possibly 300 million? Maybe less with a cussed council around. So it is a moderate contribution and can in no way be considered a "land grab".

The fact remains, however, that Chelsea have "gone large". It might all fall apart at bid stage (although we would expect them to get to round two).  But if they are successful then there is really something to think about. We can only imagine that conversations have been had with the Mayor's office and we do not give much credence to the speculative stories that 
Boris wouldn't like it. He is a politician and will thus see  the benefits of finally getting something done with the site, getting the Northern Line extension completed and seeing his iconic building retained and restored. Chelsea come with liquidity and a plan. But politicians, as we have seen with LBHF are a difficult bunch so perhaps a risk exists. We will soon know.

So our advice is be patient. Those designs will dazzle us soon enough. If you still want to stay at Stamford Bridge regardless, then you will have your say if you are a shareholder. But we would suggest that your arguments retain some credibility by not trying to convince the rest of us that Stamford Bridge is bigger and a better build option than Battersea. No amount of amateur, back-of-a-fag-packet computer graphics is going to change the reality of the situation.

Monday 7 May 2012

CPO statement on meeting with LBHF

The CPO board have relased a statement giving further details of their meeting with LBHF. It is comedy gold.


As explained to us during the meeting with them on 23 April, LBHF stated that they take a different view on certain issues put forward in the CFC statement.

We bet they do.

LBHF disagree with Chelsea FC that it is not viable to redevelop the stadium at Stamford Bridge.

Yep, we know.

They believe that an additional 13,000 seats could be added to the Stamford Bridge capacity, although they recognise that this would be achieved 'with difficulty.'

OK, so how will the seats be added, what sort of a dogs dinner might it be and what precisely are these "difficulties"? Are they different from the ones you say Chelsea are exaggerating?

The council would find a 55,000 capacity at Stamford Bridge acceptable.

Although they find 42k unacceptable on CL nights?  Is this really a serious statement? What exactly backs this up? How on earth can they say that pre-planning? The club has to abide by legal rules and regulations...and so do the council. The club have shown where a development would fall foul of these.

LBHF do not believe there would be many issues regarding local residents' 'right of light' from a development of that size.

We think the residents would have something to say about that.

In order to provide extra egresses to clear that capacity from the area, LBHF believed that just one end of terrace property would need to be compulsory purchased and removed. They questioned whether CFC had inquired as to a possible purchase of Oswald Stoll Buildings, next to Stamford Bridge.

WHAT?!!! Are the council suggesting the club should try to purchase those flats (unopposed?) and turf out old soldiers living there? Did they SERIOUSLY suggest that to the club?! We wonder how the Oswold Stoll residents are going to feel about that.

They rejected the view that several listed and other buildings would need to be acquired and demolished, and they would not find it acceptable for CFC to compulsory purchase and remove adjacent buildings on the north side of Fulham Road.

OK then. Thanks for that bit of help then.

LBHF notes they were aware of discussions some time ago between CFC and Transport for London (TfL) regarding a possible new £3.5m 'raft' built over the Underground line to the north-west of the stadium, on which outside broadcast trucks could be parked (these trucks currently reduce the stadium capacity on Champions League match nights). They believe CFC did not pursue this with LBHF or TfL.

Not entirely sure what the point is? So the club HAVE been trying to explore ways to keep CL capacity higher? Without help from LBHF.

Before LBHF could fully examine the viability of any redevelopment Chelsea FC would need to submit a planning application. They stated CFC have not submitted any planning applications of that nature in recent years.

Yes, we know because you have made it clear what you will and won't accept. The club have never claimed to have put in applications.

LBHF pledged to form a dedicated council team to assist the planning process once any stadium redevelopment application had been made.

As they would any large development. Very good of them. This team, however is not there to make life easier for the applicant but to manage the application in the way the council wants.

LBHF have not carried out any feasibility study of the Stamford Bridge site of their own.

Hey ho! But you know precisely how CFC should proceed, have made statements about what properties will and won't have to be demolished (except Oswold Stoll which you merrily invite the club to purchase for goodness knows how much).

Until the end of last year they had had several meetings with CFC and felt the ball was still in CFC's court.

Laughable. They said up to the EGM that the club had NOT been having meetings with them. Do they think we are all entirely stupid?

LBHF have filmed and monitored crowd control at recent sold out matches and found that with a full house and the existing capacity Fulham Road cleared in half an hour after the final whistle.


LBHF suggested that CFC had not looked fully at the revenue that can be extracted from each seat with the existing stadium capacity of around 41,800.

For example, the club might consider not allowing new season ticket buyers when existing holders do not renew. This would allow the club to sell more tickets on a match-by-match basis at a higher price.

Aha! So the club should bar ST holders and charge even more money to fans? Great. Just great. So that is the answer to CFC's financial future according to the council.

LBHF also questioned how much CFC would generate from any sale of the Stamford Bridge side, citing the fact that 40% of any new development housing must be allocated for affordable social housing.

Well that is an interesting point. On many levels. First, it suggests the club are not profiteering. Second, why would they not want loads of houses there whilst we went, say to Earl's Court? Bit of a "threat" too.

According to LBHF's figures, Fulham FC brings £15m into the borough per annum; their estimate was that CFC generates £30m for local business. However, the councillors said they receive two or three letters each week from local residents complaining about CFC's presence.

So we are valuable to the borough. Being half a mile away at Earl's Court would keep us in the borough?

LBHF urged CPO to challenge CFC's findings by engaging experts in the fields of planning, transport, health and safety.

So it is CPO's responsibility to do all this is it? Despite the club already having done it? Are CPO wealthy enough to carry out such work on behalf of the council and the club?

LBHF felt that there was no chance of CFC being allowed to move to Earl's Court. There were no plans to put a stadium within that development, and in their view such a move would not be countenanced by the secretary of state.

And so we get to the nub. Firstly, no planning officer is in a position to say what a secretary of state will decide. At all. A deeply disingenuous and petulant statement. Further, it is highly likely that a secretary of state would veto a destructive development at SB which threw people out of their homes. Utterly risible.

It was always the Board's intention to make this information available at this time. We of course have noted last Friday (4 May) that Chelsea disclosed that they are one of the bidders for the land including and surrounding Battersea power station.

As a consequence, the club has agreed to meet with us within the next ten days to discuss their future plans. We will report back to shareholders following that meeting.

We hope this meeting brings further information about Battersea AND Earl's Court.

So, what does all this tell us? It tells us that the council have absolutely nothing to offer the process beyond keeping Chelsea as far away from Earl's Court and their 106 million quid as possible. They have no evidence, they have no solutions, they have proposed outrageous bullying by the club of local residents. No plans, no studies, no designs. Contradictions, hypocrisy and false promises..promises they are simply NOT permitted to make and which thus, Cheslea are utterly right to reject.

LBHF have no cogent argument for keeping CFC out of the Earl's Court development other than their avarice. As they themselves admit, SB would provide them with many many houses yet they don't want them. Designing and building a stadium as part of Earl's Court is infinitely better for all concerned, except LBHF who believe Chelsea should stay in a cramped, tiny, boxed in site. Well Chelsea have obviously decided that they wish to pursue an option that means the club will get a stadium and a business model that The CLUB wants, not what suits LBHF. Chelsea appear to have taken an enormous step towards becoming a property giant at BPS. We don't know the full details but talk is that the stadium there would be self-financing. 

Perhaps there is still life in Earl's Court too?  We shall see. Whatever happens, we expect we will know much more by later in this year. 

Meanwhile we should applaud the CPO board for this beautiful bit of mugging. LBHF will not be pleased, one suspects, to have been shown to have so vacuous an argument. Videoing the crowd on match days?

Heavens above.

Friday 4 May 2012


So the club have pulled a massive power station sized rabbit out of the hat. The site that so many fans say would swing it for them (it is even possible that many would prefer BPS to Earl's Court because of its iconic status) is now a real possibility.

However, as we predicted in our earlier blog today, there are many who are now facing the possibility of a move away from SB and the sound of heels digging in is loud and clear. Bluffs have been called and it doesn't seem to be going down too well with some. The fantasy of a redevelopment of SB with the wild hope that the duplicitous soon-to-get-100 mill LBHF will ride to the rescue persists.

What people have to understand is this; Hammersmith and Fulham wanted to achieve one thing, which was keep CFC the hell out of the EC development and say whatever it took to stop CPO shares transferring. We know that CapCo had contacted the club, that CapCo were ready to bring CFC into the project. When the vote was lost, everything changed. LBHF knew that there was something afoot but also knew that CapCo were winners whatever happened. If only they could stir up enough CPO shareholders to keep it at bay....and it worked and despite a huge number of residents at West Ken rejecting the sale, LBHF will go ahead regardless. So Chelsea have now moved on and now of course, if Chelsea leave, the borough loses many millions per annum of additional visitor spend. LBHF wanted their cake and eat it. If the EGM had produced a win for the club, we would almost certainly be discussing a new Earl's Court project. Some have asked why the freehold was asked for back in October; because CFC were going for Earl's Court, that is why. Anybody who saw the clubs objection and submission to the Seagrave Road development could see that. It is mindlessly bloody obvious. LBHF's insistence that a development is possible is based purely on one thing - PR. Time to drop the fantasies. Now they have their money in effect, they would go back to their old intransigent selves.

Battersea is a huge and significant move by the club. It is not a "ruse". It is real and it is almost certain that the club's bid stands a very good chance. It is, in short, a momentous move and the mouth waters at the possibilities at the new stadium.

As we suggested would happen, talk today has been about share values, about distance, about transfer of shares, as if a billion pound stadium can be bought and demolished by a future developer. Share transfer is not necessary. Time to enter the real world and embrace the club's boldness.

If the bid fails then no doubt it will be seen as a worthless gesture. We shall soon know when the value of the bid is known. And maybe then we will face the scenario we have discussed elsewhere; a smaller, cramped and hideously expensive redevelopment of Stamford Bridge.
We suggest fans and shareholders get fully behind the club's efforts to create something very special indeed at BPS.

The bid we suspect will progress well for the time being. The 21st century arrived 12 years ago and it is high time Chelsea and Chelsea fans caught up.

And so Battersea it is... Maybe

We from CFCtruth welcome the news today that the club have made an offer for the Battersea Power Station site and have revealed ambitious and visionary plans for a new stadium. As we said in our blog posted earlier today, we were aware that this was the BPS bid deadline day and we were cautiously optimistic that the club would make an offer.

The initial reaction to the announcement from fans have been overwhelmingly positive with particular enthusiasm being shown for the plan for a 15,000 capacity, single-tier stand for home fans and the apparent determination of the club to avoid a generic (but cheap) bowl design. We at CFCtruth also welcome this acknowledgement of fans’ preferences and an understanding by the club of what works and what doesn’t in modern stadia design.

The idea of moving stadiums does not seem to be a major concern for most Chelsea supporters. They recognise, as we do, that Stamford Bridge is too small a ground to build sustained domestic and European success from and also understand that the site remains hugely restricted in terms of potential expansion. It is also clear that almost everyone likes the proposed new location. Battersea is widely considered historical Chelsea-territory and the idea of stadium both adjacent to a building like the Power Station and next to the Thames offers the potential for a truly iconic, world-class stadium design.

Of course there are naysayers – people who would rather give up football forever than consider a move from Stamford Bridge. And there are those who remain convinced that this is all part of an elaborate master plan by the owners and board of Chelsea FC to ‘steal the club away from its true fans’.  For now, we believe these people can safely be ignored – we consider it a very optimistic sign that so many CPO ‘No’ voters at last autumn’s EGM have already come out and said that this is a plan that they feel they could support. But that is a battle that the club must win at some point in order for these plans to move forward – they will still need to secure 75% of CPO votes at a future EGM. Let us all hope that this process is better handled by the club next time.

And of course that is not the only obstacle that these plans will need to overcome.  There are reportedly many other bidders for the site including some very well known and prosperous developers. Not just that but it also appears that Wandsworth Council are unconvinced that the site is right for stadium and reports suggest the Mayor’s Office has also expressed its scepticism (its concerns mainly seem to focus on transport issues). We hope that the club’s detailed plans not just for the stadium but for the regeneration of the whole area can convince them that this plan is a ‘goer’.

So the process will continue for the next few months until a decision is made on the preferred bidder for the site. CFCtruth will follow the process as it unfolds as well as any potential knock-on effects elsewhere. For example, we do wonder exactly what Hammersmith & Fulham are now thinking about the club’s Battersea plan and the potential economic loss for the borough. Equally, could CapCo be considering ‘what might have been’ for the Earls Court site if Chelsea do go ahead and choose a different path? Just speculation for now but we do wonder whether this announcement might not focus the minds of certain other parties and give them a chance to reconsider their options before it is too late...

What if Battersea?

Today is the deadline for the bids to be in for Battersea Power Station. There appear to be many interested parties and we hope one of those will be Chelsea FC of course.

But let us suppose that Chelsea do make a bid and indeed are successful in acquiring the property - what then? Firstly, we would assume that plenty of fans will be happy to hear it; it is hard to find many fans who wouldn't like to see a fantastic stadium at such a site. We presume the club would pretty soon ask CPO to hand over the shares. Would shareholders do so unequivocally or will we find ourselves embroiled in battles over the price of those shares? Would there be accusations of profit making (our recent blogs on costs should answer that question)? It is likely a bid would be in partnership with others who would share in any revenue generated in the long term. Would there be a group of fans who would still hang on to the idea that redeveloping Stamford Bridge is the only course they would accept? And would that issue of transfering CPO to a new stadium raise its head again? A vote would not have to be unanimous of course, but would campaigns against Battersea spring up, accompanied by any number of new conspiracy theories?

It is all hypothetical, however, since lots of bids are likely but we would hope that in the scenario of CFC bidding for and then acquiring BPS, the future of Chelsea would take on some clarity and momentum.

Come on Chelsea, give us some good news ahead of the FA Cup!

Thursday 3 May 2012

Estimating the Options, Part Two

Note: Since the publication of Part One of this article we have seen various comments about it on Twitter and elsewhere. To explain, we are merely trying to weigh up the potential costs of developing a new or extended stadium for Chelsea FC because nothing else like this exists right now. We want to help move the whole debate forward and, if nothing else, we hope that our figures can be a starting point for further discussion. Let us know your thoughts via

In the previous article, we introduced you to our attempt to estimate the associated costs of each of Chelsea FCs stadium options and we drew some fairly broad conclusions about the overall costs of each scheme. In Part Two we hope that we can go a little further in analysing the financial viability of each option via the estimated figures. Of course, these calculations continue to depend on an assumption that the figures we came up with in Part One are reasonably accurate (or at least are vaguely in the right ball park). So let us assume this for now. Indulge us.

When a developer considers whether to go ahead with a large-scale development, or indeed, when a choice has to be made between different large-scale development project options, the decision process involved is known as Capital Budgeting.

A number of tools have been developed to assess the viability of potential investments during a capital budgeting process. Two widely used tools used to decide on whether a particular investment is worth pursuing are the Internal Rate of Return (IRR) and the Net Present Value (NPV) of an investment. The Payback Period can also be used to compare investments but this does apparently have some serious limitations. So for the stadium question, we will look at each of the options using the IRR and NPV tools.

To simplify the exercise we have decided to compare the median values of the net total expenditure rather than either the best or worst case scenarios (though you can see the full set of calculations here to the right of each cost breakdown). Here is a comparison of the Internal Rates of Return (IRRs) of the median values of each of the various options:

Median IRR
 Stamford Bridge 55K Extension
 Stamford Bridge 60K New Build
 Battersea 60K New Build
 Earls Court 60K New Build

So what does this mean? It seems that the key question is whether an investment yields a greater return than the cost of capital (which is usually assumed to be 10%). If the return is above 10% the investment may be worth pursuing but if it is less then it almost certainly isnt. In the table above none of the median options manage this level of return although either Earls Court or Battersea would seem to be better investments than the Stamford Bridge options (which look to be potentially terrible investment decisions).

The other tool regularly used to evaluate potential investments is the Net Present Value (NPV) which should confirm whether a particular investment option is worth going ahead with it at all. To explain, if the NPV of an investment option is a negative figure the answer should always be No. If, however, its a positive figure then the answer should normally be Yes (unless a better option is available). Finally, if the NPV is about zero then the decision should take other factors into account. Here are the Net Present Values of the median values of the various stadium options:

    Median NPV
 Stamford Bridge 55K Extension
 Stamford Bridge 60K New Build
 Battersea 60K New Build
 Earls Court 60K New Build

So, strictly according to an assessment of the median NPVs of the various stadium scenarios again none of the options look financially viable. More than that, none even look close to being financially viable.

However, there is another way to look at this. As noted in Part One of this article, there are immense differences in the spread of costs between the best and worst cases in each scenario (virtually £1bn difference in the estimates for Earls Court and Battersea for example). So we have also calculated how much money could be spent on each of the projects before its respective NPV dipped into negative territory that is, the maximum net investment that would appear to make financial sense for the club (the net investment is the Total Cost spent minus the Total Revenue gained - primarily from the sale of SB - in each scenario). The result is as follows:

Best Case
Net Investment
Worst Case
Net Investment
 Recommended  Max Net   Investment
 Stamford Bridge 55K Extension
 Stamford Bridge 60K New Build
 Battersea 60K New Build
 Earls Court 60K New Build
£20m profit

*Club estimate.

So what can be concluded from these estimates? Firstly, the figures seem to suggest that neither an extension nor a new stadium on the Stamford Bridge site will ever make sense financially - even in the best possible circumstances. The maximum amounts that the club should consider spending on either a Stamford Bridge extension (£109m) or a rebuild (£356m) are way below what it would cost to do the work even if we assume costs could be kept to a minimum. So, on balance, staying at a 42,000 capacity Bridge makes more sense than even attempting to extend the capacity.

What of the other stadium options? The figure for the maximum net investment for a new stadium at Earls Court or Battersea happens to be the same as that for a new build at Stamford Bridge (£356m). This is because the recommended maximum spend is based on the predicted additional income from a 60,000 stadium and this doesnt change between the different scenarios. So, according to these figures, building a new stadium in Battersea or Earls Court could make financial sense but only if the club make enough money from Stamford Bridge and dont overpay for the new site and associated building costs. However, the figures suggest the costs of either project could quite easily rise above the £356m figure and so make either option slip into unviability once again

Overall, then, at least based on these estimates, it appears that the economic case for either expanding or moving our stadium is far from clear. The insecurity and fluidity of the large scale London property portfolio doesn't help in making estimates of property values or outcomes but building costs at the moment are favourable for large scale developments and, equally, some property developers are having financial difficulties. So it remains a fact that Chelsea's inability to confidently throw their hat into the EC ring and prise CapCo away from LBHF has been something of a disaster really. That EGM decision is haunting this whole process now.

In a way, the clubs Future of Stamford Bridge report has now set a baseline for the expected viability of a potential project the club have shared information which now allows all Chelsea fans to question whether a particular stadium option really does makes sense in terms of building a stable and prosperous future for the club. How ironic, then, if the information instead appears to make the case that maximising revenue from our current 42,000 Stamford Bridge capacity might be the best option for the club. "Great!" we hear you say. Well, not really because there is only one way for the club to do that and it will be eye-watering increases in ticket prices. And the level of increases necessary to bring our match day revenues up to the level required are not sustainable so, therefore, nor is staying in a 42,000 seat Stamford Bridge. And so the cycle continues.

What is obvious and laced with further irony is that if these figures are even remotely accurate, the club will be, whatever move/expansion option they go for, taking a big hit on the development in order to make the club itself a more efficient business model going forwards. And of course, the hit will probably be taken by Abramovich. The club have said that certain options produce unacceptably long periods for return but it is unreasonable for us to expect them to disregard that entirely.  What is abundantly clear, however, is that the profit motive that Roman is being bashed with moves further and further into fantasy whenever one looks at the issue in any detail.

Chelsea fans really have to face up to the realities of the situation at some point soon. In the meantime, CFCtruth will continue to encourage the club to take the steps required in order to further clarify these issues and to fully convince fans who continue to harbour doubts about their motives and honesty that they have the best interests of Chelsea FC at heart. But it seems that, as things stand, all the club's available options are fraught with danger and uncertainty - not least in relation to LBHF's role in all this. The path to the future remains unclear but we suspect the club has to make the next move...

Note: If you disagree with these conclusions then please tell us how and why you disagree via If we have missed or misunderstood some crucial aspect of this evaluation then we are very keen to correct the error(s) as we believe that Chelsea fans deserve to be able to read an realistic financial assessment of the situation in order to allow us all to take an informed position on these issues.