Chelsea stay in red despite debt relief

Abramovich has converted much of his loan into shares (GETTY IMAGES)

Roman Abramovich has written off £340m owed to him by Chelsea but the club are still a long way from breaking even after recording a yearly loss of £44.4m.

Abramovich, who bought the club in 2003 and has been bankrolling it ever since, halved Chelsea's debts in February and has now wiped the slate clean after turning his entire £709m loan to the club into equity. A statement from the club said the move "demonstrates the continuing commitment from the shareholder to the group".

Chelsea's latest financial figures, however, show the club are still hugely dependent on Abramovich's largesse. Most worryingly, their income fell from £213.1m to £206.4m. The club put this down to sponsorship contracts with Adidas and Samsung being "front-loaded", with more money being paid to the club in the first half of the deals.

Chelsea's losses for 2009 were £44.4m, due in part to compensation of £12.6m paid to former manager Luiz Felipe Scolari and his assistants, who were sacked in February. The figure is down from last year's loss of £65.7m, and a loss of £74.8m in 2007. However, it is still greater than any other loss recorded for an English football club with the exception of that of Leeds United in 2003, when the Yorkshire club lost £49.5m and shortly afterwards suffered financial meltdown.

The Chelsea chief executive, Ron Gourlay, outlined his hopes of making the club self-sufficient by keeping down player wages. He said: "It is still our aim to be self-sufficient and we will achieve this by increasing our revenues as we continue to leverage off our brand. We are reducing our costs by controlling expenses."

It is not immediately clear why Abramovich has decided to convert his massive loan to equity now. The Chelsea chairman, Bruce Buck, claimed the move was simply to provide greater stability. Buck said: "The club's debt load has been reduced almost to nil in order to provide more long-term stability for the club. The reduction will also enable the club to comply with any regulations on debt levels which are being discussed by the football community."

The club's manager, Carlo Ancelotti, yesterday welcomed the figures, while revealing that he has been assured that Abramovich will continue to provide money for players. Ancelotti repeated his claim that he does not plan to recruit players in January, but denied the decision had been taken for financial reasons. "It's a decision that we took together," he said. "It's not true that the club don't want to buy. If it's necessary, then we can do it. It's not a question of money. Absolutely not."

Ancelotti also joked that perhaps the reason for the better financial figures was because he was being paid less than previous managers. He said: "If Chelsea have reduced their losses, it's good. Maybe I have a contract with less money than in respect to the last few coaches."

On the footballing side, Ancelotti paid a remarkable tribute to striker Didier Drogba, who has left for African Cup of Nations duty with the Ivory Coast. Ancelotti said: "There is no one that compares to him. There has never been a player of his quality; he has everything. He is out of this world."