Chelsea less than a year from collapse before Russian takeover

Chelsea were less than 12 months away from financial collapse, experts claimed yesterday. The full extent of their plight was revealed as Ken Bates, the chairman, claimed he had sold the Premiership club to secure its future. "I think this is a great move for the club and the right time for me to sell up," he said.

It has emerged that Chelsea were struggling to cover repayments of £23m - due tomorrow - which are owed to a consortium of banks as part of an overall debt of £90m. Failure to make the payments would possibly have kick-started the first moves into putting the parent company, Chelsea Village, into administration.

Also on the business front, it appears likely that there will be an inquiry by the Financial Services Authority into the sale of shares just before the £60m takeover by the Russian businessman Roman Abramovich. There was a 50 per cent increase in the share price in the weeks before the deal was announced on Tuesday evening.

On the playing side, the 36-year-old Gianfranco Zola - despite immediately receiving an improved offer in the wake of the takeover - announced that he would be leaving Chelsea after seven years to join the Serie B club Cagliari. There was also speculation as to which big names may replace him with Abramovich, who will cover the debts, apparently pledging £50m to improve the playing staff. The Juventus midfielder Edgar Davids and the Milan defender Alessandro Nesta are believed to be targets. Chelsea's new owner is also considering a "cheeky" bid for Arsenal's Thierry Henry. More realistically Scott Parker, of Charlton, or West Ham's Joe Cole may arrive.

"It's like Father Christmas has come for Chelsea," said Stan Lock, an analyst at Brewin Dolphin Securities plc, who, like other financiers, claimed it was an excellent deal for Chelsea. "The natural reaction is to be suspicious, but the deal is chicken feed to this boy," said John Moore, a director with the stockbrokers Bell Laurie Wright. That may be cold comfort for the coach, Claudio Ranieri, whose future, it is thought, is in some doubt.

If Abramovich, 36, who has assets running into billions through oil interests, is able to sign any of those players he will undoubtedly aid the charm offensive he launched yesterday to try and secure 100 per cent control of Chelsea. So far he has paid £29.6m for 50.09 per cent of the shares, which gives Bates' £17.5m. The chairman - who says he will stay on for two more years - paid £1 when he bought Chelsea in 1982. Abramovich will write to every shareholder inside the next seven days and give them three weeks to accept his offer of 35p per share - 15 per cent more than the closing share price on Monday - to complete a buy-out.

Andy Cornelius, the managing director of Abramovich's public relations advisers, Citigate Dewe Rogerson, said: "Roman's not in this for the publicity. He's not going to put a figure on the amount he'll spend on players. But he's a very wealthy guy, very passionate about football and wants to come and watch the games."

John Mann, a spokesman for the Russian oil company Sibneft, in which Abramovich is a major shareholder, added: "He's been looking for a team for a while. He wanted a team that could win in Europe."

Bates defended the sale, saying: "In the past there have been four other interested parties who have wanted to be involved at Chelsea on a partnership basis but I didn't get the right feeling about it and it never happened. This one I know is different. He wants to take Chelsea to another level.

"Should the fans have reservations about him? Well, they had reservations about me when I first came here. No, they should not have any. Anyone who is putting £200m into a club clearly means serious business." Nevertheless reservations were expressed. The MP and former Sports Minister Tony Banks - a Chelsea fan - questioned whether Abramovich was a "fit and proper" owner. "I don't think people should be allowed to just take over a club unless we know more about them," he said. "I've argued we need a public interest test. Before any bid is accepted, the FA [Football Assoc- iation] should be able to do tests to check the bidder's financial background, their available resources and their intentions."

Gordon Taylor, the chief executive of the Professional Footballers' Association, also urged the FA to scrutinise the takeover.