Report: Costly QPR Financial Fair Play case shows what Chelsea could face after Abramovich's decision
Chelsea could face a similar issue over Roman Abramovich’s wiping of the reported £1.5billion debt to what happened to Queens Park Rangers in 2015, according to The Athletic’s David Ornstein.
While how the other clubs feel about the decision is hardly Chelsea’s problem, it remains unclear whether the governing bodies would allow it.
Ornstein, who also mentioned a column by Rob Draper for the Main on Sunday as a reference, highlighted this particular problem.
“[There are questions over] whether that’s going to be allowed under the Financial Fair Play rules,” Ornstein told Sky Sports about Abramovich’s wanting to write off the debt.
“Because QPR tried to do something similar and the EFL were having none of it.”
Bear in mind, instead of being able to write off the debt, QPR reportedly ended up paying £20million in fines and legal costs, a third of the debt they tried to write off in the first place.
The aforementioned Draper’s column also featured an interview with a leading football QC, Nick de Marco, who acted for Newcastle United during the Saudi takeover.
De Marco argued that the reported £1.5bn debt is unlikely to be treated as a debt for an annual return given a large part of the debt had been there before the FFP rules came into force.
He added: “However, what is the accounting treatment of writing off that debt? This was a direct issue in the QPR Financial Fair Play case.
“It was a different set of rules [EFL] and circumstances, but when QPR were charged, the owners said: ‘We will write off the £60m shareholders debt. And that will then improve the accounts, so the club won’t be in breach.’
“The Football League looked at that and had expert accounting advice which said that if you do that, that’s treated as an equity contribution by the owner. In other words, the owner’s putting in £60m in that year.
“Under current Premier League rules, the owners are only allowed to put in £90m over three years and anything in excess of that is treated as a debt.
“So, if Chelsea’s owner had written off the £1.5bn debt it would likely then become a £1.5bn debt for Profit and Sustainability accounting purposes.”
Abramovich’s being under sanctions, which means the prospective new Chelsea owners cannot repay the loans, at least for now, also complicates the issue.
De Marco further suggested that the new Chelsea owners may inherit the £1.5bn debt, knowing that it cannot be paid back now, but that comes with the uncertainty on when it will be required to be repaid.