The longer history and legal documents

For those who want a longer look at CPO and its history, we have outlined the detail of the company. Also included are some of the legal documents for Stamford Bridge.

 

When the Mears family sold Chelsea FC in the early 1980s they kept the freehold of Stamford Bridge back. This was then sold to Marler Estates plc, (later Cabra Estates plc) in 1984. At that time, the future of football at the ground was uncertain, and many Chelsea fans will remember that we faced continual threat from property developers.

In 1986 the club launched “Save the Bridge” a campaign directly associated with raising funds and awareness to ensure that Chelsea supporters could continue to watch football at Stamford Bridge.

When Cabra Estates plc went into liquidation in 1992, the club was granted a lease for Stamford Bridge and an option to buy the freehold.

In December 1992 Chelsea Village Limited, as Chelsea FC then was, entered into an agreement with a West Register (Properties) Ltd, a subsidiary of Royal Bank of Scotland (RBS) to take a lease of the whole of the Stamford Bridge (SB) site for a term of 20 years from December 1992. It also included the option to purchase the freehold for £5m.

Following the completion of this deal in December 1992, the then club chairman Ken Bates decided to set up Chelsea Pitch Owners (CPO). In early 1993 the deal was restructured so that CPO acquired the option that had been granted to CV to acquire the stadium site for £5m.

A conditional agreement for lease was entered into whereby if CPO acquired the freehold of the Stadium Site they would grant a lease of the Stadium Site to CFC on the terms set out in paragraph 7(b) of the 'Additional Information' section of the Prospectus.

Supporters were encouraged to buy a CPO share to meet the £5m acquisition cost. The agreement for the lease was conditional upon CPO raising sufficient monies to enable them to exercise the option.

The actual freehold cost ended up at £10.2m - rather than the £5m stated in the prospectus. This is due to one man,  Glenn Hoddle, who when he became manager in 1994, wanted a bigger pitch to play his more expansive version of football.

By that stage the foundations for the hotel had been built and so the only way a larger pitch could be incorporated was to shrink the South Stand (Shed End) and increase the size of the West Stand to maintain the 42,000 plus capacity CFC were looking for.

As a result the footprint on which the stadium was built expanded considerably to encompass the West Stand, and the value attributed to the stadium site was increased.

By 1997 roughly 7,580 shares had been sold in CPO leaving the Company at least £9.5m away from being able to buy the Stadium Site and grant the lease.

In short, the conditional lease was never granted because CPO never raised enough money to buy the stadium site.

As of October 2017 the total of shares sold stands at around 22,000, all with a nominal value of £100 each.

In the latter part of 1997 the club, by this time a PLC and listed on the AIM, had managed to agree a deal with SBC Warburg whereby it would raise £75m by way of a secured Eurobond issue. It was a condition of that issue that CFC had security of tenure for longer than the 15-year unexpired lease that had been granted in 1992.

Warburg agreed that a 199-year lease would be sufficient tenure, and so CV approached CPO to see if it was possible to vary the arrangement that was in place.

Those discussions resulted in the structure that is now in place. the club lent CPO the funds to purchase the freehold of the site on soft terms, and in exchange CPO granted the 199-year lease to the club at a peppercorn rent.

If this variation had not taken place in 1997, the original option would expire on 1st December 2012, and CPO would be wound up with the funds raised being returned to investors at par.

In reality provided CPO uses 'reasonable endeavours' to repay the loan, the loan can run for 199 years. Selling shares is the most efficient way for CPO to use reasonable endeavours to repay the soft loan.

The concept that any third party could lend CPO £9.5m to repay CFC plc is questionable. CPO has limited income and certainly could not service a loan of that scale.

During the first years of this century, CPO employed a number of staff at Stamford Bridge and assisted with organising events for the club, including the centenary celebrations in 2005. It ran a lottery and the club credit card scheme, as well as the Annual Chelsea Pitch Owners Lunch. All of these activities were surrendered to the club in 2009 by the then directors.

In 2011, the then owner of Chelsea, Roman Abramovich wished to pursue options for Chelsea to play elsewhere, such as Earls Court or Battersea. In order to do this, he wished to purchase CPO outright. To do this he needed 75% of the shareholders to agree, but he fell short with only 61.6% agreed. Share sales were suspended, and the company endured a difficult and fractious few years.

With a new board of directors co-opted and then elected by shareholders, the company has regained a place in the hearts of Chelsea Supporters worldwide, and in recent years has re-established events with Chelsea legends on and off the pitch.
 

Download a copy of the 17 Dec 1997 CPO Agreement by clicking here

Download a copy of the 17 Dec 1997 CPO Lease by clicking here