Roman Abramovich's buyout of Chelsea almost certainly rescued the club from having to default on a £75m loan that would have plunged it into financial crisis. In the latest extract of the Chelsea FC: The Official Biography, serialised in the Guardian today, the club's chairman Bruce Buck has detailed the extent of Chelsea's financial position before the £140m takeover in the summer of 2003.

Buck reveals the club was sinking in a quagmire of debt. "I personally was surprised," said Buck. "They had a £75m Eurobond outstanding and it was perfectly clear to the markets that they might have trouble making the July payment. [The then chief executive] Trevor Birch had been in discussions for some time about restructuring that bond. The financial community as opposed to the football community knew there were some real issues."

Chelsea had borrowed heavily from financial institutions, principally to fund stadium development. Ruth Giste, the widow of the late club director Matthew Harding, had also demanded repayment of a significant sum loaned to the club. "Fans did not know that in January the club had mortgaged, if you will, the TV revenues," added Buck. "It borrowed against the TV revenues that were to be handed out in August. I didn't know as a fan the club owed money to the Harding family and they wanted it back. As a fan I was naive. I knew the club had financial problems, but didn't know the specifics."

Birch confirmed that there were other obligations that had put Chelsea in financial difficulty. He was working to refinance the debts to delay repayment for 12 months, by which time the lucratively remunerated Marcel Desailly, Gianfranco Zola, Emmanuel Petit and Winston Bogarde would have been removed from the wage bill. It meant that Chelsea's period of extravagance, mostly funded by debt, had come to a close.

"We needed to reschedule and stretch some of the commitments we had," said Birch. "The [£75m] Eurobond was a lump payment each year. There were other commitments, football commitments with players who had been bought but who hadn't been paid for, that needed to be rescheduled.

"I think the financial side would have become an issue if certain actions weren't taken so all the plans were geared around stabilising the position, while certain contracts unwound. Chelsea had been caught by the acceleration of the transfer market which then left us with probably more players than we needed on probably more lucrative contracts than was prudent and therefore we had to try to untangle all those, contain things."

Though Abramovich's research into which clubs might have been available for takeover suggested five - including Manchester United, Chelsea and Tottenham - the prospect of a base in the capital proved crucial. Paradoxically, it was Chelsea's perilous financial position that proved attractive to Abramovich, as it meant a quick purchase was possible. Few, however, were prepared for the breakneck speed of the transaction.

"For the next five days, lawyers worked day and night; they gave us a lot of financial information, so we understood there was an urgency," said Buck.

"Within a few days of [the first] contact, I met [Abramovich and his advisers]," said Birch. "One of the banks we had been talking to on our possible consolidation of all the debts, Abramovich had been talking to them. They were under no illusions as to what they were buying. I took them into one of the Millennium Boxes and within 15 minutes we'd done the deal in outline."

During July 2003, Abramovich paid a 15p-per-share premium on the trading price of a fortnight previously. Even the £17m this netted Ken Bates was initially insufficient for the then chairman. "I'm told he said he wanted more money," says Buck, "and Trevor said, 'Don't be ridiculous, this is more than you could have imagined'."