By Alejandro Echeverria
March 29, 2022
Photo Credit: Associated Press
On Feb. 24, 2022, a controversial and historic event occurred: Russia’s invasion of Ukraine. Still ongoing, this conflict has become a global issue, with many countries wary of starting another world war. In response to this conflict, nations around the world have decided to take actions to weaken the Russian government financially, like imposing rigorous economic sanctions or freezing the assets of several Russian oligarchs who are believed to support Russia’s President, Vladimir Putin. Of the oligarchs whose assets were frozen, none have impacted the sports world quite like London soccer club Chelsea FC’s owner, Roman Abramovich.
Having bought the club in 2003, Abramovich has seen a series of sanctions regarding the club come his way over the past few weeks. On March 10, 2022, the U.K. government, under Prime Minister Boris Johnson, sanctioned Abramovich, labeling him a “pro-Kremlin Oligarch.” As a result of these sanctions, Chelsea was given a transfer ban and were not allowed to negotiate new contracts with its current players. Additionally, it was prohibited from selling tickets for matches that hadn't already been sold. This not only slowed revenue generation, but also had a significant negative impact on the performance of the team, which, in the English Football Triangle, can also affect the team’s future finances due to lack of success on the pitch.
Furthermore, these sanctions have caused former Chelsea shirt sponsor, Three, a mobile phone and telecommunications company, to suspend its sponsorship. Other large companies like Nike and Hyundai have considered doing the same. Having known this might happen, Abramovich attempted to protect the club from sanctions by transferring stewardship to the trustees of Chelsea’s charity. However, this plan failed, and Abramovich was left with one option: sell the club.
Rather unsurprisingly, this has not been as easy as it sounds. When the sanctions were imposed on Abramovich, Chelsea was allowed to keep operating, but only under a special license issued by the government. In order to sell the club though, the British government required another license. According to released statements, this is a special license which would give approval to the “source and use of funds” earned from the deal that was planned. After some time passed though, this license was granted, allowing for the future sale of the club. Raine Group, a capital market company, was hired to conduct the sale. The group released a statement saying it, “…will continue to maintain regular dialogue with the relevant authorities as the process moves forward.” Abramovich, however, will not be involved in this process or the distribution of the earnings from the overall sale.
More recently though, as of March 25, the U.K. government updated the special license issued to include some more favorable terms for Chelsea. Under this version of the license, the club will be allowed to resume the sale of tickets for away games and cup matches, with Abramovich’s company being granted the chance of supplying the club with up to $39.6 million with the purpose of aiding “cash flow and liquidity.” However, Abramovich will see no profit from the sale of the club, which is estimated to be worth around $4 billion. Whether or not he makes profits though, Chelsea’s sale seems imminent, with potential buyers lining up, and a shortlist created by Raine Group already in place.
The frontrunner for the sale is a consortium led by British real estate magnate Jonathan Goldstein, Swiss billionaire Hansjörg Wyss, and L.A. Dodgers and Lakers co-owner Todd Boehly. But making a push is another consortium led by British businessman and former Liverpool chairperson Sir Martin Broughton, Philadelphia 76ers and New Jersey Devils co-owners Josh Harris and David Blitzer, and World Athletics president Sebastian Coe. The shortlist also includes the Chicago Cubs owners’, The Ricketts Family, and Stephen Pagliuca, co-owner of the Boston Celtics.
With so many big names being mentioned around the sale of Chelsea, fans can hope that their new owners can turn the club’s financial losses around, but must stay wary of the fact that the new owners may not be willing to spend as much as Abramovich did, and the historic Chelsea FC may never be the same.