UK sanctions leave Roman Abramovich and a growing list of Chelsea suitors in limbo

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Roman Abramovich’s time at Stamford Bridge is coming to an end, but the billionaire’s efforts to launch a quick sale of Chelsea FC he’s been pondering for at least three years have just been scuttled.

On Thursday, after weeks of intense debate in parliament, the British government announced sanctions against Abramovich and six other Russian oligarchs, restricting their business interests, banning all travel to the country and freezing their assets, including the fourth most valuable club of the Premier League. . A source tells Forbes that previous investigations accelerated the sale process, which is led by sports investment bankers The Raine Group, which accelerated following the unified international response to Russia’s invasion of Ukraine.

“It was never about business or money for me, but pure passion for the game and the club,” Abramovich wrote in a March 2 statement announcing his intentions that he signed, simply. , “Novel”.

Such sentiment is unlikely to hold much sway over the UK government, although names of potential buyers are emerging – from British property mogul Nick Candy to UFC fighter Conor McGregor – although some of them have a slim chance of succeeding.

A source at the Department for Digital, Culture, Media and Sport has confirmed that any potential dealings are now prohibited. However, the source added that UK lawmakers are very “open to selling the club” and would consider whether Chelsea apply for a license to allow the sale. Following the sanctions, Abramovich would not receive any proceeds from a deal. Last week, he handed over management (not ownership) of the club to the trustees of the Chelsea Charitable Foundation.

However, several sources have confirmed Forbes that Abramovich was presenting offers as early as three years ago, with at least four parties having done serious research but unable to reach an agreement. Billionaire Todd Boehly, co-owner of two Los Angeles teams, the Dodgers and Lakers, reportedly made a $2.9 billion bid in 2019, according to Sky Sports.

After the invasion, Abramovich went public with his intention to sell, hiring Raine, leading to a steady stream of speculation about potential buyers that seemed to indicate resolution as early as Tuesday, the bank’s deadline for offers. Among the biggest reported deals are a joint effort by Boehly and Swiss billionaire Hansjoerg Wyss, Woody Johnson, New York Jets owner and former US ambassador to the UK, and Apollo Global Management co-founder Josh Harris. Some potential buyers are well ahead of the pack, having done their due diligence in previous efforts.

For the past two decades, Chelsea’s saving grace has been Abramovich’s deep pockets. The 55-year-old billionaire has loaned Chelsea $2 billion of his own money since buying the club for $190 million in 2003. Abramovich’s funding has led to 19 major trophies during his tenure, including the Champions League crown in 2021, scoring the most success. period in the club’s history and transforming the club into a global football brand. This financial pipeline is now gone.

The sale and future of Chelsea, the seventh most valuable football team in the world at $3.2 billion, is now in limbo. The club cannot sell merchandise and tickets, acquire new players or renegotiate contracts, as losses mount.

“Operationally, Chelsea have lost money faster than any club in Premier League history,” said Kieran Maguire, a football professor at the University of Liverpool. Forbesadding that the cost of penalties is a “cause of concern” for the club’s future.

According to annual returns from Chelsea’s parent company, Fordstam Limited, the club has lost $167 million over the past two financial years while spending $396 million on acquiring new players over the past two seasons. (The impact of Covid-19 largely influenced that loss, which still eclipsed the rest of Premier League clubs.)

If Chelsea do make a sale, the question of price looms large. Abramovich’s press release from last week suggested he was ready to forgo the $2bn loan Chelsea owed him and donate the ‘net proceeds’ of a sale to victims of the war in Ukraine . Exactly what Abramovich means by “net proceeds” is unclear and something the UK government is seeking to confirm before amending the license and authorizing a sale. Maguire says the charity component can provide a little leeway around government restrictions to get a deal done, saying the government could “observe transactions and effectively push for the money to end up [in]…the right place.

Any new owners at this stage should consider the reputational damage of Chelsea’s association with Abramovich. Conrad Wiacek, head of sports analysis at GlobalData, says Chelsea’s long-standing multi-year trade deals are now under threat. Mobile telecommunications brand Three, which spends $55.2 million a year on a shirtfront deal with Chelsea, has already asked to drop its sponsorship. The club’s $72m kit deal with Nike could be next. “Although Chelsea have a sporting license to continue operating as a football club, many brands will be wary of guilt by association,” Wiacek said. There’s also the matter of Stamford Bridge, Chelsea’s home stadium which remains woefully outdated as London rivals Arsenal, Tottenham and West Ham have all recently moved into state-of-the-art buildings.

Who that might be remains a matter of speculation, with Marc Ganis, president of consultancy firm Sportscorp, considering the offers from Johnson, Wyss/Boehly and that of the Ricketts family, owners of the Chicago Cubs, as “extremely formidable”. Others are more complicated. Harris, for example, owns shares in Crystal Palace, another Premier League club. He would need to divest, which could be a months-long process in itself. RedBird Capital founder Gerry Cardinale was rumored to be considering a bid, but sources close to the former Goldman Sachs partner said he was unlikely to make a bid due to his Liverpool stake. FC through Fenway Sports Group.

For now, Abramovich must deal with the implications of the UK government’s latest actions, which were taken as part of an effort to “isolate Putin and those around him”. Prime Minister Boris Johnson said in the statement: “There can be no refuge for those who supported Putin’s vicious assault on Ukraine.” Foreign Secretary Liz Truss added: “Oligarchs and kleptocrats have no place in our economy or our society. With their close ties to Putin, they are complicit in his aggression.

Although the UK has issued a license allowing a number of ‘football-related activities to continue at Chelsea’, including allowing the club to continue playing matches, Chelsea will play football under the shadow of sanctions. until there is a significant shift in global geopolitics. landscape, whether it is regime change in Russia or the start of serious peace talks in Ukraine. Chelsea said in a statement that the club “requests permission to amend the license in order to allow the club to operate as normally as possible”.

Unless a buyer is found, Chelsea fans can expect tough times. Chelsea did not respond to questions about the sanctions, the appeals process, or provide an update on the sale of the club.

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