Financial crises among football clubs are far from unusual. But the spectacular fall from grace of world and European champions Chelsea, following the imposition of swingeing sanctions on owner Roman Abramovich, can rarely have been so swift.
In the days before Boris Johnson’s government threw the kitchen sink at the Chelsea proprietor he was confidently seeking to sell the franchise for a record setting £3bn. Now the club, like NatWest owner Royal Bank of Scotland after the financial crisis of 2008, is under government control. It effectively has been nationalised.
Restrictions have been drawn so tightly that supporters are unable to buy tickets in case the cash falls into the hands of Abramovich and his cronies. One of the most expensively assembled teams in Europe may be required travel to overseas games by EasyJet if it is not to breach the sanctions rules.
Chelsea Football Club will be automatically cut-off from all inflows of fresh income whether it be uncollected broadcast rights or sponsorship and advertising deals.
Chelsea owner Roman Abramovich is among oligarchs hit with asset freeze and travel bans under new UK sanctions revealed by the UK government on Thursday morning
The Foreign Office announced the sanctions with top-trumps style images on social media
There are early indications that any commercial association with Chelsea instantly has become toxic.
The British government charged that a publicly quoted steel company Evraz, effectively controlled by Abramovich, potentially provided the steel to Vladimir Putin to build the Russian tanks pounding and killing the people of Ukraine.
The Hong Kong owned telecom company Three, a sponsor of the team’s shirts, is severing that deal.
Under the government licence Chelsea is only permitted to earn enough revenues to pay its current bills and expenses.
Where precisely that money will come from when it must shell out £28m a month on salaries for its 65 playing staff or a massive £336m a year is unclear.
A woman injured in Russian shelling of Mariupol’s maternity hospital stands outside wrapped in a blanket amid the carnage
As a double Chelsea season ticket holder for nearly 30-years it has been hard for me to feel hostility towards a tainted benefactor in Abramovich. He personally took on £1.5billion of debt and paid for the managers, players and club infrastructure which delivered 21 trophies during his 19 years of stewardship.
But I cannot be anything but appalled and sickened that funding for that success flowed from the bloodstained brutality of Putin’s rule. What is even more shocking is that like so many of the oligarchs Abramovich’s family originated (like my own) from Ukraine.
What is really surprising is that Abramovich, for all his access to the best legal and financial minds in London’s laundromat, has failed to put in place a durable corporate structure. It could have given the club the chance to continue operating under government supervision without the onerous restrictions.
Abramovich has overseen the most successful period in Chelsea’s history, winning 21 trophies – including five Premier League titles and the Champions League twice
He has given fans incredible memories but it is appalling where his funding has come from
What Chelsea now can and can’t do following sanctions on Abramovich
- Play all their matches, home and away;
- Pay the salaries of players and staff;
- Provide stewards, security and food and drink for fans;
- Receive TV broadcasting revenues;
- Club sale could potentially still go ahead, as long as Abramovich does not benefit financially.
- Sell tickets to home or away fans – only existing ticket holders will be allowed to attend;
- Agree any new transfers or contracts;
- Sell merchandise at the stadium or online;
- Spend more than £20,000 on away travel.
When oligarch Mikhael Fridman was sanctioned by the European Union earlier this month his main company LetterOne, which owns vitamin chain Holland & Barrett and firms employing 120,000 people across the globe, was able to continue doing business.
The shares owned by Fridman and his associates were confiscated but the independent directors, led by City grandee Lord Mervyn Davies, pledged to carry on running the enterprise and earmarked all proceeds – including a hefty dividend of £150m plus – to Ukrainian related charities.
Chelsea are asking the government if the licence, under which the club is now having to operate, could be amended in some way so that the core value – which is the playing staff – is not denuded making it easier to sell the club.
That could possibly be done if a fresh board, with no connections to Abramovich, could be assembled. It would then have to provide iron clad pledges to Whitehall that not a penny of dividends or revenues of any kind would leak into companies once controlled by the oligarch.
The major question for any buyer is what is the status of the £1.5bn debt, accumulated by an Abramovich outfit, which he promised to forgive last weekend.
So quickly have events moved that no one precisely knows where that loan now lies.
What is clear is that Abramovich has gone from hero to zero overnight. He has left a football club with 105-years of history, sitting some of the most valuable real estate in London and with a brilliant roster of players, in a most perilous position.
Chelsea’s shirt sponsor, the telecom’s brand, Three, has suspended its deal with the club
Abramovich is worth 10.4bn ($12.5bn), according to Forbes, and owns a £150m Kensington mansion, a £22m penthouse, and more than £1.2bn of yachts, private jets, helicopters and supercars based in Britain and around the world