Roman Abramovich has been an untouchable billionaire free to control Chelsea's phenomenal success for nearly two decades, but that changed on Thursday morning. The UK government announced sanctions against seven Russian oligarchs who believe they have close links with the assassinated regime of Russian President Vladimir Putin, after two weeks of intense pressure to act amid the country's ongoing invasion of Ukraine. After this step.
Abramovich - along with Igor Sechin, Oleg Deripaska, Dmitry Lebedev, Alexey Miller, Andrei Kostin and Nikolai Tokarev - have their assets frozen and face a ban on all transactions with UK individuals and businesses. Abramovich, who bought Chelsea for £140 million in 2003, has always denied ties to Putin's government, but the U.K.
Abramovich is associated with a person who is involved in destabilizing Ukraine or undermining and threatening Ukraine's territorial integrity, sovereignty and independence, namely Vladimir Putin, with whom Abramovich has had a close relationship for decades, "Read it. "This association involves obtaining financial benefits or other material benefits from Putin and the government of Russia."
The decision, in effect until 31 May, directly affects Chelsea, which has been frozen as Abramovich property, the kind he previously tried to avoid by creating a degree of separation between himself and the club.
On 26 February, as criticism over the lack of sanctions began to focus on Abramovich, he handed over Chelsea's "caretaker and care" to the trustees of the Blues Charitable Foundation. However, sources told ESPN that as lawyers began to work out the details of this vague term, fears grew increasingly that it would not stand up to scrutiny that there were impending sanctions.
This comes amid doubts from trustees as to whether the foundation was a suitable vehicle to run the club - reporting the situation to the Charity Commission for further clarification - and doubts among Abramovich's advisers that it would protect against any punishment targeting Chelsea. will not be sufficient. Russian, he made a second statement on 1 March confirming that the club would be put up for sale. Bidders have been doing the rounds since - though sources have told ESPN that so far no interested party has come close to Abramovich's £3bn valuation - but that government intervention could lead to Chelsea's sale and even that significantly affects the day-to-day running of the club. Uncertainty.
Chelsea, 117 on 10 March, have won 21 trophies during Abramovich's 19-year tenure - more than any other English club - but his ownership is coming to a humiliating end. ESPN is looking for answers to key questions.
How surprising is the decision of the government to take this step?
It is massive. Sources told ESPN that senior people at Chelsea, the Premier League and UEFA were all shocked by Thursday's decision. This was always a possibility given the increasing pressure on the government to intervene – Labor leader Sir Keir Starmer last week called for Abramovich to be approved outright – but the hope was that, rightly or wrongly, he would be given time to sell. .
New York merchant bank Rhine Group, appointed to handle the sale, set a March 15 deadline for interested parties to submit bids for Chelsea, and the sources described it as "no coincidence", noting that That it was also the date on which the government could act on emergency legislation known as the Economic Offenses Bill, once passed into law. (The bill would make it harder to hide assets in the UK, as well as make it easier to issue sanctions going forward.) As it turns out, they weren't required to, which will likely be the subject of some heated political debate. in the coming weeks.
Abramovich could appeal the decision, but as of Thursday afternoon, no one connected to the 55-year-old had indicated whether he would do so.
What is their basis for targeting Abramovich?
Published by the Treasury Office of Financial Sanctions Implementation, the document detailing the government's reasoning is as comprehensive as it is damning. After outlining his belief that Abramovich "has had a close relationship" with Putin "for decades", it suggests a wide range of suspicious activities including companies linked to Abramovich receiving tax breaks, buying shares and Selling and sharing from the Russian state at favorable rates. and the contract received for the FIFA 2018 World Cup.
Abramovich has therefore been accused of receiving "preferential treatment and concessions from Putin and the government of Russia", while also being targeted for his stake in the steel mining and construction company Avraz plc. The company is accused of supplying steel to the Russian military, which "could be used in the production of tanks" used in the invasion of Ukraine.
Can Chelsea still be sold?
Yes, but now it's a lot more complicated. The process is halted because the immediate result of these sanctions is to freeze Chelsea as an asset, so Abramovich cannot put in or withdraw any money from the club, or give ownership to anyone else. But he can apply for a license to allow the sale of the club.
Sources have told ESPN that the Department for Culture, Media and Sport will be clear that any such license would not benefit Abramovich from the sale of the club, while remaining subject to sanctions. Those sources said DCMS and the Treasury are working closely with clubs and the Premier League on the implications of today's announcement, but where the money will go will be considered under the terms of a new license application to allow the sale.
However, the starting position is expected to be that the asset may not make a profit if it is frozen. Sources claim that his charitable foundation also did not benefit, although he had previously suggested that he donate any "net proceeds" of sales to victims of the war in Ukraine through an as-yet-unspecified charity. (The Government shall be satisfied that the proceeds of any sale shall not benefit Abramovich. The exact destination of any proceeds shall be determined in discussion with the Government when an application for a sales license is made.)
If the government effectively took control of the sale, Abramovich would have no chance of achieving his £3bn worth: this price does not reflect the club's independent market valuation, which bested it between £2bn and £2.5bn. tactfully kept. (The government's involvement will be determined once the licenses are presented for sale: they will play an important role, but it is not yet clear how this will work.) Buyers will modify their position and look at the latest accordingly. You may try to downgrade your offers. revelation, but it is too early to know how interested parties will react.
If Chelsea are frozen, can they still play matches and operate as a club?
Yes. As part of the crackdown against Abramovich, Chelsea were given a license to continue operating as a club because of their importance independent of their owner. Britain's sports minister, Nadine Dorris, said: "Football clubs are cultural assets and the basis of our communities. We are committed to protecting them."
That means Chelsea teams can play games and pay staff - about 1,000 employees in total - but there are several restrictions. The club essentially cannot generate new revenue from this point onwards as Abramovich could technically benefit financially through ownership of the club. This means tickets can no longer be sold, the club shop has already been closed and Stamford Bridge hotel staff have been told they cannot accept bookings for the foreseeable future.
Season-ticket holders and fans with individual match tickets already purchased can attend as usual as those transactions predate Thursday's decision. However, cup matches are not included with Chelsea's season ticket, so they face the possibility of playing Champions League matches behind closed doors. In addition, away supporters would not attend matches at Stamford Bridge if those tickets were not sold before Thursday, and Chelsea fans have since been told to return to their FA Cup quarter-final in Middlesbrough once a week on Saturday. Can't buy tickets.
The Premier League and UEFA have yet to clarify the situation, but it may now be the case for all future Chelsea away games whose tickets have not already been sold.
Under existing agreements any money generated by the club - for example televised specific matches that would trigger an additional broadcast payment - will be paid in writing to Chelsea, but will be frozen until such time as Abramovich is no longer subject to sanction or the club is sold.
There are also strict limits for their operating costs for the foreseeable future. The club is limited to £500,000 in the cost of staging a home game, while away travel expenses are limited to £20,000. Although sources have indicated that there is some flexibility in both of these figures, this will likely mean cutting backroom and logistical staff traveling for games: it is estimated that a typical away trip in Europe costs around £30,000. is, and only slightly less, for a Premier League away game.
Chelsea travel to Lille for their Champions League last-16, second leg match next week, but this is likely to be pre-paid and in any case a short one-hour flight from London - if anything. , so it is a place that can even be reached directly by train. That said, European tours in the later rounds should move Chelsea - they lead 2-0 after the first leg - to be more problematic.
In a statement released on Thursday afternoon, Chelsea indicated that they are seeking more leniency in their actions in general. "We intend to engage in discussions with the UK Government regarding the scope of the licence," it read. "This would involve obtaining permission to amend the license to allow the club to operate [ly] as normally as possible."
What about existing contracts?
Clubs cannot re-sign players to new and revised deals, which is an especially urgent problem in the case of many players with contracts expiring at the end of the season. On the men's side, Cesar Azpilicueta, Antonio Rudiger and Andreas Christensen are all free agents this summer, while among Chelsea women, Ji So-eun, Maren Majelde, Jonah Anderson and Drew Spence are all affected. Sources have told ESPN that Chelsea Women's coach Emma Hayes is seeking clarification on her position, as she is on a one-year deal.
Sponsors have reacted negatively to the news, with three - the club's main shirt sponsors in a deal worth £40m a year - temporarily suspending their agreement and placing their logo on all kits, advertising hoardings to Stamford. Asking to remove the bridge and over. The club's Cobham training base. Carmaker Hyundai, which pays around £10m a year to Chelsea, is "currently assessing the situation," according to official partner Zapp.
What about transfers?
Chelsea will be planning a summer despite the transfer market currently closed, but no new deals can be agreed while the club is frozen. Outstanding payments on existing deals – for example, players already at the club who signed deals where costs were spread over several years – would continue as normal, assuming those obligations were met. There is cash in the club. Sources have told ESPN that this includes payments related to the deals of Ben Chilwell from Leicester City and Timo Werner from Red Bull Leipzig.
Does the club have the money to keep going?
According to his accounts published in December, for the year ending June 30, 2021, Chelsea had a cash balance of just £17m. For comparison, this figure is a fraction of that of their domestic rivals, which include Manchester City (£130m) and even Liverpool (£38m).
The club will continue to receive funding from existing broadcast and sponsorship deals, although that money will also be frozen in accordance with sanctions. However, that money can be used for things like employee wages, travel costs, taxes, payments to other clubs, and matchday logistics, as outlined in Section 4 of the license the club was granted to remain in operation. The club has previously made no secret of how dependent they are on Abramovich's personal wealth, with loans totaling £1.514bn at last count. The £17m figure could be artificially low as the impact of the coronavirus and games played behind closed doors will take a toll on their revenue, this was still a time when the club won the Champions League.
Chelsea's reliance on player sales to offset operating losses is well established - the club has made an average of £75m annual profit since 2014 - and they will need the freedom to function over the summer to ensure they can manage this revenue stream. to continue building when the transfer window opens again. Three's decision to suspend its Kit sponsorship could also put pressure on cash flow, as other partners are looking to follow the same path.
The club's latest set of accounts mentioned above also disclosed £153.6m in commercial revenue. The making of those deals is confidential. If payments were made on a single, annual basis, the club would have already received income, but if it was staggered each season, there could be immediate financial implications apart from obvious public relations damage. There have even been suggestions that Chelsea could be placed in administration if they run out of cash - an action that could lead to a points deduction - but with the government to grant licenses for sale. Given the apparent openness, this current stress test of the club's finances may not be so far off without Abramovich.
That said, it is impossible to set the pace of any negotiations on the sale, and without further concessions on the government-run license, the pressure will only increase if Abramovich is approved and Chelsea do not have a new owner.