Just mere days after he announced the club would be for sale, Russian oligarch and Chelsea FC owner Roman Abramovich has had his assets frozen by the UK. The surprise move has thrown a major wrench into his plan to sell the organization for upwards of 3.9 billion dollars.
According to The New York Times, the British government sanctioned “a handful of individuals whose businesses, wealth and connections are closely associated with the Kremlin.” Abramovich, according to the British government, is among those individuals who have “enjoyed a ‘close relationship’ with Russia’s president, Vladimir V. Putin, for decades.” These sanctions are a direct response to Russia’s invasion of Ukraine. The restrictions applied to all of the Chelsea owner’s businesses, holdings, and property, and will subsequently end on May 31, 2022. On this side of the pond, the US government has frozen Abramovich’s hedge fund investments.
Chelsea, one of Abramovich’s assets, is now “frozen.” So, what exactly does that mean?
While the team is still able to play matches, as, Nadine Dorries, Britain’s Minister of Sport noted: “Football clubs are cultural assets and the bedrock of our communities. We’re committed to protecting them;” they can no longer sell tickets for future games—only those with previously purchased tickets will be allowed into Stamford Bridge. This means that only season ticket holders will be at the matches, due to the way tickets are sold for Premier League matches—single game tickets are sold only days in advance as opposed to the American way, where you can get tickets months in advance. Additionally, don’t think those who have tickets will gouge prices. Chelsea, like many other clubs, forbids ticket resale without prior consent. While it is hard to enforce, it still is policy.
In addition to the restrictions on ticket sales, the club is facing incredibly strict limits on its operating costs. Chelsea is only able to spend £500,000 to produce home games and can only spend £20,000 to travel for away matches. It is estimated that the typical away match for Premier League games is around £30,000. Chelsea have 11 Premier league matches remaining, and are likely to qualify for the Champions League quarter-final (which means at least another 2 matches).
On top of this, the team is unable to sell merchandise through their official store. A simple message on the store’s website reads: “Due to the latest government announcement, the Chelsea Megastore Official Online Store shall be offline until further notice.” While the team is unable to sell merchandise, third-party stores, such as Fanatics, are still selling the club’s merchandise. As a result, there were rumors that Nike would end its sponsorship of the World Champions. However, the Swoosh has reaffirmed its commitment to the team. But it’s not all roses for the Lions, as Three, the club’s main jersey sponsor, has “temporarily suspended their sponsorship and have asked for all logo branding to be removed until further notice.” Despite this, Chelsea wore kits with the Three logo in their match against New Castle on Sunday.
What about the sale of the Club?
While you may have been like me, and keeping up with the rumors and gossip about Chelsea’s potential suitors, we may need to pump the brakes. Simply put, the immediate sale of the team is now unlikely—but not impossible. According to ESPN, the process is now “on hold” “as Abramovich cannot put in or take out any money of the club, or pass ownership to someone else.” However, the oligarch is able to apply for a license to sell the club. Should he successfully apply, where the proceeds go would be up the British government—even if he wanted to donate the proceeds to victims of the Russian invasion of Ukraine.
The sanctions should put the final dagger in Abramovich’s hope to get 3 billion pounds. According to Forbes, Chelsea is the 25th most valuable sports team in the world, with a value close to worth about £2.5 billion; half a billion pounds shy of the owner’s valuation. It was unlikely before the sanctions, but now, such a price is almost impossible.
According to Telegraph reporter Matt Law, the final sale of the club boils down to whether Abramovich will allow the government to take over the process. This puts him between a rock and a hard place—he either allows the British government to pick the next owner, or he takes a risk that the club won’t lose value.
What happens in the coming days will be interesting.
Photo via: wallup.net
3L & Editor-in-Chief of the Buffalo Environmental Law Journal. Sad fan of the Philadelphia sports teams and Tottenham Hotspur. I enjoy writing and learning about the intersection of sports and business law, with a focus on the NHL. H2P!