UKRAINE – RUSSIA CONFLICT: ABRAMOVICH FORCED TO LEAVE CHELSEA AFTER 19 YEARS

As the Blues made their entrance to Kenilworth Road to face Luton Town in the FA Cup round of 16, at 7:06 PM on March 2, the official club website issued a statement in which owner Roman Abramovich expressed his intention to sell the London club following the Russian invasion of Ukraine. Eight days later, a storm broke out at Chelsea: the Russian magnate was sanctioned by the British government with the freezing of all his assets, leading to significant consequences for the West London club.

Arrival in London in 2003 and the Winning History with Chelsea

Roman Abramovich arrived at Stamford Bridge in 2003, purchasing the London club for approximately 160 million euros. From the first summer, he made headlines by investing over 165 million euros in his first transfer window, an unusually high amount at the time, which allowed him to bring in several major players like Hernan Crespo (€24 million from Inter), Adrian Mutu (€19 million from Parma), Juan Sebastian Veron (€21 million from Manchester United), and Claude Makelele (€20 million from Real Madrid).

In his 19 years of ownership, the Chelsea president collected 5 of the 6 Premier League titles won by the Blues in their history, 5 FA Cups, 3 League Cups, and 2 Community Shields, as well as a rich international trophy cabinet, which includes 2 UEFA Champions League titles (the latest in May 2021), 2 UEFA Europa Leagues, and the UEFA Super Cup and FIFA Club World Cup won last year.

Between Statements and Sanctions: The Last Troubled Weeks at Chelsea

Following the Russian invasion of Ukraine, which occurred on the night of February 23-24, the owner of the West London club decided to temporarily entrust the club’s management to the Chelsea’s charitable Foundation due to potential sanctions that could target him due to his close ties with Vladimir Putin.

On Sunday, February 27, while Tuchel’s men were preparing for the League Cup final in front of 60,000 fans at Wembley, Chelsea officially expressed its solidarity with the Ukrainian people. However, the news that caused the most uproar came the following morning when, while English newspapers reported the Blues’ defeat against Liverpool, it was rumored that Roman Abramovich himself would participate in negotiations in Gomel, Belarus, at the request of the Ukrainian delegation.

However, in the following days, rumors of possible sanctions for Russian “oligarchs” in the UK grew stronger. Indeed, during the afternoon session of March 2 in the House of Commons, Labour MPs Sir Keir Starmer and later Christ Bryant urged Prime Minister Boris Johnson to sanction the Russian magnate quickly, emphasizing the importance of taking swift action not only because of his close connection to the Kremlin, but also because the Russian oligarch was already moving to sell his millionaire properties, including the West London club.

That evening, an official statement was released in which Roman Abramovich declared his intention to sell the club in order to protect the club’s interests, waiving the credits the club owed him, which amounted to around €1.5 million, and stating that he had already mobilized his legal team to direct the net proceeds from the sale of the club to the victims of the war in Ukraine.

The British government’s response came on March 10, when Foreign Secretary Liz Truss announced sanctions for seven Russian oligarchs, including, of course, Roman Abramovich.

The consequences for the Blues were significant, and the situation became very delicate. Nevertheless, the club was granted a special license for ordinary administration, and as stated by British sports minister Nigel Huddleston, the club, in collaboration with the Premier League and the government, would work continuously to avoid causing irreparable damage.

Today, the situation is as follows:

• Sale of the club: It must go through the government, and the sanctioned party cannot profit from the sale proceeds. Following an additional license, the first official offers from potential buyers must be submitted by March 18.
• Transfer market: The club cannot operate in the market and cannot sign new contracts with players whose contracts are expiring; indeed, Azpilicueta and Christensen seem to be increasingly close to Barcelona, while Rudiger has several suitors, ranging from Juventus to Real Madrid.
• Tickets: No more tickets can be sold for upcoming matches; only fans already holding a season ticket or match tickets will be able to access Stamford Bridge.
• Payments: Chelsea can continue to pay salaries for staff and players, make transactions related to stewarding, catering, and security for home matches with a cap of £500,000, support travel costs without exceeding £20,000 (an average trip costs £25,000), and continue paying taxes, insurance, and other necessary expenses.
• Revenue: Merchandise sales have been blocked, but the club can still receive payments from TV rights and sporting prizes.
• Sponsors: Main sponsor Three decided to suspend the agreement with the London club, as did partner MSC; Hyundai declared it was evaluating the situation, while the giant Nike chose not to drop Chelsea, staying loyal to its £60 million-a-year contract with the club until 2031.
• Penalization: The difficult economic-financial situation could result in a 9-point penalty in the league if the club ends up in administration.
• Bank accounts: Barclays Bank froze the club’s accounts.
• Abramovich: The Blues owner is no longer allowed to enter the UK.

As can be seen from statements by management, the coach, and players, the situation at Chelsea is quite complicated, with the club living in uncertainty about having the necessary means and arrangements to play its matches, waiting for normality to return.

The Link to Russia and the Title of “Mayor of Londongrad”

Orphaned at just four years old, the Russian magnate began his entrepreneurial activities in the late 1980s. However, much of his success can be attributed mainly to President Vladimir Putin. Thanks to the excellent relationship that developed between the two over the years, Abramovich managed to maintain his wealth, holding the majority of shares in Evraz, a leader in the Russian steel sector, and serving as governor of Chukotka from 2001 to 2008 and president of the parliament of the same region from 2008 to 2013.

Because of his close ties to the Kremlin, Chelsea had already come close to being sold in December 2019 when, following tensions between the UK and Russia related to the Sergei Skripal case, the British government refused to grant Abramovich UK citizenship. In response, Abramovich immediately canceled a £500 million project to build a new Stamford Bridge in the West End. As many UK newspapers reported at the time, the Russian magnate, in response to the refusal of the British passport, instructed the investment bank Raine to carry out a strategic review with the aim of selling the club for around €3 billion. On that occasion, Todd Boehly, an American financier and co-owner of the Los Angeles Dodgers baseball team, made an offer, which was rejected by the Russian magnate as it fell just below the €3 billion threshold.

With sanctions arriving on March 10 from the British government, Prime Minister Boris Johnson’s goal seems to go beyond freezing the assets of major Russian oligarchs in response to the current situation. This decision appears to be part of a broader project to eliminate “Londongrad” (a term used to describe the strong influence Russian presence has in London), not only due to the presence of Russian companies listed for around €85 billion and real estate holdings worth over €2 billion, but especially because of the uncomfortable presence of seven Russian oligarchs, among whom Roman Abramovich stands out as the “mayor.”

The Sale of the Club

Following the government’s green light last weekend, Chelsea can now be sold without Abramovich being able to profit from the net proceeds of the sale. The club is valued by the Russian magnate at around £3 billion, a figure that does not match analysts’ estimates, which tend to value it at around £2 billion, particularly due to the issue with the stadium, which Abramovich decided not to invest in back in 2019, and which now has a capacity of only 40,000 people, a number that severely limits ticket sales revenue and, consequently, the market valuation of the club.

In recent weeks, many names of potential buyers have emerged, with the first offers due by Friday, March 18. The most concrete names are as follows:

• The Ricketts family was the first to officially submit an offer for the club on Wednesday. Owners of the Chicago Cubs baseball franchise, they announced through a London communications company that they are leading a group of investors who would present a formal offer on Friday, stating, “We understand the importance of investing for success on the field, respecting the club’s traditions, fans, and community.”
• Hansjörg Wyss, an 86-year-old Swiss billionaire, seems to have already made a first offer along with other partners, following the corporate developments after the Russia-Ukraine conflict began.
• Nick Candy, together with various international partners, including the Italian Gianluca Vialli, CEO of Candy & Candy, a leader in the British real estate sector and a long-time Chelsea supporter, said in an interview with Sky Sports last Sunday, “I’ve loved Chelsea since I was four. I don’t care where it ends up, even if it’s not in my hands, as long as it’s in safe hands.”
• Todd Boehly, an American financier with whom Roman had already negotiated in 2019, whose offer would fully respect the standards set by the Raine Group, appears confident that his bid is the best and most comprehensive.
• The California-based Oaktree Capital fund, which manages assets worth around $166 billion and is already known in the football world for having financed Inter Milan in 2021 with €275 million, has shown interest, along with a group of American billionaires, as reported by the Financial Times in recent days.
• Aethel Partners, a financial services firm specializing in private equity and alternative asset management, has made an offer worth over £2 billion to acquire Chelsea and seems particularly interested in the project for a new Stamford Bridge, fulfilling one of the main conditions set by the Raine Group at Abramovich’s request.
• Jim Ratcliffe, a British entrepreneur and owner of the chemical company Ineos, considered the richest person in the UK with a net worth exceeding $17 billion in 2021, had previously negotiated to buy Chelsea in 2019 but ultimately decided to back out due to Abramovich’s excessive demands.
• Stephen Ross, an American billionaire and founder of The Related Companies (a leader in the real estate sector), owner of the Miami Dolphins, and previously involved in the Super League project in Europe, is the last name on the list of potential Chelsea buyers.

Despite the extremely delicate situation, Thomas Tuchel’s team continues to remain competitive on all fronts. After a last-minute victory against Newcastle last Saturday in front of their fans, consolidating their third-place position in the league, and with star player Kai Havertz, on Wednesday night they managed to secure a place in the Champions League quarter-finals away at Lille, with captain Cesar Azpilicueta scoring the final 2-1 goal. Tomorrow, they will play the FA Cup semifinal in Middlesbrough.

If in 2019 the Europa League trophy, lifted by the Blues in front of Arsenal in the Baku final under Maurizio Sarri, seemed like Abramovich’s last trophy with Chelsea, today, it is the winning season of Thomas Tuchel’s team, crowned with the Champions League and the FIFA Club World Cup titles, that is set to mark the end of Roman Abramovich’s two-decade-long Chelsea empire.

Now, awaiting the official submission of the first offers, one certainty remains: the future president of Chelsea will face the great responsibility of replicating the rich, successful history left by the club’s historic number one: Roman Abramovich.

By Luca D’Addario