Chelsea FC threatened by sanctions against Russian oligarch Abramovich

Chelsea’s home stadium Stamford Bridge is seen through trees in London on March 10, 2022, as Chelsea’s Russian owner Roman Abramovich was hit with a UK asset freeze and ban to travel, throwing his plan to sell the European and club world champions into disarray.

Justin Tallis | AFP | Getty Images

Chelsea FC, one of the UK’s most popular football clubs, faces an uncertain future after its owner, Russian oligarch Roman Abramovich, was hit with sanctions over his links to President Vladimir Putin .

The club’s proposed sale of £3 billion ($3.9 billion), player transfers and merchandise sales have all been halted under sanctions imposed by UK authorities. Major sponsors have also distanced themselves from the club whose name has been smeared by its owner’s ties to the war in Ukraine.

The UK said on Thursday that Abramovich had a “close relationship” with the Russian president and had received “preferential treatment and concessions” from the Kremlin over the years.

He, alongside six other oligarchs named Thursday, had his assets frozen and his travel restricted.

Chelsea caught off guard

The crackdown on Abramovich was widely expected from a government facing mounting pressure to harden its stance on Putin’s inner circle.

Indeed, the 55-year-old billionaire appeared to be anticipating the decision, embarking on a cut-sale of his UK assets, including the club and a string of luxury properties, last week.

Chelsea owner Roman Abramovich waves to the fans after the UEFA Champions League Final between Manchester City and Chelsea FC at Estadio do Dragao on May 29, 2021 in Porto, Portugal.

Alex Livesey – Danehouse | Getty Images Sports | Getty Images

However, the London-based club, which celebrated its 117th birthday on Thursday, appeared to be largely caught off guard.

Following the announcement, manager Thomas Tuchel said Chelsea FC’s future was uncertain, indicating he would stay put pending further clarity.

“We take it day by day,” he told BBC Radio 5 Live. “I didn’t see that coming yesterday and I don’t know what will happen tomorrow.”

The club did not immediately respond to CNBC’s request for comment.

What this means for the club

Under the sanctions, the sale of Chelsea FC has been suspended and the club is now subject to a special government license which strictly regulates what it can and cannot do.

Currently, the club can continue to play matches – as they did on Thursday night – and incur “reasonable travel expenses” up to a maximum of £20,000. However, only subscribers and those who have already purchased tickets will be allowed to attend.

In the meantime, the club will no longer be allowed to transfer or loan players; broadcast and prize money were also frozen. The official Chelsea club store closed on Thursday and some staff were partially made redundant.

Martyn Hardiman with his son Peter, 2, after buying the club’s last shirt before the store closed following the UK government’s sanction of Roman Abramovich.

Stefan Rousseau – Pa Images | Pa pictures | Getty Images

Regarding club ownership, the government has said it will consider granting further special dispensation to allow a sale to take place – as long as it does not benefit Abramovich.

It is unclear where the proceeds from the sale, which could amount to more than £1billion, would go, although observers suggest they could be donated to the humanitarian crisis in Ukraine.

The alternative – that Abramovich tries to keep the club, likely resulting in a long and costly battle and possible further penalties – seems unlikely given he previously agreed to write off £1.5billion in debt that the club owed him and to donate the proceeds of the sale to the victims of the war in Ukraine.

Partners and sponsors are leaving

The upheaval surrounding the club does not appear to have dampened interest from potential buyers, with reported bidders including British property tycoon Nick Candy.

However, he saw sponsors and business partners distancing themselves from the previously esteemed club.

On Friday, Nike reportedly considered walking away from a 15-year, £900m deal struck with Chelsea in 2016. Such a move could see the Stamford Bridge club miss out on £540m.

UK telecommunications network Three, the club’s main shirt sponsor, confirmed on Thursday that it was suspending its partnership worth an estimated £40million a year.

These moves mark a blow for the club whose income is largely based on broadcasts and commercial agreements.

In the meantime, the sudden shock has raised questions from those who say greater due diligence is needed with foreign owners and sponsors of British Premier League clubs.

“The situation at Chelsea demonstrates, once again, why we need an independent regulator with really tough owner testing,” said MP Tracey Crouch, who chaired a recent fan-led review of the football governance.

Everton last week suspended all sponsorship deals with Uzbek oligarch Alisher Usmanov, another sanctioned Putin ally.

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