Lavish spending, backed only by Roman Abramovich’s investment, funded Chelsea’s 21 trophies in his 19 years as owner. Now there are fears the Premier League club could run out of money after the UK government sanctioned the Russian oligarch and froze his assets.
A team that won the Champions League last year and were crowned world champions by FIFA a month ago have now seen certain banking facilities frozen with officials unable to use company credit cards while that Barclaycard assesses what is permitted by government rules.
Chelsea are only allowed to continue to operate and play games under government-defined conditions through a special licence, with spending caps and a ban on ticket sales which will hurt cash flow of a club with a latest published wage bill of nearly £28m ($36m) a month.
Chelsea officials held talks with the government on Friday to discuss how the club can continue to pay staff, operate Stamford Bridge on matchdays and ensure the club can be sold.
Abramovich had already announced his intention to sell his trophy last week before being sanctioned on Thursday for his ties to Russian President Vladimir Putin following the invasion of Ukraine.
The Raine Group, an investment bank, is working on the sale process on behalf of Abramovich, who remains owner of Chelsea. He originally hoped to divert the proceeds to a new foundation for victims of the war in Ukraine, which he has yet to condemn for Putin’s launch. But the government will only sanction a sale that does not benefit Abramovich as the government tightens the screws on influential people it sees as empowering for the Putin regime.
There are potential buyers waiting in the wings, including British property investor Nick Candy and Todd Boehly, co-owner of MLB’s Los Angeles Dodgers.
“I would describe Chelsea as a struggling asset,” said Rob Wilson, a football finance expert from Sheffield Hallam University, “and the association they have with the owner is what afflicts them.”
The only positives for Chelsea on its second day as a sanctioned entity was that no sponsor suspended deals after backer, communications firm Three, requested that its logo be removed. Jersey manufacturer Nike had not yet stopped its sponsorship. Another sponsor, hotel search site Trivago, said it would continue to sponsor the training kits.
“We look forward to a transition of ownership as soon as possible and want to support the club in this process,” Trivago said. “We will provide any updates to our business relationship as and when appropriate.”
The statement condemned the “unprovoked and catastrophic invasion of Ukraine” without naming Russia. Hotels on its website could still be booked in Russia on Friday evening.
Travel booking is an imminent challenge for Chelsea. The trip to France to face Lille in the Champions League next week has already been bought. But travel expenses for future games have been capped at £20,000 by the government.
Chelsea can also spend just £500,000 on matchdays – starting on Sunday at home to Newcastle in the Premier League which the club have won five times under Abramovich. The league title had only been won once in the 98 years before Abramovich bought the club in 2003.
Chelsea have only made a profit five times during their ownership, according to the respected Swiss Ramble Twitter account which analyzes club accounts. There have been cumulative losses of around £900 million in almost two decades of Abramovich ownership, while annual revenues have fallen from £110 million in 2003 to £435 million in the last financial year.
The way Abramovich backed the Blues with his money to turn them into a force, partly for personal status, is similar to how other oligarchs paid WNBA players like Brittney Griner $1 million for come and play for their company-sponsored teams in Russia.
Chelsea were dependent on the £1.5bn in loans Abramovich injected into the club which he said he would not ask to be repaid.
The last reported cash reserves for Chelsea’s parent company were just £17.7m.
The club can’t even sell merchandise anymore, with the club shop closing hours after the sanction was announced on Thursday. The government also prohibits selling new tickets to generate revenue. Only season ticket holders can attend Premier League matches. There is the possibility that the stadium could be empty for a potential Champions League quarter-final, as tickets for those matches would not be included for fans who have purchased season tickets. Chelsea are also unable to sell tickets for next week’s FA Cup game at Middlesbrough, hitting the Second Division club as well.
The impact could be felt more harshly by the fact that temporary staff are no longer required to work at Chelsea matches.
“We would like the club to have the opportunity to trade as close to full capacity as possible,” said Dan Silver of the Chelsea Supporters’ Trust. “All these people are relying on this (money) to put food on the plate. It’s hard for them, and the punishment that falls all the way down is hard.
“We don’t want jobs to be lost because of this, because the main thing is to protect and take care of everyone at the club.”
The priority will be to avoid having to go through the administration – bankruptcy protection. History, however, could repeat itself. Chelsea were sold for £1 in 1982 to Ken Bates due to financial problems, then Abramovich stepped in with their takeover in 2003 when there were further cash flow problems.
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