As pressure mounts to punish the oligarchs for Russian President Vladimir Putin’s invasion of Ukraine, Roman Abramovich has a multi-billion dollar insurance policy should the UK come after his assets: his well- loved Chelsea FC.
The club that Abramovich bought for around $190m in 2003, loved, nurtured and built into the 2021 UEFA Champions League winner has been valued by Forbes to $3.2 billion last year. It owes the Russian billionaire, its majority owner, the staggering sum of $2 billion.
Kieran Maguire, a lecturer in football finance at the University of Liverpool, says Abramovich has no shortage of influence in the UK, depending on the depth of sanctions. The worst case scenario for Chelsea fans is now on the table. “If he wants his back, he could ask for the loan from Chelsea,” Maguire said. “That means Chelsea go bankrupt, and Putin will be able to say, ‘Well, you started it.'”
The situation underscores how the ongoing crisis could impact the sports world, especially as many teams scramble to sever ties with Russia. FC Schalke 04 of the German Bundesliga announced on Thursday that they are removing the logo of Russian energy giant Gazprom from their shirts. Manchester United have yet to comment on their sponsorship of Russia’s biggest airline, Aeroflot, after sanctions banned the company from operating in the UK. And perhaps the most severe blow to date: UEFA moves the Champions League final out of St Petersburg. Expect more big draw events to flee Russia.
Forbes calculates Abramovich’s fortune at $13.3 billion, mostly from steel and metals. His name has repeatedly topped the list of oligarchs most likely to face the next round of UK sanctions over assets and business interests. Over the past week, Parliament has been forced to deal with the flow of Russian money into London as US and EU politicians said they fear loopholes in UK rules could derail their punitive measures against Russian aggression.
The most significant attack today came from Labour’s Chris Bryant, who said at home – while protected from libel suits by parliamentary privilege – that Abramovich ‘should no longer be able to own a [soccer] club in this country,” adding that the UK “should consider seizing some of his assets, including his £152m ($200m) home.” A spokesperson for Abramovich did not immediately respond to requests for comment.
The latest annual accounts from Fordstam Ltd, Chelsea’s parent company, confirm a $2 billion loan “provided by the ultimate controlling party, Mr R Abramovich”. Over the past year, Abramovich loaned Chelsea an additional $26 million even as the club lifted the Champions League trophy in June 2021.
Maguire describes the loans as leverage against any major attack on his assets. “The club don’t have the resources to repay the money,” Maguire says. “If Chelsea have been sold, you’re ultimately selling for the value of the business. Whether that money comes in the form of equity or debt doesn’t matter. But the club, potentially, could be on the hook here because Maguire says Abramovich could effectively argue that his assets are frozen, he needs the money, “and the club ceases to exist”.
A potential Chelsea buyer would need deep pockets. The price paid for Newcastle United by a consortium led by the Saudi sovereign wealth fund – around $300m – shows there can be better value in smaller clubs that buyers can develop and shape themselves.
Abramovich’s situation raises a wider question of whether the Premier League, or any top-flight European football organization, needs to rethink who it lets into its ownership ranks, according to Kenneth Cortsen, a sports economist at the University. College of Northern Denmark.
The Premier League Owners and Directors Test, for example, examines a number of factors including the absence of criminal convictions, breaches against a governing sporting body and financial viability. (Abramovich passes them all on.) But rising player salaries, the pressure of competition at the highest level and the impact of Covid-19 are just some of the monetary constraints that have made football more vulnerable to a questionable property. The circumstances surrounding the sale of Newcastle United, and now Chelsea, have prompted league scrutiny. The fallout from the Russian war in Ukraine has only complicated matters. The Premier League declined to comment.
“Russia has not been a positive association for international sport in recent years, with systematic doping, sportswashing and other incidents related to negative reputational capital,” Cortsen said. “Why are we allowing the ownership of some of the most important sporting assets, in the case of Chelsea, on British soil to people with links to, in this case, Russia, given all that has happened? pass?”
Of course, just because he could, doesn’t mean Abramovich would bring about the financial collapse of one of Europe’s most famous clubs, just to spite the British government. However, he showed what he was capable of by helping to form the breakaway Super League before leading the exodus against it. The option to destroy his precious Chelsea is still on the table.
“People talked about solidarity and protecting Europe [soccer] pyramid,” Cortsen says. “But at the same time, they’ve allowed people to go for money without really delving into, at an in-depth level, what that means.”