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Chelsea Q&A: Roman Abramovich wants at least £3BILLION – but can he get it?

Roman Abramovich wants to sell Chelsea – and quickly – but there are plenty of questions surrounding the future of the club, both immediate and long-term.

After the Russian oligarch attempted to give the ‘stewardship and care’ of the club to the Chelsea Foundation trustees this week, what happens next? What does that mean? And do they even want it?

On top of that, who could buy the club, and what would it mean on the pitch?

Here, Sportsmail delves deep into the situation at Chelsea, sparked by Russia’s invasion of Ukraine, to find out the answers to all the big questions…

What is the current state of play?

Well, let’s begin at the beginning. Russian billionaire Roman Abramovich bought Chelsea in 2003 and has overseen a hugely successful period in the club’s history, culminating in them being crowned European and then world champions in the last year.

Russia’s invasion of Ukraine last week, ordered by president Vladimir Putin, has now thrown his ownership of the club into severe doubt, with the threat of sanctions on Russian businessmen in the UK raised in Parliament.

Abramovich now wants out – and quick – as he looks to sell his assets and walk away.

So how do we know he wants to sell?

The elderly Swiss billionaire Hansjorg Wyss, whose personal wealth is put at around £3.8billion, told the Swiss newspaper Blick on Wednesday that he is one of four people to have been offered the chance to buy Chelsea – and that he would be interested in investing as part of a consortium.

But there are also thought to be a number of prospective American buyers circling for one of the most prestigious Premier League clubs. Significantly, Chelsea have not commented on the idea of Abramovich selling before any imposition of sanctions which would prevent him putting money in or taking it out. They usually dismiss such suggestions out of hand.

Sportsmail then reported that the Russian wants a minimum of £3billion to sell Chelsea as he invites bids for the club.

But there are emerging doubts that the Russian oligarch will receive anywhere near that mark.

And why exactly does he want to sell?

It seems increasingly clear he is worried that the British government will try to freeze or seize his assets, including Chelsea, for his alleged closeness to Russian president Vladimir Putin, even though he is currently now on the list of oligarchs currently being targeted.

If we assume he is seeking a quick sale, as widely reported, we can probably also assume he wants to get cash for his asset as quickly as possible and then get that cash out of the UK before any possible government action to stop him.

It is reported Abramovich wants £3bn for Chelsea. How much is it worth?

Any asset is ultimately worth whatever someone else will pay for it. So if there happens to be a nation state or sovereign wealth fund or mega-wealthy billionaire out for for whom £3bn in a drop in the ocean, and for whom sensible business practice is not applicable, then theoretically Abramovich might get £3bn. But that is a long, long, long shot for several reasons.

First, by the very nature of the way this sale is being attempted swiftly, it is Abramovich acting as a ‘distressed’ seller, and therefore this potential sale is happening in a buyer’s market where the longer it drags out, the lower the price falls, because Abramovich will be getting more and more desperate to cash out at least a chunk of money.

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Second, if you look at the objective value of the club, taking into account its revenues and outgoings and assets (such as the stadium and players), then one highly respected valuation tool, the Markham Multivariate Model (geeks can read much more in detail HERE) would put a value on Chelsea currently of somewhere between £1.25bn and £1.5bn.

What has Abramovich done so far?

Well, Sportsmail revealed on Wednesday morning that Abramovich has instructed American bank the Raine Group to handle the sale of Chelsea. It is understood that the Russian is targeting American buyers as investment from China, the Far East and Eastern Europe has dried up for clear political reasons, although there are major doubts that any potential buyer will meet his £4billion valuation.

The Raine Group first acted for Chelsea in 2018 after talks with US private equity firm Silverlake and British billionaire Jim Ratcliffe broke up without reaching an agreement. The club has effectively been for sale ever since due to Abramovich’s conflict with the UK government after the Home Office declined to issue him a visa, with Russia’s invasion of Ukraine giving him fresh impetus to sell.

In terms of his role at the club itself, Abramovich made his first move at the weekend when a statement was released, revealing that he was putting the ‘stewardship and care’ of the club in the hands of the Chelsea Foundation trustees.

That decision seems purely symbolic, as the decisions at the club are still being made by the same faces, and it was soon revealed that the trustees themselves hadn’t signed anything or agreed to taking on the role.

In fact, Chelsea have since been probed by the Charity Commission over Abramovich’s plan to hand over control, and the trustees have made a serious incident report amid concerns of conflicts of interest. In truth, it could get ugly.

So what happens if the trustees reject the ‘stewardship and care’?

One possibility being reported by Sportsmail’s Sami Mokbel today is the creation of a holding company to take on stewardship responsibilities – instead of the trustees.

The trustees are so worried about the ramifications of taking on the club in a way Abramovich laid out in a statement on Saturday that they may well refuse. Conflict of interest is understood to be one of the key apprehensions.

Some trustees don’t want to be the face of a business that has been linked to a Russian regime which has invaded Ukraine.

And what does ‘stewardship and care’ even mean?

We’ve spoken to some lawyers on this, and they are able to shed a bit of light to explain a little more clearly…

Stephen Taylor Heath, Head of Sports Law at JMW Solicitors, said: ‘In a legal context stewardship means no more than the job of supervising or taking care of something, in other words the job of “caretaker”. If you were to give somebody the “stewardship” of your home because you were going abroad you would be somewhat affronted if on your return the caretaker sought to claim ownership of your home.’

Essentially, it seems to be a way of Abramovich trying to put some distance between himself and Chelsea… whether that will eventually help a sale is yet to be seen.

The Chelsea owner would not receive any protection from sanctions through stepping away from daily control at Stamford Bridge, it is worth adding.

Could the government really seize control of the club?

The ownership of Chelsea is certainly on the government’s radar, and Labour leader Sir Keir Starmer questioned Boris Johnson in Parliament on why Abramovich hasn’t yet faced sanctions, with the Prime Minister saying: ‘It is not appropriate to comment on individual cases at this stage’.

Labour MP Chris Bryant has also called for the UK government to impose sanctions on Abramovich after a number of Russian oligarchs have already fallen under such penalties.

Meanwhile, Kieran Maguire, a football finance lecturer at Liverpool University, claims Abramovich may use his ownership as an exertion of force against any threat of British government sanctions against him.

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‘If he feels he is being made a scapegoat for the activities of Putin then the worst-case scenario is he tries to call in the loan.

‘Then we’ve got a crisis. He and Putin could argue that it is the British government that has destroyed Chelsea Football Club.’

Maguire also predicted that there may be ‘a lot of misrepresentation and accusations made from all parties if the British government does go down this route’.

‘But I suspect this government will not want to upset football fans as we have a populist government. I suspect Chelsea’s legal team would be going through all the options’, he added.

Finance lecturer at Sheffield Hallam University, Dr Rob Wilson, has suggested such sanctions, resulting in Abramovich walking away from Chelsea, could put the club’s future at risk.

‘If the government do seize the assets, in which case they seize Chelsea, that is probably for him a bit of a final straw,’ Wilson said.

‘He would likely try to walk away from the club, which would create a problem for Chelsea because it would have to be sold or go out of business. Who would buy Chelsea with a £2 billion loan?’.

So is a quick sale going to be possible?

It will certainly be difficult, given the ever-evolving situation in Ukraine. We’ve been back in touch with the legal people at JMW Solicitors to find out the answer to this question, and according to Heath, it could come back to the trustees again.

He said: ‘It is understood Abramovich does not own the club directly but rather controls the corporate entities that do. For a takeover the first legal issue would be whether the sale was of the club as an asset of that company or the company itself. There may be shareholder agreements in place that could be relevant requiring the cooperation of third parties.

‘It would bring into sharp focus the idea of stewardship of the club having been placed in the hands of the Trust if in fact the Trust and Abramovich were not on the same page with regard to the sale of the club to the prospective buyers.

‘A sale would likely require consideration of the structure and what was being sold. The right to run the football operation may be in the hands of a different corporate entity to say the ground or hotel or training ground etc.

‘Any would-be buyer would need to undertake due diligence which would establish the ownership structure and any issues with the club. And so a very quick immediate sale would be very difficult in practice.

‘Further the prospective buyers would have to complete the Owners and Director test to show that they were fit and proper persons for owning/running the club. This would involve an analysis of the proposed owners including their interest in other clubs and the Premier League would be particularly keen to establish the source of funding and if any third parties were involved that had not been declared who would be in effective control of the club.

‘That process may be eased if the executives currently running the club remain in situ however new owners normally want to bring in their own team for the key positions.’

And there’s the issue of the stadium itself?

Correct, that’s another – pretty major – stumbling block that any prospective buyer will have to overcome. Essentially, Abramovich doesn’t directly own Stamford Bridge.

The stadium is owned and maintained by the Chelsea Pitch Owners, a non-profit subsidiary of the club which also retains the rights to the name ‘Chelsea Football Club’.

There were complicated plans to redevelop the 41,800-seater stadium back in 2018, but they were shelved around the time Abramovich’s UK investor visa expired.

The site’s freehold would not be included in any sale of the club… which could put off a potential buyer.

Is it true that Abramovich is involved in ‘peace talks’?

Abramovich’s spokesperson said on Monday that the Russian-Israeli businessman was attempting to broker a peace deal between Russia and Ukraine.

The word from inside Kyiv is that he actually IS using Jewish contacts in Ukraine to attempt to contribute to negotiations. But there is scepticism there about him being presented as some kind of peacemaker.

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The view is that self-interest is behind him putting such calls in. If war continues, the west will aim to strangle Russia’s economy with sanctions and Abramovich has big shareholdings in many Russian companies.

But the chances of talks resolving anything are remote because Russia’s demands include keeping all the Ukraine lands they have annexed and a change of Government.

Has the invasion affected his wealth already?

Yes. There’s evidence he is scrambling to minimise the financial hit he might take. He moved his 28 per cent shareholding in the big Russian steel firm EVRAZ from an offshore account considered at particular risk of sanctions, eight days before the invasion. Experts say that may make a quick sale easier.

The shares’ value has plummeted. MP Chris Bryant has said in parliament that the billionaire is also selling London properties before he faces UK sanctions, which would prevent him taking money for them.

And what is Abramovich himself saying?

Abramovich insists he has had nothing to do with Putin for years. He has businesses in Ukraine as well as Russia and is not under pressure in the USA or Israel… only in the UK, probably because his profile is so high because of Chelsea.

He has always denied the club was up for sale but there was a time, a couple of years ago, when he was open to offers and the asking price is reputed to have been £3billion. He won’t sell without getting his money back.

Don’t Chelsea owe Abramovich a load of money? How does that affect things?

Yes, the football club owe Abramovich about £1.5bn (give or take, it’s NOT £2bn as widely erronesouly reported elsewhere) to the club’s parent company Fordstam Limited, which is owned by Abramovich.

Why does it owe this money? Because, to grossly simplify things, Chelsea have spent far, far more money on buying and paying players since 2003 than the club has earned in revenue from matchday, commercial and media (TV) income. Which means Abramovich has had to keep lending the club money to stay afloat, all under the assumption that he would never recall these loans and endanger the club.

But now it’s up for sale, this £1.5bn is big deal in any sales process.

The club is only worth around £1.5bn objectively (see MMM above). So if any buyer is a rational business person and not a nation state seeking a trophy asset, then the most they should pay, logically, is £1.5bn.

Except that is also the level of the debt. So in the real world, they might give Abramovich £1.5bn (the money he’s owed by the club, to walk away), and then get the club for nothing extra.

Is that feasible?

Nobody acting rationally would pay more than £1.5bn in total, although as we’ve already discussed, a sportswashing nation state or a billionaire to whom £3bn is chump change (https://www.bloomberg.com/billionaires/) might do.

You might argue that it’s more feasible for a buyer to pay LESS than £1.5bn, as Abramovich faces a race against time to liquidate his asset. The longer it takes, the more the price drops, the more he might have to take a ‘haircut’ on what he is owed.

Could Chelsea be in trouble if Abramovich leaves?

Of course, that all depends on who takes over… but certainly their financial muscle could change drastically without Abramovich at the helm.

When Wyss – the Swiss billionaire we mentioned earlier – says the club has no money, he means the club runs off the personal fortune of Abramovich. It makes a loss, quite a big loss usually, unless they’ve had a good year in the transfer market.

They pay among the best (if not the best) wages in the country and sack the manager frequently, which has proved quite expensive. Take Roman out and there is only the money generated by broadcasting, tickets sales, transfers and the like.

So is this bad for Chelsea? It depends who takes over but, to be honest, it’s unlikely to be an owner as generous as Roman. There’s basically him and Abu Dhabi at City, Qatar at PSG and maybe now the Saudis at Newcastle running this sort of game.

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