The clock is ticking for Chelsea’s sale to be carried out with Roman Abramovich expecting his £1.5billion loan to be frozen having been advised that the UK Government sanctions against him block his plans to write off the club’s debt.
The 55-year-old pledged to wipe out his loan to Chelsea when confirming he had put the Stamford Bridge club up for sale on March 2, amid Russia’s invasion of Ukraine.
Downing Street imposed sanctions on Abramovich on March 10, claiming to have proved the business magnate’s links to Russian president Vladimir Putin.
The terms of those sanctions have left Chelsea’s parent company Fordstam Limited frozen, with the Blues operating under a special government licence.
Fears are thought to have been raised that Abramovich could insist on his loan being repaid, which could jeopardise the entire sale process. Chelsea’s sale needs to be completed by May 31, when the government’s special licence expires.
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What’s happened?
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Kaveh Solhekol says the three remaining bidders for Chelsea have been asked to put forward another £500m because Roman Abramovich wants more of the proceeds of the sale to go towards the club’s charitable foundation.
The sale of Chelsea has been thrown into doubt over disagreements about what will happen to the £2.5billion the club is expected to be sold for.
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The consortium led by US businessman Todd Boehly is the preferred bidder to buy Chelsea, but the UK government will not allow the sale to go through unless it is completely certain Roman Abramovich will not receive any of the proceeds.
Two months ago Abramovich put Chelsea up for sale and said he would not be asking for his loans to the club to be repaid and all the proceeds would go to a charitable foundation for “all the victims of the war in Ukraine”.
The government is aware of attempts to restructure any potential deal in a way which could see Abramovich receive the £1.5billion he has loaned the club through its parent company Fordstam Limited.
The government has to issue a special licence for Chelsea to be sold and it would not do so if any of the proceeds were going to Abramovich or towards paying back the loans he is owed by the club.
What’s the worst-case scenario for Chelsea?
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Kaveh Solhekol says that Sir Jim Ratcliffe had earlier said he was not interested in bidding for Chelsea, but that something has made the Ineos owner change his mind.
Chelsea’s government licence to operate runs out on May 31 and they are facing the prospect of going out of business unless the club is sold or the licence is extended.
The Premier League are meeting on June 8 to constitute the new season, by which time Chelsea would need to have a licence to be part of the next campaign.
Chelsea and Abramovich have declined to comment.
What happens to Chelsea if Abramovich refuses to sell?
He could do that. He’s got other business interests. He’s got a house in Kensington that’s worth £150m. He’s not selling that at the moment and giving the proceeds away to charity. He’s sitting tight.
But the only problem is, if he sits tight and refuses to sell Chelsea then Chelsea will go out of business. Chelsea will not exist anymore and, of course, he’s always maintained Chelsea are very, very close to his heart and he does not want that to happen.
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Kaveh Solhekol explains why a significant development in the ongoing sale of Chelsea could threaten the future of the club itself.
What is going to happen to the money? And who’s going to have control of that money?
It can’t be Abramovich, because he is sanctioned. The UK government are not allowing him to do any business in the UK. So we could have a potential situation where we’ve got a standoff between Abramovich and the government. And all the while the clock is ticking. The clock is ticking because Chelsea’s licence to operate runs out at the end of this month, May 31.
There are two sides to this. If you see it from Abramovich’s point of view, he is thinking: “They want me to sell Chelsea for £2.5billion and I’m not going to get any of that money. I’m going to lose all that money. I’m going to lose the club as well and I’m going to lose the £1.5billion I’ve lent the club”.
From the other point of view, the UK government are saying: “Look at what is happening in Ukraine, look at what Russia is doing in Ukraine. Abramovich is somebody who is linked to the Russian government. He’s linked to Vladimir Putin. That is why he’s sanctioned. We cannot have him doing any business in the UK. We cannot have him making 1p in the UK”.
And in the middle of all this is a stuck Chelsea Football Club.
What will happen if Chelsea are not sold by the end of this month?
Image: A Roman Abramovich banner at Stamford Bridge
Strictly speaking Chelsea should have stopped playing and trading on March 10 when their owner was sanctioned. They have remained in business only because they have been given a special license by the government.
The license runs out on 31 May so you could argue that the club could go out of business unless they have new owners by the end of this month.
But it is highly unlikely that the government would effectively close down the club and despite what may be said in private they would almost certainly extend the license.
That would still cause plenty of problems though especially as the Premier League are meeting on June 8 to constitute the new season and there would be question marks about Chelsea’s future if Roman Abramovich is still in charge.
Will Marina Granovskaia and Bruce Buck stay at the club?
The three consortiums who submitted bids to the Raine Group all want Granovskaia and Buck to stay on in their roles. Granovskaia’s expertise in the transfer market would be especially useful for new owners this summer.
The government though are known to have concerns about executives who have been so close to Roman Abramovich remaining in place under new owners.
Why doesn’t Abramovich just refuse to sell? Surely this is the worst time for him to sell?
If Chelsea were not a football club and just another business or a property then it is almost certain that Abramovich would sit tight and wait and hope that the war in Ukraine ends and his sanctions are lifted.
It doesn’t make sense to sell anything when you can’t receive any of the proceeds but if Abramovich refused to sell Chelsea then they would quickly run out of money and go out of business.
Abramovich is not going to let that happen so in a sense he has to co-operate with the government and sell Chelsea even though he will be losing up to £4 billion – the £2.5 billion sale price and the £1.5 billion he has loaned the loaned club.
Who will decide who the new owners will be?
Ultimately it is Abramovich’s decision even though he is sanctioned. Abramovich appointed the Raine Group to sell the club and the government allowed him to.
Where are we with the Boehly bid?
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Kaveh Solhekol reports that the consortium led by LA Dodgers owner Todd Boehly is set to be the preferred bidder for Chelsea FC despite a late offer from Sir Jim Ratcliffe.
The Todd Boehly-led consortium are the preferred bidders and they have until the end of this week to finalise the terms of an agreement to buy the club. The bid is already being scrutinised by the Premier League to see if it passes their owners and directors test.
Like the other bids they have presented their extensive plans for the club to the Raine Group and they have given guarantees that they will not sell the club for at least a decade.
They have also given assurances that they will invest at least £1 billion in the club and infrastructure, including redeveloping Stamford Bridge.
How is all this uncertainty affecting the football club?
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It has been taking its toll on and off the pitch. Nobody at the club knows what the future holds. As far as the squad are concerned, Antonio Rudiger will be joining Real Madrid when his contract runs out next summer and Cesar Azpilicueta and Andreas Christiansen are expected to join Barcelona.
Thomas Tuchel has already pledged his future to the club but all the uncertainty is making his job very difficult and it is almost impossible for him to plan for the future.
At the moment Chelsea are not allowed to discuss new contracts with players such as Mason Mount and Jorginho. And the future of club-record signing Romelu Lukaku cannot be resolved until new owners arrive.
What about the Ratcliffe bid?
Sir Jim Ratcliffe‘s bid to buy Chelsea has been “rejected out of hand” but he remains interested in buying the club.
Ineos Group Ltd director Tom Crotty told Bloomberg on Wednesday: “We’ve been rejected out of hand by Raine but we will keep reminding people we are still here.”
Ratcliffe made a last-minute bid worth £4.25 billion at the end of last week. Ratcliffe’s last-minute bid on Friday had given pause to the entire sale process, with Britain’s richest man understood to be pressing on with his candidacy to buy the Blues.
It emerged last week Ratcliffe, Britain’s richest man, had tabled a last-minute £4.25billion bid to buy the west London club.
But, the consortium of LA Dodgers part-owner Boehly was still named as the preferred bidder. Ratcliffe has not engaged in the process set out by the Raine Group, making it difficult for his bid to be considered.
Where are we with the other bids?
Image: Sir Martin Broughton has submitted a bid for Chelsea
The Sir Martin Broughton and Steve Pagliuca bids are still very much in play. The two consortiums remain interested in buying the club and they are on standby to re-enter the process if the Boehly bid is unsuccessful.
Both bids believe they have made very compelling bids for the club and both believe the club will thrive and flourish in their hands.
Is there any danger that Chelsea will be taken over in a leveraged buyout?
Chelsea bidders were told last week that they would be allowed to borrow money to finance their offers for the club. A source close to the sale process says the advice on debt was changed at the same time as the bidders were asked to increase their offers by £500m.
The bidders are believed to have been told that there would be an element of flexibility when it came to debt.
The Glazer family bought Manchester United in 2005 in a leveraged buyout which has so far cost the club more than £1 billion in interest and repayments.
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