European soccer champions Chelsea are now effectively controlled by the British government after sanctions were imposed against Russian owner Roman Abramovich on Thursday.
That process is now on hold, leaving the west London club, ranked by Forbes as the seventh most valuable in world soccer at $3.2 billion, in a state of limbo, operating under a special government license.
The Russian bought the club in 2003 for a reported $184 million and his investment resulted in the most successful era in their history as they won five Premier League titles, five FA Cups and the Champions League twice. His purchase of the club helped transform the landscape of English football with Chelsea breaking the stranglehold of Manchester United, Arsenal and Liverpool.
Abramovich had funded Chelsea via $2 billion in total loans through Fordstam Limited, the entity through which he owns the club. In their most recent accounts in December, Chelsea, who reported post-tax losses of $191.93 million for the year ended June 30 2021, said they were "reliant on Fordstam Limited for its continued financial support."
Yet now there is a huge question mark over the club's future. Chelsea, the Premier League and a spokesperson for Abramovich did not immediately respond to requests for comment.
A number of potential new owners had emerged in the past week, including several American sports executives, but there is now a block on any sale.
A spokesperson for Britain' Prime Minister Boris Johnson said that block could be lifted in the future if another license is agreed to.
"We would have to grant a further license. I think it is fair to say the government is open to the sale of the club, but... currently, it would require another license and that would require a further conversation with the Treasury (finance ministry)," he told reporters. "The principle has been to mitigate the impact on fans ..., these measures are designed to punish those close to (Russian President Vladimir) Putin.”
A source close to Chelsea told Reuters on Wednesday that the expectation within the club was that a deal would be done "sooner rather than later."
New York investment bank Raine has been handling the sale and potential buyers will now have to wait to see whether a license allowing a sale is granted and how any eventual legal action from Abramovich proceeds. Chelsea are now operating under a special government license, which allows some exemptions to the asset freeze restrictions, in order to allow the club to fulfill their fixtures.
Chelsea, who are third in the Premier League and in the last 16 of the Champions League, will be able to play their games and pay their players while broadcasters will be permitted to show their matches on television. Only fans who have already purchased tickets or who have season tickets will be allowed to attend matches, the government said, while no new merchandising sales will be permitted. The club shop has put up a notice saying it is closed due to the latest government announcement.
The club will not be able to enter into transfer deals for new players or receive money for selling existing players — effectively a transfer ban. However the club will be able to continue paying the wages of all employees, including their playing and coaching staff.
British government Culture Secretary Nadine Dorries said the moves were aimed at "depriving Abramovich of benefiting from his ownership of the club."
"I know this brings some uncertainty, but the Government will work with the league and clubs to keep football being played while ensuring sanctions hit those intended," Dorries said in a statement. "Football clubs are cultural assets and the bedrock of our communities. We're committed to protecting them."
Fans group, the Chelsea Supporters Trust (CST), urged the government to involve fans in future decisions over their club.
"The CST notes with concern the Government's statement regarding the owner. Supporters must be involved in any conversation regarding ongoing impacts on the club and its global fan base," it said in a statement. "The CST implores the Government to conduct a swift process to minimize the uncertainty over Chelsea's future, for supporters and for supporters to be given a golden share as part of a sale of the club."
(Reporting by Simon Evans, Additional reporting by Elizabeth Piper and Andrew MacAskill; Editing by Toby Davis and Ken Ferris)