Chelsea count cost as government turns screw on Abramovich
Chelsea now find themselves in a very different world, but what do the sanctions mean? And how can they dig themselves out?
Stop the ticket sales, prevent the megastore cash registers from ringing. Thursday was a confusing and disorientating day, not only for Chelsea but the whole of European football, following the announcement of sanctions against Roman Abramovich. The paperwork which accompanied it all made for eyebrow-raising reading. According to the government, Abramovich is a pro-Kremlin oligarch who has financially benefited from his decades-long ‘close relationship’ with Vladimir Putin and who has been involved in ‘destabilising Ukraine’ and undermining or threatening its independence via Evraz PLC, a steel manufacturing and mining company, through providing steel for the tanks that are currently causing so much misery.
Damning words, but what does this all actually mean? We’ve already seen a strange preoccupation with tickets being sold to fans in the tabloid press reaction to the news, and perhaps this reflex is reflective of the fact that we are in completely uncharted waters with this announcement. What is clear from it all is that the government doesn’t intend for sanctions against Abramovich to become sanctions against Chelsea supporters, and in describing the club as a ‘significant cultural asset’ and putting this special licence in place, it is understood that they mean to protect the club while severing any financial benefits that Abramovich could extract.
Under the ‘special licence’ given to the club to allow it to trade, Chelsea can at least continue to pay wages, and this was probably the single most important aspect of the story, immediately. A failure to pay wages would have led to all the players’ contracts being breached by the club, and regardless, Chelsea employ many hundreds of people who do not earn multiple thousands of pounds per week. These people do not deserve to be caught up in this mess. What may happen to megastore and ticket office staff, whose employment may have been rendered unviable as a result of these sanctions, is unknown.
But where is the money going to come from to pay these wages? Chelsea are effectively forbidden from acting as a commercial organisation, and with no income streams – even broadcast and prize money will be frozen – and no Abramovich to underwrite it all, the answer to this question isn’t absolutely clear. Chelsea’s total wage bill is believed to be around £28m per month, and that’s a lot of money to hope to find down the back of the sofa in the event that the club doesn’t have that sort of cash reserves. It has also been reported that the financial costs to the club could stretch beyond the immediate, with shirt sponsors Three reportedly reviewing their contract with the club. That contract is worth £40m a year and another commercial partner, Zapp, is also said to be considering its position.
This sudden severance really does affect every aspect of the club’s dealings. The women’s team is hit by the exact same sanction as the men’s team, and even travelling to matches is now significantly complicated. Chelsea’s spending on travel to away matches is now limited to £20,000 per match, which has been estimated at more than 50% less than their current budget.
Clubs cover the costs of travel – usually a flight – to away matches, including security, food and hotels for a travelling party of at least twenty players plus coaching staff and administrators. It seems unlikely that we’ll see Chelsea players on the Eurostar or taking the Megabus, though. Perhaps more likely would be for the players to cover the cost of travel now, and for the club to reimburse them when they’re able. But this is all very much up in the air at the moment.
The same goes for any dealings that the club was intending in the transfer market. Antonio Rudiger, Andreas Christiansen and Cesar Azpilicueta are all out of contract come the end of this season, and Chelsea now cannot negotiate new contracts with them, or bring any new players into the club. Christiansen is already understood to have agreed terms with Barcelona for next season, and the likelihood of the other two players staying beyond the end of this season can only now be considered more remote.
The obvious route out of all of this is for the club to be sold, but any discussion of that between Abramovich and current suitors has now presumably (and quite suddenly) been terminated. But if Abramovich cannot sell the club, he can agree for the government to sell it, so long as they decide where any proceeds from the sale end up. It had been reported that Abramovich had been looking for £3bn or more from the sale of the club, but it seems unlikely that he will have much to do with the sale price now.
On the matters of the buyers themselves, The Telegraph has reported that they contacted one of the prospective buyers, who confirmed that their interest remains just as strong as it was and that they were optimistic that a solution could be found that allows a sale of Chelsea. With Abramovich’s hands effectively tied by the sanctions, it’s difficult to see what the positive effects for him from refusing to sell up might be. It is understood that he has always been very keen to protect his Chelsea legacy; it is possible that the sale of the club might even be expedited by recent events. But the matter of the £1.5bn owed by the club to Abramovich is also now completely up in the air. He can’t write off this money – he’s not allowed anywhere near this sort of decision-making – so what happens to that, in the event of the club being sold?
It isn’t all nightmarish news for Chelsea supporters. The freehold to Stamford Bridge itself is owned by the Chelsea Pitch Owners non-profit. That’s safe, no matter what, although it seems unlikely that much renovation work will be taking place there for the time being. And the government does at least seem to have recognised the value of the club as a cultural institution. No matter how bad things might seem right now, they could have been worse. But the least that anyone can say for Chelsea today is that their position is considerably less certain than it was. Perhaps it’s time for the Premier League – or, God willing, an independent regulator – to tighten the rules on football club ownership to the point that nothing like this can ever happen again.