How sanctions on Russian oligarch Roman Abramovich will affect Chelsea football club
The United Kingdom’s latest round of sanctions amid the Russia-Ukraine war froze Russian oligarch Roman Abramovich’s assets in the country, which largely prevents the Abramovich-owned Chelsea Football Club from conducting various forms of business.
The UK’s sanctions prohibit Chelsea from selling tickets to its soccer matches, operating its team store, adding players, and other ways of generating new revenue. Additionally, sponsors have tacked on their own version of sanctions, with telecommunications company Three reportedly pulling its jersey sponsorship, according to several reports.
“Franchises derive most of their revenues from media, sponsorships, tickets and concessions,” Irwin Kishner, a sports lawyer who’s overseen brand deals as well as mergers and acquisitions for major sports franchises, told Yahoo Finance. “And pretty much all of those will be affected as the sanctions take hold.”
Abramovich's net worth is estimated to be $13.7 billion.
In an official release, the UK acknowledged the public nature of Abramovich’s assets and declared an intention to protect the overall Chelsea brand and its constituents. The nation issued special provisions to allow Chelsea to continue operating in the English Premier League, including paying English employees already under contract and allowing fans who already bought tickets into games.
“I know this brings some uncertainty, but the Government will work with the league & clubs to keep football being played while ensuring sanctions hit those intended,” UK Secretary of State for Digital Culture, Media, and Sport Nadine Dorries tweeted. “Football clubs are cultural assets and the bedrock of our communities. We're committed to protecting them.”
Valued at $3.2 billion by Forbes in May 2021, Chelsea is one of the top 25 most expensive clubs in the world — trailing U.S. names like the Dallas Cowboys, New York Yankees, and New York Knicks, all of which are valued at $5 billion or more.
The UK could still oversee a sale of the club and cut Abramovich out of the proceeds, Kishner explained. If that transaction were executed, he doesn’t believe the current sanctions would impact the club’s value.
“While I think it’s material on the immediate effect on the franchise, I don’t think it’s going to be materially detrimental to the overall value a club like this could seize on the open market and the competitive bidding process,” he said.
Since the UK interested in keeping Chelsea in good standing, Kishner believes the club’s sale could be expedited to ensure the least detrimental impact on the club’s brand and value. Defending champion Chelsea’s role in the Premier League and the overall place of sports in the country’s culture could provide the nation a compelling interest to oversee the sale before the ongoing sanctions stranglehold the club’s ability to compete on the field, he argued.
In that case, the money could be held in a frozen fund while Chelsea continues on as a normal club.
“That’s the way I thought they would have driven these sanctions,” Kishner said. “ And ultimately, I think that’s where this thing may be going in any event.”
Josh is a producer for Yahoo Finance.
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