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.
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”.
Abramovich was sanctioned by the government on March 10, preventing him from doing any business in the UK.
But the sale of Chelsea is being conducted by the Raine Group, an investment bank appointed by Abramovich, and he will have the final say on who buys the club.
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.
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.
Time is ticking for all sides but who will blink first?
Analysis by Kaveh Solhekol, Sky Sports News Chief Reporter
Last week some of the bidders were told Abramovich or a company linked to him actually wanted to be repaid the loans he’d made to Chelsea. What that would mean is Roman Abramovich was not writing off his loans of £1.5billion and, ultimately, that money could find its way back to Roman Abramovich. There’s no way the UK government are going to stand for that, because Abramovich is sanctioned.
So what is going to happen to the money? And who’s going to have control of that money? Is it going to be the UK government or is it going to be Abramovich? 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 happens to Chelsea if Abramovich refuses to sell? And of course 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. But if that was to happen, who would Chelsea supporters blame? Would they blame Abramovich or would they blame the UK government?
So the clock is ticking not just for Abramovich, but also for the UK government because they can’t have a situation on their hands when at the end of this month Chelsea’s licence to operate expires and potentially one of the biggest clubs in the world could go out of business.
Prospective Chelsea buyers given flexibility over debt
Chelsea bidders were told last week 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 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 £1billion in interest and repayments.
Where are we with the Boehly bid?
The consortium led by Todd Boehly is the preferred bidder to take over Chelsea 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 they will not sell the club for at least a decade.
They have also given assurances they will invest at least £1billion in the club and infrastructure, including redeveloping Stamford Bridge.
Where are we with the other bids?
The Sir Martin Broughton and Steve Pagliuca bids are still very much in play, with both consortiums still interested in buying the club.
They are on standby to re-enter the process if the Boehly bid is unsuccessful.
Both believe they have made very compelling bids for the club and both believe the club will thrive and flourish in their hands.
What about the late Ratcliffe bid?
It emerged last week that Sir Jim 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.
Irrespective of that, his bid remains on the table and Ratcliffe is still interested in buying Chelsea.