Chelsea will play for free

British sanctions hit the football club.
London "Chelsea" fell under the sanctions of the British government. This was a consequence of the decision to freeze the British assets of club owner Roman Abramovich. The football club is allowed to continue to play, but at the same time it is prohibited from almost any commercial activity - from the sale of tickets and goods with team symbols, to the transfer of players. The way out could be to change the owner of the club, but in the current conditions, the sale of the club, which Mr. Abramovich announced his desire for in early March, is turning into a complex process.

On Thursday, the UK government placed Russian businessman Roman Abramovich on the sanctions list, freezing all his British assets, which inevitably hit the most expensive of them - the Chelsea football club. The team will be able to continue participating in tournaments (in the English Premier League championship, Chelsea is third, in the Champions League on March 16 they will play the second leg of the 1/8 finals against Lille). This is separately stipulated in the decision of the government, which noted, however, that the exclusion from the sanctions list can be reviewed or canceled at any time.

But at the same time, from now on, the club is prohibited from selling tickets for matches, selling goods with club symbols in their stores. The money he receives as prize money and funds from the sale of rights to television broadcasts will be frozen. In addition, Chelsea cannot sell and buy players, as well as renew expiring contracts of players.

True, there are a number of exceptions. So season ticket holders (about 28 thousand of them) and spectators who bought tickets for the next Chelsea home matches before Thursday will still be able to get to the games. With Stamford Bridge seating 42,000, Londoners will have to play most of their remaining matches with stands only 2/3 full. The club is also allowed to make and receive payments for already completed transfers and loan agreements for players.

The club can continue to pay the full salaries of staff, players and coaches. At the same time, the authorities severely limited the associated costs of the club. For example, the cost of an away match, regardless of whether it is a Premier League or European Cup match, cannot exceed £20,000 for the entire team. It is hard to imagine how this money can be used to provide, for example, a trip with accommodation to the same Lille for at least two dozen people. At the same time, the limit on expenses for organizing a home meeting is set at around 25 times more - £ 500 thousand. This takes into account the costs of security, catering (it was not forbidden to sell food at stadiums) and other things.

All this, as noted by the Minister of digital technologies, culture, media and sports of Great Britain Nadia Dorris, is necessary in order to make sure that no money generated by the activities of the club will fall into the hands of Roman Abramovich. At the same time, she noted that the authorities were aware that they were creating problems for the club.

“I know this creates an uncertain situation, but the government will work with the Premier League and clubs to ensure that football does not suffer and sanctions hit exactly who they are aimed at,” said Minister Dorries.

The government did not explain how to deal with the money that Chelsea receive from other sources, such as sponsorship contracts. According to the Deloitte Money League 2021 report, Chelsea generated €470m in revenue in 2020, of which €208m came from television contracts. Matchday generated €62m, with the rest, €200m, going under 'commercial activity', which includes sponsorship agreements. Perhaps some clarifications will follow in the future, but so far one of the largest partners of Chelsea, the telecommunications company Three, the contract with which brought the club £40 million a year (only Nike pays more than Chelsea - £60 million a year ), has already announced that she will reconsider relations with the team.

The departure of sponsors can quickly cause irreparable damage to the club. The fact is that there is not so much money in the accounts of Chelsea.

From an analysis of Chelsea's accounts, it appears that the club's average monthly expenses are around £28m. At the same time, the team is unprofitable. The Chelsea report for the last financial year (ended in June 2021) notes that the club's losses amounted to £ 145.6 million. It was planned to close the hole in the budget with funding from Fordstam Limited. She belongs to Roman Abramovich, and it was through her that Chelsea was financed. At the same time, injections were made out as interest-free loans. So Chelsea owe Roman Abramovich, according to various estimates, from £1.5 billion to £2 billion.

Now, of course, even if he wants to transfer money to Chelsea's accounts, Mr. Abramovich will not be able to. Given the aforementioned ban on transfers (the total cost of the Londoners according to Transfermarkt is € 883 million), as well as the lack of access to prize money and money from television broadcasts, the club is deprived of the opportunity to close the budget deficit, which threatens to delay the players' salaries. And this, in turn, can lead to the introduction of external control in it. In such a case, according to the rules of the Premier League, Chelsea could be penalized by 9 points, which will hit their chances of getting a place in the Champions League next season. Last season Londoners won the Champions League, and their income from participation in the tournament exceeded €100 million.

At the moment, the only way to quickly normalize the situation at Chelsea seems to be his emergency sale.

Roman Abramovich announced back in early March that he was selling the club and intended to transfer the proceeds to a fund to support those affected by the events in Ukraine. By Thursday, a number of applicants had already expressed interest in the deal, and it was planned to complete the acceptance of applications by March 15. The key issue was that Mr Abramovich was allegedly asking for around €4bn for the club, with the most generous offer not exceeding £2.5bn. Now that gap between the offer and the offer could widen. Buyers are likely to demand a discount for the additional risk involved. But now it is already necessary to talk about the sale of the club with the British authorities. Nothing will happen without their permission. Nadine Dorris confirmed that a permit could be issued, but on the condition that "Abramovich does not benefit from the sale." True, she does not know when this can happen.

Recall that Roman Abramovich acquired Chelsea in 2003. The club at that time had not won the national championship for half a century. Under Abramovich, Chelsea have become one of the giants of world football and won a total of 21 titles, including two victories in the Champions League and the Europa League and five triumphs in the Premier League.