The unthinkable could soon become the inevitable, with Chelsea, Champions League winners and once one of the richest clubs on the planet, facing a very real danger of entering administration following the government’s decision to sanction Roman Abramovich.
That’s the warning from one of the country’s leading sports finance experts, who believes that a lack of capital in the London club’s bank account could see the situation at Stamford Bridge unravel at breakneck speed.
The decision to sanction Abramovich on Thursday has thrown the club’s viability into serious doubt and although the government has said it will do it all can to protect Chelsea, it’s clear that unless the club is sold extremely quickly, the five-time Premier League champions are in the kind of financial peril that was unthinkable with the Russian at the helm.
Chelsea have been granted a special licence by the UK government after Abramovich was named on an updated list of oligarchs that have links with Russian president Vladimir Putin. The latest round of sanctions are designed to make life as difficult as possible for those within Putin’s sphere of influence following Russia’s invasion of Ukraine and the war it’s waging in the country.
Chelsea fans will fear that the move could take the club back a generation – to the days when they were more likely to be relegated from the top flight than challenge for a place in Europe.
“The biggest issue now is the ongoing running of the club,” says Rob Wilson, football finance expert at Sheffield Hallam University. “I don’t believe that they have enough cash in the business, without owner support, to meet their ongoing obligations, such as paying players. I suspect administration will be on the table soon.
“And if that happens, player sales would be permitted but you would expect them to be at a much lower value. The administrators’ role will be to pay creditors, a task made easier by virtue of the fact that Roman Abramovich wouldn’t be one, as the shareholding is diluted under administration.”
For now, there are still many more questions than answers, not least for Chelsea’s employees on and off the pitch. On Thursday, Chelsea’s shirt sponsor, Three, said that it was “temporarily suspending” its £40m deal with the club.
Tim Crow, a sports business advisor who has worked with clubs across the Premier League, believes that other commercial partners will also be reassessing their relationship with Chelsea.
“If they were well-advised then all these commercial partners would have the right to cancel or suspend,” he says. “They will all be reviewing but this could be a tipping point.
“I suspect that we will see a lot of suspensions and also some cancellations. Just carrying on and doing nothing is not an option because you either look like you don’t care or you risk putting yourself on the wrong side of history. I would suspect that we will see a raft of suspensions, at the very least.”
Even if the government introduces some kind of special arrangement to allow a sale to go through – an eventuality which looks more and more likely despite the imposition of sanctions – it's possible that companies would look to cut the value of future contracts, regardless of whether Chelsea are no longer in Abramovich’s hands.
“There will be ‘change of control’ clauses in these contracts, so that if there is a change of control and, in the opinion of the sponsor, it doesn’t work in their favour, then they can cancel or renegotiate,” says Crow. “The sponsors will have the right to have another look and get into a fresh negotiations over those contracts if and when any deal goes through.”
Uncertainty reigns. Whether the sanctioning of Abramovich is just a piece of symbolism by a government seeking to look as strong as possible as Russia continue their onslaught, only time will tell.
Regardless, Matt Rogan, sports strategy adviser and author of All to Play For, believes it’s in no one's interests for this situation to drag on.
“The government seem to have left the door open for a sale of the club to still happen,” he says. “If the proceeds go to a charity such as the Red Cross, and also in UK tax, then that’s a sensible move. I could see a sale process for the club continuing on that basis.
"Certainly, a fire sale of the club’s players is in nobody’s interests if that’s where the deal proceeds are heading because it will completely erode the value of the club. Resolving the question of the outstanding debt could still be tricky, though. There’s clearly still a long way to go.”
