Sanctions on Roman Abramovich could strangle Chelsea

FOR YEARS now, a banner in the colours of the Russian flag and emblazoned with the words “Roman Empire” has hung from the stands of Stamford Bridge, home of Chelsea, an English football club. It is a fan tribute to the club’s owner, Roman Abramovich. The Russian oligarch’s purchase of Chelsea in 2003 transformed a team of sporadic cup winners into perennial title challengers. Under his stewardship—and fuelled by the investment of about £1.5bn ($2bn)—Chelsea won the English title five times (having won it only once in the pre-Abramovich era); the FA Cup five times; and the Champions League, the most prestigious prize in European football, twice. But now his reign is over and his empire is on the verge of collapse.

On March 10th the British government slapped a range of sanctions on Mr Abramovich in response to Russia’s invasion of Ukraine. It says the tycoon’s “close relationship” with Vladimir Putin, Russia’s president, and the benefits that it yielded, helped him to amass a fortune estimated at $14bn. Almost all his assets in Britain, including Chelsea, have now been frozen.

The news should not have surprised Mr Abramovich. Questions over his connections to the Kremlin—which he has consistently denied—have dogged him since he bought the club. Days earlier, shortly after Russia began its assault on Ukraine, he had announced plans to sell Chelsea, presumably in anticipation of such a freeze. The club, however, was blindsided by the scale of the restrictions. Almost every source of revenue is now choked. It cannot sell new tickets for its matches nor merchandise at its own store, and it is banned from trading players.

Even before these sanctions, Chelsea had been haemorrhaging money. Its income rarely matched the wages for its star-studded squad and other running costs. According to calculations by Swiss Ramble, a football-finance blogger, Chelsea’s net losses of £260m over the past decade exceeded those of any of its rivals among England’s “big six”. Chelsea has reported ten of the 25 biggest annual losses ever recorded in the Premier League.

It has survived and thrived only because of Mr Abramovich’s largesse. Through a holding company, he has continued to pour money into the club via interest-free loans (although the flow had slowed in the last two years). Few owners have done so much. His injection of £701m in the past ten years trumps even the amount put into Manchester City, the only other English team to match its recent success, by Abu Dhabi’s royal family.

Starved of Mr Abramovich’s support, Chelsea’s future is now in jeopardy. The British government insists it does not want the club, which it considers a cultural asset, to go under. It has granted Chelsea a special licence to keep playing matches and paying wages. The club may be sold eventually, but only if the government is convinced that no proceeds would reach Mr Abramovich.

The government’s clampdown may also worry other English clubs whose income derives ultimately from autocratic regimes. These include not only Manchester City, but also Newcastle United, which was bought last year by a consortium led by Saudi Arabia’s sovereign wealth fund. The government has said it will review the Premier League’s “fit-and-proper” test for prospective owners—currently a cursory assessment under which all manner of owners are waved through.

Chelsea’s coach, Thomas Tuchel, remains upbeat despite the uncertainty. His team must focus on football, he said, before a win against Norwich City on the evening of March 10th. Mr Tuchel and his players may want to distance themselves from this saga but many Chelsea fans are defiant in their support of Mr Abramovich. As their team took to the pitch, fans could be heard chanting his name. For them, he remains the emperor. ■

Correction (March 14th, 2022): An earlier version of the chart incorrectly suggested that Chelsea won their second Champions League title in 2020. It was actually 2021.

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