Sanctions against Abramovich
Why the sale of Chelsea FC is so complex
By Stephan Uersfeld
03/22/2022, 10:25 am
The traditional English club FC Chelsea is for sale. After the sanctions against the oligarch Roman Abramovich, the club needs a new owner. A first decision could be made on Friday, and a Bundesliga club is also involved. The takeover process is extremely complicated.
The bidding war for the English Premier League club Chelsea is entering the decisive phase. The sales process initiated by the US bank Raine could lead to a possible new owner as early as Friday. However, it still has to be approved by the British government and undergo a Premier League test. The sale was made necessary after oligarch Roman Abramovich, the previous owner, was sanctioned in the UK for his links to Russian aggressor Vladimir Putin.
The British government has granted Chelsea FC a special license. She has no interest in destroying a heritage of English football. The license allows the club to continue playing under strict conditions. The Londoners are not allowed to sell tickets or memorabilia, are not allowed to negotiate new contracts and have a drastically restricted budget for home games or travel to away games. Although this special license, which prohibits the club from generating income, rules out a change of ownership, the government is open to a sale. “Should a buyer be found, they or the football club could apply to the government to change the terms to allow the sale,” said UK Technology Minister Chris Philp last week.
Augsburg is also involved
There is a lot of interest in the club itself. Numerous offers are said to have been received by the US bank Raine. These include that of the 86-year-old Swiss Hansjörg Wyss, the offer of the Saudi Media Group, that of a British real estate billionaire and the bids of some groups that already hold shares in franchises in the US professional leagues NBA, NHL and MLB. Interesting from a German point of view: A consortium of bidders around the front figures Sir Martin Broughton and Lord Sebastian Coe is to be supported by the co-owners of Crystal Palace, among others. In addition to the legal aspects for the Premier League, which prohibits investments in more than one club, it is also worth taking a look at the names of Josh Harris and David Blitzer.
The latter also holds 45 percent of the shares in Hofmann Investors GmbH through his company Bolt Football Holding, which in turn holds almost 100 percent of the outsourced professional football department of the Bundesliga club FC Augsburg – and with Klaus Hofmann provides the president and club manager. Blitzer acquired the shares in February 2021 for 5.5 million euros. In addition to Crystal Palace and Augsburg, the Blackstone man also holds minority stakes in the Philadelphia 76ers, the New Jersey Devils, a second-tier baseball team, lower-tier soccer clubs in Belgium and the Netherlands, and an eSports team. In January 2022 he also acquired the US soccer club Real Salt Lake together with billionaire Ryan Smith. Smith had also recently acquired the NBA franchise Utah Jazz.
Blitzer’s investment in FC Augsburg made headlines in January. The billionaire is said to have made the most expensive transfer of the Bundesliga winter transfer period possible with his contacts. The 19-year-old US player Ricardo Pepi was worth around 17 million euros to the club at the time. In his six appearances in the league so far, he has not played a goal. An unusual clarification by the club on the alleged initiation rites of coach Markus Weinzierl caused a brief commotion. Blitzer did not want to comment on a possible participation in the consortium behind former Liverpool chairman Martin Broughton and former middle-distance Olympic champion Sebastian Coe over the weekend to the “Philadelphia Inquirer”.
Who decides on new owners?
According to a report by “Guardians” Broughton and Coe are said to be in a promising position at the moment. However, if their bid were successful, they would have to wait for Blitzer and Harris to divest their shares in Crystal Palace. But that’s definitely one of the least of your worries right now. However, the sale itself is difficult and extremely complex. It is not only about how to ensure that Abramovich does not receive any money from the sale and what happens to the proceeds from the sale, but also about who decides on the new owner.
Coe (left) and Johnson (middle) were the faces of the 2012 Summer Olympics in London.
(Photo: picture alliance / dpa)
Normally, the sale of a club is agreed between the previous owner and the buyer. The club itself plays only a minor role in this process. He provides potential buyers with information. However, due to the sanctions against Abramovich, the previous owner is excluded from the negotiations. So now other bodies have to decide on the new owner. The bidder selected by the American Raine Bank must then enter into further talks with the British government. This conducts the negotiations on behalf of the sanctioned owner. After that, the Premier League will decide on the suitability of the new owner.
It’s complicated for the UK government, which is said to have ties to some of the potential buyers. One of the bidders, real estate tycoon Nick Candy, is among a slew of real estate developers bidding between July 2019 and June 2020 13 million euros donated to Prime Minister Boris Johnson’s party. Other potential buyers also have UK government ties.
The hurdle Premier League
The Premier League is the regulatory body for all clubs participating in the league and should not really decide who owns it, just their suitability to run a club. The “Owners and Directors Test” is not only intended to ensure that a buyer has the financial means for a takeover, but also to determine whether the person is suitable to run the club on the basis of various factors. The owner may not participate in the Super League, have no shares in other clubs (like Blitzer currently), not be a player agent, not be bankrupt and criminal.
The “Owners and Directors Test” is currently being called into question not least by the takeover of Newcastle United by a Saudi consortium and also the sanctions against Abramovich. For example, there are currently considerations to include the human rights component in the assessment procedure in order to prevent sportswashing – the attempt to improve the reputation of companies or states with the help of sporting events or participation in clubs. However, there will be no changes to that before Chelsea’s sale. The following applies to the upcoming takeover: Chelsea should not again be put in a situation that threatens its existence by world events. But sport and politics will remain connected.
Many of the bidders known to date have not necessarily attracted attention through philanthropy in the past. Which is hardly surprising given the asking price of almost four billion euros: Such wealth can hardly be accumulated with philanthropy. “Regardless of who wins the public competition to buy Chelsea from Abramovich, the club will continue to be linked to politics to a greater or lesser extent,” concludes “The Athletic” sobered up.