Chelsea facing administration unless Roman Abramovich drops plans to call in £1.5bn debt
Chelsea owner Roman Abramovich will likely have to drop plans to call in his £1.5bn loan to the club or see it go into administration.
Abramovich is reported to have scrapped an apparent previous commitment to write off the debt as part of the sale of the club.
The sanctioned Russian oligarch is not allowed to receive any of the sale proceeds but is said to have told the Government that he would like the debt paid to a Jersey-based company with links to his business empire.
The move has raised fresh doubts about the possibility of a deal – and the future of the club, which has been reliant on loans from Abramovich to remain solvent.
“I think, in reality, we have to assume that Abramovich either writes off the debt entirely and signs legal documents to indicate that he cannot reclaim it retrospectively,” Dr Rob Wilson, a football finance expert at Sheffield Hallam University, told Morning Wire
“Or the business would be placed into administration. We already know that the income is insufficient to cover costs, so without his financial support it is technically insolvent.”
A spokesperson for Abramovich did not respond to a request for comment.
Negotiations over the sale of Chelsea to Todd Boehly, the co-owner of Major League Baseball’s LA Dodgers, have reached an advanced stage.
Boehly’s consortium, which is backed by US fund Clearlake Capital, is in a period of exclusivity and has until the end of the week to finalise the terms of a deal.
The purchase price is expected to exceed £2.5bn, making Chelsea the most expensive sports team ever traded.
But what happens to the proceeds remains one of several question marks over the sale of the Premier League club.
The Government has insisted it is not overseeing the process but has stipulated certain conditions and must sign off on a proposed deal before it can be completed.
Ministers froze Abramovich’s assets in March following Russia’s invasion of Ukraine. The European Union has since followed suit.
Concerns have been raised that writing off the debt would leave Chelsea liable to financial fair play punishments.
It is thought, however, that concessions could be made in the interests of preventing one of the world’s most famous football clubs going to the wall.
“Under FFP you are only permitted a certain level of loss and owner investment. The rules have changed so there is some flexibility and historic capacity but a £1.5bn write off wouldn’t be permissible, in theory,” said Wilson. “But I think the protection of Chelsea as a football entity will transcend those discussions.”
Boehly’s bid was given preferred status by the Raine Group, the bankers running the sale of Chelsea for Abramovich, last week.
Other bidders included groups led by former British Airways chairman Sir Martin Broughton and Bain Capital co-chair Steve Pagliuca.
British billionaire Sir Jim Ratcliffe’s 11th-hour offer was “rejected out of hand”, a director at his business the Ineos Group said yesterday.