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Current Affairs

Chelsea FC to be sold

Date: 05 March 2022 Tags: Sports

Issue

English football club Chelsea FC has been put up for sale by the Russian owner Roman Abramovich.

 

Background

The Russian invasion of Ukraine has increased the possibility of sanctions on the owner, who had earlier tried to transfer the management to members of its charitable arm.

 

Details

  • Abramovich has stated that his decision to sell was based on the best interests of the Club, the fans, the employees, as well as the Club’s sponsors and partners.

  • He has also expressed his desire to write-off all the loans he had extended to the club in the past and the net proceeds of the sale would go towards Ukrainian victims.

 

Reasons for sale

  • Abramovich has been regular fixture at Chelsea matches but in 2018 his investor visa was put on hold by the British government owing to spy poisoning scandal in London.

  • Abramovich has close ties with Russian President Putin and has made money through oil and gas business. He also served as Governor of Chukotka.

  • Abramovich was virtually running his business without having visited the club’s offices since the past three years.

 

Increasing pressure

  • Since Russia’s latest invasion of Ukraine, pressure has been mounting on UK Prime Minister Boris Johnson to sanction Abramovich.

  • Abramovich has been convinced that a sanction is imminent and it was better to get back his investment before it is frozen.

 

Non repayment of loans

  • Abramovich has earlier extended interest-free loans to Chelsea to the tune of £1.5 billion in order to finance expensive player acquisitions. 

  • Despite winning championship, Chelsea has declared losses to the tune of $200 million. Recovering £1.5 billion from a club would push it deep into debts.

  • A club with such a substantial amount of debt will not be able to lure prospective buyers and the value would also go down. In addition, the sanctions are around the corner.

 

Proceeds of the sale

  • The net proceeds of the sale would be donated to a foundation set up by his team to help victims of the Ukraine invasion. 

  • This would ensure that profits from the sale would be under his control. In addition, it will gain him some sympathy from British political class.