- Chelsea FC need Russian oligarch Roman Abramovich to sell the club quickly.
- If not, there’s a risk it could go bankrupt, a prominent sports lawyer told Insider.
- “The club would be in a difficult financial situation very quickly,” said Stephen Taylor Heath.
Chelsea FC could be insolvent within weeks if the club is not sold, says a UK-based sports lawyer.
The English Premier League club has been put up for sale by current owner Roman Abramovich, a billionaire Russian oligarch linked to Vladimir Putin, following Russia’s invasion of Ukraine.
The sanctions imposed on Abramovich and Chelsea by the British government, however, complicated the proposed sale.
The 55-year-old owner had his frozen assets and was banned from carrying out transactions with British citizens and businesses.
Chelsea have been banned from generating revenue through the sale of tickets and merchandise, cannot sign new players or extend the contracts of current players, and can only pay up to $26,000 per game for Trip costs.
Despite the sanctions, the UK government has said it remains open to Abramovich selling the club, as long as the profits do not accrue to him and a suitable buyer can be found.
Chelsea have set Friday as the deadline for interested parties to make an offer, with Swiss billionaire Hansjörg Wyss and British property tycoon Nick Candy among those expected to submit offers.
Stephen Taylor Heath, head of sports law at UK law firm JMW Solicitors, told Insider that securing a quick, albeit complicated, sale is key to ensuring the club does not fall into insolvency. , that is to say when the debts of a company are greater than the value of its assets and its income.
“The club are in a situation where they have a massive wage bill but are not allowed to enter into contracts that generate revenue,” Taylor Heath said. “He is supposed to live on the income he has already accumulated.
“If the sale – which would allow any new purchaser to then inject money into the club – does not materialize, then it will be in an insolvency scenario with the appointment of an administrator, who would oversee the sale of the same way an administrator oversees the sale of Derby County, for example.”
Championship club Derby, which is managed by Manchester United and England legend Wayne Rooney, fell into administration in September 2021, earning them 21 English Football League anchors ( EFL).
The administrators have not yet found a buyer, raising fears that the club could be close to liquidation.
“It’s kind of a crazy situation,” Taylor Heath continued. “Because if you have financial restrictions on you, like if you’re in an administrative type situation, then normally those restrictions are only on your spending.
“So you basically have to tighten the purse strings in terms of money, because that money has to be available for potential creditors. But you wouldn’t have restrictions on what income you can receive, so an administrator would normally do everything they can possibly get as much money as possible.”
Derby, for example, recently sold Polish international winger Kamil Jóźwiak to MLS side Charlotte FC for $2.6 million to raise money to help the club keep running.
Chelsea don’t have that option at the moment.
“Here you have a situation where there are restrictions on what Chelsea can spend and how Chelsea can generate income,” Taylor Heath said. “And then the club also had the added complicating factor of major sponsors suspending their sponsorship deals due to the association with Abramovich.”
Last week, Chelsea shirt sponsor Three, a UK cellular network, requested that its brand be removed from the club’s association with Abramovich.
Asked about the chances of Chelsea becoming insolvent, Taylor Heath replied: “If [sponsorship] income is also suspended, so it is quite obvious that the club would be in a difficult financial situation very quickly.”