Sports top lawyer explains how oligarch-owned Chelsea could go bankrupt in weeks – Reuters Sports News

Chelsea owner Roman Abramovich.

Getty/Peter Macdiarmid

  • Chelsea FC needs Russian oligarch Roman Abramovich to sell the club quickly.
  • If not, there’s a risk of it going bankrupt, a prominent sports attorney told Insider.
  • “The club would be in a difficult financial situation very quickly,” said Stephen Taylor Heath.
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Chelsea FC could go bankrupt in 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 Russian billionaire linked to Vladimir Putin, following Russia’s invasion of Ukraine.

However, the sanctions imposed by the British government on Abramovich and Chelsea made the proposed sale more difficult.

The 55-year-old owner has had his assets frozen and banned from transacting with British citizens and businesses.

Chelsea cannot generate income from the sale of tickets and merchandise, cannot sign new players or renew the contracts of current players, and can pay up to $26,000 per game for travel expenses.

Despite the sanctions, the British government has said it is open to Abramovich selling the club, as long as the profits do not come to him and a suitable buyer can be found.

Chelsea set Friday as a deadline for interested parties to make an offer, which include Swiss billionaire Hansjörg Wyss and British real estate mogul Nick Candy.

Stephen Taylor Heath, head of sports law at British law firm JMW Solicitors, told Insider that securing a quick, albeit complicated, sale is key to ensuring the club does not become insolvent.

“The club is in a situation where it has a huge wage bill, but is not allowed to enter into contracts that generate income,” said Taylor Heath. “He is supposed to live on the income he has already built up.

“If the sale – which will then allow any new buyer to pump money into the club – does not go through, it will be in an insolvency scenario with the appointment of a trustee, who oversees the sale in the same way a trustee oversees. the sale of Derby County for example. †

Championship club Derby, which is managed by Manchester United and English legend Wayne Rooney, fell under the board in September 2021, earning them 21 English Football League (EFL) anchors.

The trustees have not yet found a buyer, raising fears that the club is on the brink of liquidation.

Wayne Rooney’s Derby County took office in September 2021.

Getty/Dan Istitene

“It’s a bit of a crazy situation,” Taylor Heath said. “Because if you have financial limitations, for example if you are in an administrative situation, these limitations usually only relate to your expenses.

“So you actually have to pull out your wallet in terms of money, because that money must be available to potential creditors. But you wouldn’t have any restrictions on the income you can receive, so an administrator would normally do what they can to get as much money as possible. †

For example, Derby recently sold Polish international winger Kamil Józwiak to MLS team Charlotte FC for $2.6 million to raise money to help keep the club going.

Chelsea don’t have that option at the moment.

“Here’s a situation where there are restrictions on what Chelsea can spend and how Chelsea can generate revenue,” said Taylor Heath. “And then the club also had the added complicating factor of major sponsors suspending their sponsorship deals because of the partnership with Abramovich.”

Last week Chelsea shirt sponsor Three, a British mobile network, requested that the brand be removed from the club’s association with Abramovich.

When asked about the likelihood of Chelsea becoming insolvent, Taylor Heath replied: “If… [sponsorship] income is also suspended, so it’s pretty clear that the club would be in a tough financial situation very soon. †