Low Asset

A Long Queue Forms to Buy London’s Most Famous Russian Asset: Chelsea FC

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During

Roman Abramovich’s

scramble to put his London affairs in order this month—a collection of cars, bank accounts, and luxury real estate—none drew more interest than his prized asset sitting off King’s Road. 

Chelsea Football Club, in the English Premier League, had been his trophy asset since he bought the club as a little-known Russian billionaire in 2003. Now, as a world famous Russian billionaire under U.K. government sanctions for his ties to

Vladimir Putin,

his forced sale of the club has touched one of the most closely watched bidding wars in global sports. No club from the Premier League’s so-called Big Six has changed hands in over a decade.

More than 20 different parties have shown interest in possibly submitting an offer, including American investors on Wall Street, a group from Saudi Arabia and a British consortium led by a former Olympic champion. It’s still unclear how many will actually materialize before a deadline for initial bids this Friday, according to a person familiar with the matter. 

How much Chelsea is actually worth is unclear. Among the variables that buyers must consider are the vast expense of running a competitive team in the Premier League; the low return on investment in soccer’s transfer market; the need to upgrade the club’s Stamford Bridge stadium; and the speed at which the sale is taking place. 

But bids are widely expected to fall in the $2.5 billion to $3.5 billion range, putting the price on par with a team in the National Football League or National Basketball Association.

Roman Abramovich bought Chelsea in 2003.



Photo:

John Sibley/REUTERS

Among the leading American candidates are a a group led by

Todd Boehly,

the former Guggenheim Partners president and a part-owner of the Los Angeles Dodgers, who had a bid for Chelsea rejected in 2019. U.S.-based Oaktree Capital Management, a well-known global investment management firm, is also considering a bid or could become part of a broader consortium, according to people familiar with the matter. And earlier this week, the Chicago Cubs-owning Ricketts family also threw its hat in the ring with its partner, the hedge fund billionaire

Ken Griffin

of Citadel.

On the British side, property magnate Nick Candy, a Chelsea season-ticket holder, has announced that he is making an offer and has partnered with former Chelsea manager Gianluca Vialli. And

Martin Broughton,

formerly of

British American Tobacco

and now of the

British Airways

parent company, who briefly served as chairman of Liverpool in 2010, has also positioned to make a bid. Broughton’s group includes the former British track star

Sebastian Coe,

who oversaw London’s hosting of the 2012 Summer Olympics.

Farther afield, a consortium around Saudi Media Group, which deals in broadcast rights and advertising in the Gulf, has also entered a bid.

The list of people expressing even vague interest grew so fast and so long that mixed martial arts superstar Conor McGregor mused on Twitter that he might consider a £3 billion ($3.9 billion) offer for the club. He isn’t believed to be serious about it.

Since Russia invaded Ukraine at the end of February, the U.S. and allied countries have imposed heavy sanctions on Russia. WSJ’s Shelby Holliday dives into how these sanctions are affecting everyone from President Vladimir Putin to everyday Russian citizens. Photo: Pavel Golovkin/Associated Press

By far the most complicated part of the whole transaction are the British government sanctions which explicitly prevent Abramovich from doing business or earning money in the U.K. 

To complete any sale, the U.K. government will need to approve a special license that approves both “the source and use of funds” generated from the planned deal, according to a statement distributed to bidders last weekend. The club and the New York-based Raine Group, which was hired to conduct the sale, “will continue to maintain regular dialogue with the relevant authorities as the process moves forward,” it added.

After initial bids are submitted, the number of bidders will be narrowed and second rounds of bids will likely follow in the coming weeks ahead of settling on a winner. Abramovich isn’t involved in the sale process and will have no role in the ultimate distribution of any proceeds from any sale, according to the person familiar with the process. 

A Downing Street spokesman said “we are open to the sale of the club. We’d consider an application to the license to allow that to happen in the right circumstances.” The government spokesman said that it would be up to Chelsea to determine the exact process of the sale. The club would line up a buyer and then apply to the government for a license for the sale to go through, the spokesperson said.

Chelsea players celebrate a goal during a recent match.



Photo:

Kirsty Wigglesworth/Associated Press

Abramovich initially thought he could shield Chelsea from eventual sanctions by transferring stewardship (though not ownership) to the trustees of the club’s charity late last month But that plan quickly proved untenable and, days later, Abramovich recognized he needed to divest entirely.

The sale of Premier League clubs has become increasingly fraught in recent years, as scrutiny increases on prospective buyers. 

With interest pouring in from around the world, the league is under pressure to ramp up its vetting, particularly following the sale of Newcastle United last year to a consortium backed by Saudi Arabia’s Public Investment Fund. Though the league said it had received “legally binding” assurances that the majority-shareholding group wasn’t under Saudi state control, it has been subject to widespread criticism for its limited background checks on new investors.

Write to Joshua Robinson at Joshua.Robinson@wsj.com, Ben Dummett at ben.dummett@wsj.com and Max Colchester at Max.Colchester@wsj.com

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