Chelsea have been warned their future hangs in the balance after the government ruled out sale delays amid fears Roman Abramovich will renege on his promise to cancel a debt of 1.6 billion pounds sterling.
Ministers believe time is running out on the May 31 deadline for the license and are expected to flatly reject the prospect of further negotiations allowing Abramovich to recoup funds.
the Russian billionaire sanctioned promised in a statement when the club went up for sale in early March that he would cancel the colossal sums the club still owes him.
However, sources close to the government process say Chelsea are now talking about the prospect of restructuring on terms of sale, which would appear to allow Abramovich to be reimbursed.
Two Whitehall sources have told Telegraph Sport that the ministers’ position is still that Chelsea will not get approval for the takeover if it receives a “penny”. Under an amended proposal issued late last week, Chelsea’s parent company Fordstam Ltd would repay the loans to offshore Camberley International Investments, which is believed to be linked to Abramovich.
The perceived change in plans at the 11th hour has heightened feelings of anxiety within the government that negotiators will soon start to run out of time to complete the complex process.
With auditors also expected to verify and implement the process of paying billions to a foundation, Whitehall’s figures raised the prospect of an ‘existential threat’ to the club. Abramovich had his Premier League owner’s license revoked following government sanctions, and the top-flight fixture in England on June 8 to make up the 2022-23 season. As it stands, Chelsea’s license to continue operating under a government license will have expired eight days before that date.
The feeling in government is that Abramovich’s people had tried to coerce ministers’ hands by raising the prospect of a change of heart on the loan at this late stage. However, several Whitehall figures say the loan deal remains a red line and there can be no room for further negotiations.
Abramovich said in early March when he put Chelsea up for sale that “I will not be asking for any loan repayments”. There was just over £17million in cash reserves at parent Chelsea in the last round of accounts to the end of last season, but the loans Abramovich has injected since l he purchase of the club in 2003 now totals £1.6 billion. Last season alone Abramovich injected around £150m and withdrew around £130m to end the year loaning the club a total of £19.9m.
What does this mean and what’s next for Chelsea?
Has Abramovich really changed his mind about his promise to cancel his £1.6billion Chelsea loan?
It’s been two long months since Abramovich – then still clinging to the vain hope that he could still avoid sanctions – put the club up for sale and promised to cancel massive loans. All net proceeds from the sale, he claimed then, would be donated to a charitable foundation which would be “for the benefit of all victims of the war in Ukraine”. “I have always made decisions in the interests of the club,” Abramovich said.
“In the current situation, I have therefore taken the decision to sell the club, as I believe it is in the best interest of the club, the fans, the employees, as well as the sponsors and partners of the club. The sale of the club will not be expedited but will follow due process I will not be requesting any loan repayments It has never been about business or money for me but pure passion for the game and the club.
However, a lot has changed since then and his charitable mood could only be tested when the UK and EU continued their efforts with brakes, while the Premier League tore up its right to own Chelsea. Any hope that the sanctions could be eased anytime soon was then dashed over the past fortnight as authorities tightened the screws, targeting close associate Eugene Tenenbaum – a Chelsea manager – and freezing hundreds of millions of pounds in cash. active in Jersey, France and beyond.
Whether Abramovich actually staged a reversal of his loan pledge remains to be seen. Telegraph Sport have been told by sources close to the government process that under an amended proposal submitted by Chelsea at the end of last week, the club’s parent company Fordstam Ltd would repay loans to offshore Camberley International Investments. However, with Chelsea yet to comment on Abramovich’s intentions in closed-door talks, the full picture is incomplete.
What is the government’s position?
There are two main reasons why the government cannot crack and now allow Abramovich to withdraw money from the deal. Firstly, ministers maintained the position that any changes to Chelsea’s operating license as a frozen asset would only be granted if the club can prove the sanctioned billionaire is not profiting.
Second, there is simply no time to respond to these late requests. Before Abramovich’s apparent change of course in the 11th hour, Culture Secretary Nadine Dorries had warned that Chelsea were already on ‘borrowed time’. “There is a very short window left for this sale to take place,” Dorries said. Chelsea are operating under a special UK government license which ends on May 31. When asked how soon the club should be sold, Dorries replied “[within] weeks”.
Why has this happened now?
Given that all parties want to avoid a situation where Chelsea go bankrupt, Abramovich’s negotiators may see this as the likeliest time the government could blink.
Talks between the club and ministers are at their most detailed, delicate and critical stage as exclusive talks have now begun with a preferred bidder in the person of Todd Boehly.
What will happen if a deal is now postponed until May 31?
This is the potential doomsday scenario for Chelsea. Abramovich’s license to continue operating under exceptions to blanket sanctions expires just eight days before the Premier League meets to agree his clubs’ signing for the 2022-23 season. Whitehall sources say there is a real ‘existential threat’ to the club if a deal is not reached by May 31.