Chelsea Takeover CompletedMay 30, 2022, 11:00 AM
As discussed in previous posts, the purchase of Chelsea F.C. required approval from not only the Premier League but the U.K. government as Roman Abramovich, the selling owner of Chelsea F.C., is subject to the sanctions issued by the U.K. government on Russian individuals with ties to the Russian government. However, it has been reported that the U.K. governmental authorities overseeing the sale process pursuant to the Russian sanctions have approved the purchase transaction by the group led by Americans Todd Boehly and Mark Walters, and Swiss billionaire Hansjoerg Wyss.
The Premier League had previously signed off on the takeover after its review of the proposed new ownership group but the completion of the transaction was held up by the U.K. government’s review and approval. There were reports that the governmental reviewers were concerned with where the proceeds from the sale would end up, particularly that the proceeds would end up in an entity indirectly controlled, directly or indirectly, by Abramovich which would have violated the Russian sanctions. In the end, the governmental reviewers and those involved in the flow of sale proceeds were able to work out a structure that appeased the concerns of government officials and ensured that the proceeds would not end up in an entity with connections to Abramovich.
The U.K. government’s approval arrives just in time for Chelsea F.C. to meet crucial deadlines. The special license to operate that the U.K. government had issued Chelsea F.C. in connection with the Russian sanctions was set to expire on May 31, 2022. If the takeover transaction had not been completed and approved prior to the May 31 expiration, then Chelsea F.C. would not have been able to register for the 2022-2023 Premier League or next season’s UEFA Champions League. Such a result would have been dire for the West London club and likely would have triggered walkaway rights for potential bidders meaning that Chelsea F.C. would not have been sold and the club would no longer have any license to operate with the club finding itself forced into administration. Fortunately, the approval from the U.K. government arrived just in time.
Although the sale of Chelsea F.C. is an extraordinary circumstance where the sale was, in essence, forced by the U.K. government through the sanctions issued upon Roman Abramovich, it is common to see sports franchises subject to a forced sale either due to the death of an owner with no succession plan or the respective league forcing an owner to sell for any number of reasons or violations. However, even in “common” forced-sale situations where governmental review is involved, the final destination of sale proceeds is usually not the point of contention that holds up the government’s approval.