Whitehall officials have cast doubt on whether a licence to ensure Chelsea changes hands will be issued by the end of the month amid an impasse with Roman Abramovich, Sky News understands.
Tuesday 17 May 2022 06:13, UK
The £4.25bn takeover of Chelsea has been thrown into fresh doubt amid a renewed impasse between owner Roman Abramovich and Whitehall over the deal's terms.
Sky News understands that government officials have doubts about whether a special licence needed to approve the sale will be issued before a deadline at the end of the month.
People close to the discussions say that ministers have yet to receive the assurances they are seeking from Mr Abramovich about the destination of the £2.5bn sale proceeds.
Without a deal ahead of various footballing authority deadlines, Chelsea could be excluded from club competitions next season or even face the renewed threat of administration.
People close to the situation cautioned that it remained fluid, and a licence could yet be issued before the end of the month, ensuring Chelsea begin next season under new stewardship.
The oligarch and his advisers struck a binding deal earlier this month with a group majority-funded by Clearlake Capital, a Californian investment firm, and spearheaded by the LA Dodgers part-owner Todd Boehly.
The sale would bring the curtain down on Mr Abramovich's 19-year tenure as the owner of Chelsea, who lost to Liverpool on penalties in Saturday's FA Cup Final.
The Blues have been operating under a government licence since Mr Abramovich was sanctioned in March, prompting a quick-fire auction which attracted billionaires from around the world.
Officials at the Department for Digital, Culture, Media and Sport (DCMS) have been in talks with the club and Mr Abramovich about a new licence to non expedite the sale.
On Monday, officials said they remained concerned about the fate of a £1.5bn loan to the club's parent company from Mr Abramovich.
The government's sanctioning of Mr Abramovich means he does not currently have access to the funding required to repay a £1.54bn loan owed by the club's parent company, Fordstam, to Camberley International Investments - a vehicle associated with the oligarch.
The loan is thought to be repayable on Chelsea's sale.
'Crunch week' for negotiations
Prior to being placed on the sanctions list in March, Mr Abramovich said he intended to write off the £1.5bn loan to the club and hand the net proceeds from the sale to a new foundation set up to benefit the victims of the war in Ukraine.
Although he has insisted that this remains the case, officials say they have not received sufficient assurances or binding legal commitments from the current owner.
"Without those, the licence will not be issued," one said.
They added that this would be "a crunch week" for the negotiations.
The renewed risk to the sale may call on George Osborne, the former chancellor, to seek to smooth its path to completion.
The firm where Mr Osborne now works, Robey Warshaw, is advising the Boehly-Clearlake consortium.
Mr Abramovich has struck a binding deal that involves the new owners paying £2.5bn to acquire his shares, while pledging £1.75bn of future investment in its stadium, academy, and women's team.
Sky News revealed recently that the terms of the takeover would prevent Mr Boehly and his fellow investors paying dividends or taking management fees for a decade.
The measures were described as a package of 'anti-Glazer clauses' designed to avoid the controversies which have dogged Manchester United since the Glazers' takeover in 2005.
The new owners will also be prohibited from selling any shares in the club for ten years, as well as agreeing to strict limits on the level of debt that they can take on.
The Glazer family's £790m takeover of Manchester United saddled the club with expensive debt known as payment-in-kind notes, and provided a focal point for fan protests, which escalated in the wake of Sir Alex Ferguson's retirement in 2013.
Manchester United was floated on the New York Stock Exchange a decade ago, with the Glazers having extracted hundreds of millions of pounds in dividends and from the sale of shares during their ownership.
Premier League still must approve takeover
Chelsea's takeover remains subject to approval from the Premier League, and the issuance of a special licence from the government.
That is expected in the next fortnight, although people close to the deal have cautioned that it is not yet certain to take place.
Mr Abramovich is said to be determined to donate at least £2.5bn to a new foundation benefiting war victims, with a demand in the latter stages of the auction that bidders increase their offers by at least £500m.
The rivals to the Clearlake-Boehly bid were a consortium headed by Boston Celtics part-owner Steve Pagliuca and Larry Tanenbaum, the NBA chairman and Toronto Maple Leafs owner; and one led by Sir Martin Broughton, the former British Airways and Liverpool FC chairman, which would have involved Harris Blitzer Sports & Entertainment - owner of a stake in Premier League side Crystal Palace and a string of US sports teams - holding a controlling interest.
Sir Jim Ratcliffe, the Ineos Group tycoon, also made a late entry into the process, although its approach was dismissed by Mr Abramovich's advisers.
Uncertainty over the club's ownership already being blamed for the departure of key players including Antonio Rudiger, the German centre-half.
Mr Abramovich has owned Chelsea since 2003, and has turned the club into one of the top sides in Europe, with 19 major trophies having been won under him.
The DCMS declined to comment.