The delay by UK authorities in processing Roman Abramovich’s visa renewal application, reported around the world on Sunday, has added a new concern to what already promised to be a very challenging summer for Chelsea.
ESPN FC attempts to make sense of the issue and the potential fallout.
So what’s the problem here?
The Tier 1 investor visa that Abramovich has always used to gain entry to the UK expired more than three weeks ago, and he has yet to receive a new one despite the renewal application being filed on time. While his application is in process he is still legally allowed to be in the country, but he can’t leave or enter and was unable to attend Chelsea’s 1-0 win over Manchester United in the FA Cup final at Wembley on Saturday as reports claimed he was in Russia already.
How worried should he be?
Well, that depends on the reason for the delay. Sources around the club and Abramovich have both stressed that he has not been formally denied a visa, and it is very possible that the long wait is simply due to Home Office bureaucracy.
The context, however, is concerning for Abramovich; only last month the UK government pledged to review the visa access granted to around 700 wealthy Russian citizens amid growing political tensions between the two countries.
Will Chelsea be affected if he is refused a visa?
In terms of the club’s day-to-day operations, no. Marina Granovskaia runs the show on the Abramovich’s behalf and whether it be Sheikh Mansour (City), Joel and Avram Glazer (United), Stan Kroenke (Arsenal), Joe Lewis (Spurs) or John W. Henry (Liverpool), there is nothing unusual about the key decisions of top Premier League clubs being steered by owners from outside the UK.
It would be disappointing and perhaps even a little bit humiliating for Abramovich, though, if his sporadic presence on match days at Stamford Bridge became a thing of the past due to the UK government.
That’s it? Things couldn’t get worse?
Not in the short term, and it’s hard to envision any set of circumstances which could realistically compel Abramovich to relinquish his control of Chelsea.
Even if the UK government passed legislation granting themselves the power to target the assets of wealthy Russians — similar to the Magnitsky Act in the U.S. — he comfortably has the financial means to ensure that any attempted seizure would likely result in a long and expensive legal battle. In any case, we are a long way from that messy scenario.
So you’re saying Chelsea have nothing to worry about?
There’s no immediate cause for panic at Stamford Bridge, but it’s certainly not good if Chelsea’s owner can’t enter the country. The optics of the situation are bad and the Russian’s investment, both emotional and financial, is as essential for the stability of the club as at any point since his arrival in 2003.
Really? I thought Abramovich’s money wasn’t as crucial to Chelsea now?
These aren’t the heady days of the 2000s, but Abramovich is still pumping money into Chelsea on a yearly basis (£34 million in the 12-month period up to June 2017, according to respected football finance analyst Swiss Ramble).
It is true the club has made big strides in its push towards sustainability, recording a profit in three of the last six years.
Revenues have been fortified by spiralling Premier League TV deals, lucrative new long-term commercial agreements with Yokohama and Nike, and smart player trading — Chelsea have averaged a £56m profit on player sales in the last four years compared to an average of just £13m between 2005 and 2013, per Swiss Ramble.
But in spite of all this, it’s clear that Chelsea would find it significantly harder to stay competitive at the top of the Premier League without Abramovich’s backing.
Why do you say that?
Well, they have already swum impressively against the financial tide in recent times, winning two league titles in the last four years despite a lower total net spend than Everton and Crystal Palace since June 2014. Excluding player sales the club’s annual loss has remained around £70m, per Swiss Ramble.
The Stamford Bridge redevelopment project is also at a delicate stage. Costs have ballooned to around £1 billion and Abramovich is no longer funding it solely from his own deep pockets. Loans could make up as much as £500m of the financing, which would result in debt to be repaid.
What is Chelsea’s current debt situation?
Chelsea are debt free, thanks to Abramovich’s decision to convert more than £800m of investment into equity in 2009. The club’s holding company Fordstam Ltd, however, has £1.1bn of debt in the form of an interest-free loan from the Russian, theoretically repayable on 18 months’ notice.
That sounds scary…
Yes it does, but in reality selling the club would be a far more effective way for Abramovich to get his money back than calling in the debt.
Still, this is all just speculation, right?
At this stage, yes. There’s no reason to believe that, even in the worst-case scenario, Abramovich’s visa issue would prove any more than an inconvenience for all him and for Chelsea. You can rest assured, however, that those in the corridors of power at Stamford Bridge will be monitoring developments with keen interest over the coming weeks.
Liam is ESPN FC’s Chelsea correspondent. Follow him on Twitter: @Liam_Twomey.