Roman Abramovich: The financial engineer who changed the face of world football
June 1, 2003 – a day when the face of English football would change dramatically. Not that the sport would be conceived any differently, but this was the day that the English Premier League, the blue-chip of European football, would have a ‘foreigner out of nowhere’ at its doorstep, ready to shake up the old firmament of English football. This was the day that Roman Abramovich bought Chelsea Football Club.
Let’s first look a little back in time before that day to understand what kind of turmoil Chelsea Football Club was facing before its acquisition.
By the late 90s, Chelsea enjoyed some domestic and European success under another ambitious owner, Ken Bates, with a well assembled team. The club landed a major trophy after close to 25 years, in 1996.
The on-field success was coupled with some positive movement on the off-field legal battles front. The club was finally able to renovate most parts of the stadium, turning it into an all-seater one.
The brand of football was attractive to most. The players, including a certain Italian wizard, received adulation from pundits, and finally managed to qualify for the biggest competition in Europe.
But the on-field and off-field momentum was gained at a cost. The cost to build a multi-tier West Stand and the payroll for the big names had driven the club deep into debts, adding to the existing ones.
The financial health of the club had turned from bad to worse. A season in Champions League was not enough to provide any respite. It is said that the club had no money to pay Roberto Di Matteo when he retired. As expected, Di Matteo did not put any pressure and was ready to accept the money when the club could pay. A year later he bought shares worth that amount instead.
£75m were the annual repayment costs for the Eurobond. The club had a plan in place to sell all the big names by 2003 and restructure the bond. Earning a place in Champions league was absolutely vital, as failing to do so would make it impossible to avert a financial crisis.
And in an eventful afternoon on the last day of the 2002-03 season, Jesper Gronkjaer confirmed the club’s participation in the following year’s Champions League, also a key factor in the subsequent takeover, with a winner against Liverpool in the ‘£20 million match’.
Roman Abramovich had fallen in love with football after watching the Real Madrid-Manchester United quarterfinal in the 2002 Champions League. He had the whims and ambition of a typical businessman, and immediately had the desire to buy a football club.
Roman wanted to buy a club where he could create a huge brand, a new empire. With that in mind, London became the favoured destination for his investment, as a political-financial capital would provide far more incentives for creating a brand than any other city could.
This ruled out Aston Villa, for sale at that time, or even Manchester United. Tottenham, Fulham and Chelsea were the viable options in the list. Thanks to Tottenham’s lack of interest in even meeting him and the financial turmoil at Craven Cottage, Roman found in Chelsea the perfect club to invest in.
Predictably, the troubled board members of Chelsea and an ardent Roman struck a deal within 20 minutes, resulting in Roman gradually buying the club for £140m, with £60m for the club and £80m for buying the debt. Ken Bates gladly gave up his ownership to get the £17m share from the sale of the club he bought for a pound (though he inherited a debt of 1.5m in 1982).
Thus, Chelsea FC was not only safe but also in the hands of the richest owner in England.