Part I – Roman’s déjà vu
The events in Ukraine in recent weeks have been confusing, infuriating and decried worldwide. Anytime that human lives are at risk I feel uneasy with accepting the reasoning behind it, even in planned military operations. Using armed force in any conflict makes no sense in my little world.
I’m not ashamed to admit that politicians in my part of the world growing up made me sick. Didn’t want to listen to them, nor look at them. Now well-travelled around Europe I can see that is the case not only in my home country. The word “politics” is revolting to me. And I’m unapologetic about it.
But enough about me. Football has a central stage in many people’s life around the world. Their world was rocked on multiple occasions in the last couple of years with Super Leagues, extinction of clubs with over 100-year-old history, games behind closed doors and now stinky owners, dirty money and usage of sports clubs as a tool to boost someone’s image and reputation.
I will try to make sense of what’s going on with the world of football and specifically ownership models, intentions, governments and end-games. For that however, the detail in some parts of the stories will be heavy and at times confusing, but I hope it will make sense at the end of the series of articles.
Part I – Roman’s déjà vu
Thursday 10th March 2022, or in other words two weeks after Russia’s invasion in Ukraine. That is the date when the UK Government decided to enforce sanctions on selected Russian oligarchs including Roman Abramovich due to alleged close links with the Russian President Vladimir Putin.
Freezing of assets would usually include real estate and other physical and intellectual property owned by the sanctioned person. Rarely if ever, an international multibillion asset of cultural significance appears in such situation, which will explain the absolute media mayhem in recent days. Too many stories, too many headlines and too many people are busy with trying to decipher political moves that have wider impact on society.
The start of our journey begins in the late 1990s. Vladimir Putin has been elected as a successor to the then President of Russia Boris Yeltsin. The collapse of the Soviet Union, privatization, and the poor living conditions in Russia at the time saw Vladimir Putin’s plan to take back the wealth of the country off the hands of the oligarchs as the perfect platform for economic rebuild. Freezing assets, oligarchs in jail and many tax frauds court cases suggested that Putin will put an end to deals that benefit private sector and handicap the Russian economy.
As part of the planned economic rebuild in the early 2000s, Russia managed to acquire majority shares in the following gas and oil companies along with others — Gazprom, Novatek, Rosneftegaz. 50% majority shareholder in Gazprom, around 32.4% in Novatek (9.4% through Gazprom and 23% through Volga Group owned by Gennady Timchenko, close friend of Putin since the 1990s, also sanctioned by the UK Government) and full 100% ownership of Rosneftegaz. Remember the last name, it will come handy later. But what is all this having to do with football?
We as football fans are led to believe that Roman Abramovich is that super villain that builds tanks and funds the Russian military operations in Ukraine. We are also led to believe that the UK is taking drastic measures against a human being that is partly responsible for committing such atrocities on innocent territories. But above all we are led to believe that this is the whole truth. In my country there is a saying “The thief shouts ‘catch the thief’” which comes to my mind for some reason in this situation.
But before we get into the crooks of it all, we need to fully understand the relationship between Roman Abramovich and Vladimir Putin and later the ties between Saudi Arabia, Russia, and the United Kingdom.
It is particularly important why Abramovich bought Chelsea FC. As most oligarchs, Abramovich was on the target-list for Putin since he is President. But not Abramovich per se, more so the businesses Abramovich owned and the finance he has taken away from the Russian state through private ownership. The business partner of Abramovich at the time Boris Berezovsky was strongly against the idea of Putin and Russia taking their business away.
However, in 2005 the company controlled by Roman Abramovich and Boris Berezovsky, Sibneft, was sold to Russia for over £7 billion. That way Roman Abramovich had no longer any business interest in Russia. The oligarch handed back the control over to the state. But here, we do not talk about money. One year after the court case Berezovsky vs Abramovich in 2012, in which Berezovsky claimed unsuccessfully he was owed money from the deals involving Sibneft and Russia, Berezovsky was found dead.
Those deals usually take time and certain amount of leverage needed to execute a deal like that. Handing over your business to someone else is usually because you have no interest anymore or the financial gains for a sell are too much to refuse. That was not the case with Sibneft and its acquisition by Rosneftegaz in 2005. Roman Abramovich was forced out of the old-fashioned oligarchy. He was entering the new era of ownership in which he had no control over. He was no longer the ventriloquist in the grand scheme of things, only a very good looking and extremely rich puppet that lost its influence in the underground world.
To make some sense of it all, Roman Abramovich got a deal with Russia that allowed him to start a new life as a 39-year-old multi-billionaire in exchange for his past. He was no longer the Casper the Friendly Ghost of the underground world. He had to come out in eye of the public, and that was expected, not every day someone has £10 billion sitting ready to invest in a legitimate business.
What better way to clear your dubious image at the time than taking a top-half club from London and turning it into a European superpower?
£2 billion pounds in the first 10 years, capturing every single trophy along the way, Roman Abramovich and his investment created one of the most recognisable brands in the world. Chelsea FC, currently valued at around £3 billion and reigning European and World Club Champions has never ever had owner that did so much for the club both on the pitch and off it. And nobody seemed to care about his connections to Putin for those 19 years.
But here comes another question. Why does not every owner spend so much money and buy their way into glory? Some owners have much bigger financial power than Abramovich but the financial injections into the Premier League clubs seem to come from selected places.
The reason behind that is the source of money. Owners like the Kroenke family at Arsenal, Fenway Sports Group at Liverpool, and the Glazer family at Manchester United are in the business for the long run. Their vision is more into the territory of sustainability achieved by initial investment (here the Manchester United fans can argue).
The idea behind the purchase of Chelsea was never achieving a sustainable football club in 10–15 years. The idea was always to create a character that holds his cards close to the chest. Larger than life figure with certain mystique around it. Name that speaks volumes louder than anything he will ever say. Roman Abramovich.
For years he spent money on the football club not because he liked to, not because he wanted to, but because he had to. He may really fell in love with the club at some point, but that was not a love from first sight. It was love because Roman Abramovich and Chelsea FC in 2003 needed love. And money. A lot of it.
And while the football tribalism will always push me towards not sympathizing with Chelsea fans for the years of disgusting inflation their club caused, my head tells me otherwise. Do we really believe that Chelsea is the only one? Do we really believe that your club, whoever that may be, is really run sustainably and absolutely 100% ethically?
I feel sorry for the fans of Manchester City and Newcastle United. They so desperately want their clubs to be successful that they are sitting in the darkness praying the next news cycle does not involve their football club and in particular the owners.
Unfortunately, those news cycles are coming their way. And even more unfortunately everything is connected. Chelsea FC, Manchester City FC, Newcastle United FC. Dirty money wrapped up in the glittering pursuit of Champions League glory. Simon Hughes got triggered by the “sporting integrity” and want Chelsea FC to “do us a favour.”
How about we all do each other a favour and think why a multibillion-pound business is on the “brink of extinction” with internal debt of over £1.7 billion and bank balance of only £20 million. Call it sportswashing, call it globalization, call it whatever you feel comfortable with but make no mistake, Chelsea FC should be only the start.
End of Part I.
Stay tuned for my next article describing the preparation for this moment by Roman Abramovich in the last couple of years, the connections between the Russian money and Saudi Arabia money in English football plus a little government talk. Part II coming soon.
