Chelsea Owner Narrowly Escapes Financial Ruin

Roman Abramovich, one of the world’s richest private citizens and owner of London’s Chelsea Football Club (not to mention a handful of other sporting organizations) is typically portrayed as a shrewd business investor who dumps money into Chelsea to help him pass his time. Everyone knows he got his money from selling his post-Soviet oil empire — Sibneft oil — to Russian state-owned Gazprom for a whopping $13 billion. What few know, however, is how close he would be to bankruptcy or, worse yet, jail for failing to cooperate with a psuedo-authoritarian state if he hadn’t sold when he did.

Roman Abramovich Daria Zhukova

(The advantage of selling at the right time: Landing this woman)

It’s a shocking revelation considering the fact that Abramovich single-handedly changed the face of the world’s richest sports league, the English Premier League. By dumping hundreds of millions of dollars into the Chicago Cubs of the EPL, Abramovich turned Chelsea into a household name, and set the stage for other oligarchical investors — Sheik Mansour at Manchester City, before all others — to snap up soccer teams before they got even more expensive. It’s now clear that getting Chelsea when he did is a credit to former Prime Minister Vladimir Putin as it is to Abramovich himself.

According to an article in THE NEW YORK TIMES, Abramovich sold his entire business just before many of the state owned companies began to hemorrhage cash in the long recession that has left some people more than $40 billion short of where they stood a decade ago. In fact, the question isn’t whether or not Abramovich was wise to sell when he did — clearly, he sold at the apex of Sibneft’s value.

The question is whether he sold then because Putin forced him to, or because Abramovich saw the writing on the wall before his colleagues did. Failing to do so would have been crushing to Abramovich’s fortune, and it might have put him at odds with Putin, a move that easily could have turned Putin against him. Failing to sell to Gazprom could have been determined to be anti-Russian, since it’s a state-run organization, and that easily could have been spun to make Abramovich an anti-nationalist pantomime villain, landing him in a Siberian prison. If he hadn’t, Putin might have found a bogus reason like unpaid taxes, the justification for dismantling the Yukos oil conglomerate, for breaking apart Sibneft and taking down Abramovich.

Whether forced by Putin or his own recognizance, selling Sibneft allowed Abramovich to sink the money he would have lost to a Russian recession into a prominent soccer team, an ability that isn’t lost on English society, which has been transformed by Chelsea’s rise. Because he’s universally recognized as the owner of a global soccer brand, he’s essentially invincible to further Russian prosecution. That’s helped insulate his wealth, allowing him to make Chelsea even stronger. It’s a cycle of economic strength that, even in a recession, ensures that Abramovich will have some leveraged assets that kept him immensely wealthy.

That’s a long ways off from a Siberian gulag after refusing to sell out to a state-owned corporation, don’t you think?