Chelsea’s shirt sponsor, the telecom brand, Three, has suspended its £40 million deal with the Blues after the UK Government sanctioned the club’s owner, Roman Abramovich.
Abramovich will be subject to an asset freeze and travel ban, under the terms of the sanction, which was announced by Prime minister Boris Johnson, on Thursday.
The news immediately threw Chelsea’s future – including the club’s extensive sponsorship arrangements – into doubt.
Last year, Chelsea made £154 million from commercial deals despite the coronavirus pandemic. In 2019, before Covid struck, the club earned £200 million in sponsorship.
Analysts are warning other sponsors could quickly follow Three, who will remove their logo from shirts until further notice, and review their involvement with the club, hoping to avoid ‘guilt by association’ with a Russian oligarch accused of making financial gain from his relationship with President Vladimir Putin.
Announcement of Three UK’s suspension arrives hours after the company announced packages to support Ukrainian refugees arriving into the UK, with pre-paid 30-day pay-as-you-go sim cards available to them.
‘In light of the government’s recently announced sanctions, we have requested Chelsea Football Club temporarily suspend our sponsorship of the club, including the removal of our brand from shirts and around the stadium until further notice,’ a spokesperson said.
‘We recognise that this decision will impact the many Chelsea fans who follow their team passionately. However, we feel that given the circumstances, and the Government sanction that is in place, it is the right thing to do.’
Brands worldwide have been desperate to distance themselves from Russia following Putin’s brutal invasion of Ukraine, which began two weeks ago today.
The situation in Ukraine deteriorates daily with Putin accused of war crimes after his forces have consistently bombed cities, hitting civilian targets, including a children’s hospital.
‘Three’ have been the first to blink within hours of Abramovich being sanctioned.
The company has admitted it is ‘reviewing the situation and are in discussions with Chelsea FC’, according to The Athletic.
Other leading brands, including, Nike, which has a £55 million kit deal with Chelsea, as well as car manufacturer, Hyundai, and the watchmaker, Hublot, which have deals worth over £15 million combined, will also have to weigh up their next move.
Not only has Chelsea’s owner now been sanctioned, but the club was heavily criticised after its supporters chanted Abramovich’s name during the minute’s applause for Ukraine ahead of the Premier League match against Burnley at Turf Moor on Saturday.
The Chelsea Supporter’s Trust has had to urge all Chelsea fans not to sing the name of owner Roman Abramovich during moments of solidarity with Ukraine.
‘Sanctions placed on Chelsea owner Roman Abramovich by the UK government casts a shadow over Chelsea’s many commercial agreements,’ said Conrad Wiacek, Head of Sport Analysis at GlobalData, a leading data and analytics company.
Chelsea is one of the assets that is now frozen, as a result of sanctioning Abramovich.
The Government said it will issue a special licence that allows fixtures to be fulfilled, staff to be paid and existing ticket holders to attend matches.
But while season ticket-holders can still attend matches, no more tickets can be sold, no transfer activity will be allowed and the club shop has been closed. And the club is limited to a £20,000 spend on away travel. The licence is in force until May 31.
Abramovich’s proposed £3 billion sale of the club, confirmed last week, is also on hold.
The sale can only progress if Abramovich is able to prove to the UK government that he will not personally benefit from the transaction.
‘While Chelsea has a sporting licence to continue trading as a soccer club, many brands will be wary of guilt by association,’ Wiacek said.
‘Chelsea FC is still one of the biggest clubs in the world and its on-field success still makes it an attractive commercial partner.
‘However, given the rate at which many brands are looking to dissociate themselves from the Russian state, some may be wary of continuing partnerships.
‘Nike’s deal with Chelsea runs until 2032, so the apparel brand may decide to wait the situation out until the club’s sale is able to continue.
‘However, brands such as Hyundai and Hublot, which have deals…expiring at the end of 2021/22 season, may not have that luxury.’
READ ALSO: UK seizes Chelsea FC over Abramovich ties with Putin
Abramovich has been described UK government as a ‘pro-Kremlin oligarch’. A government document published on Thursday claimed Abramovich has had a ‘close relationship for decades’ with the Russian premier.
‘This association has included obtaining a financial benefit or other material benefit from Putin and the Government of Russia,’ the Government said.
Abramovich has always denied a close relationship with Putin.
Sponsors could walk away from Chelsea under the terms of sponsors contracts, according to Kieran Maguire, the University of Liverpool football finance expert.
‘There will be a good behaviour clause in the contract,’ Maguire told Sportsmail.
‘If one of the parties is concerned that the conduct of the other party is inappropriate and they could suffer reputational damage off the back of it they would take legal advice and walk away from the contract.’
‘We have seen Manchester United not want to be associated with Aeroflot as did UEFA with Gazprom,’ added Maguire, who also hosts the Price of Football podcast.
‘We could now see a reversal where sponsors say we do not want to see reputational consequences.’
The Chelsea owner is one of seven oligarchs to be hit with fresh sanctions, The list also includes billionaires Igor Sechin and Oleg Deripaska, a one-time business partner of Abramovich.
Prime Minister Boris Johnson said ‘there can be no safe havens’ for those who have supported the invasion.
‘Today’s sanctions are the latest step in the UK’s unwavering support for the Ukrainian people.
‘We will be ruthless in pursuing those who enable the killing of civilians, destruction of hospitals and illegal occupation of sovereign allies,’ Mr Johnson said.
Chelsea’s status as a ‘significant cultural asset’ means it has been granted a special licence to continue playing, but its owner will be deprived of any profits.
The club has been banned from selling home and away tickets, with only fans who have already bought tickets – including 28,000 season ticket holders – still allowed to attend games.
There is also the prospect that Champions League games will be played effectively behind closed doors, as those tickets are often purchased separately from season tickets.
Chelsea play Norwich away tonight and Newcastle at home on Sunday.
Ministers sought to reassure the club it would not be ‘unnecessarily harmed’.
In a tweet, Culture Secretary Nadine Dorries said holding those who have ‘enabled the Putin regime to account’ was the priority.
‘I know this brings some uncertainty, but the government will work with the league and clubs to keep football being played while ensuring sanctions hit those intended,’ she wrote.
Abramovich took over Chelsea in 2003. Since then, his billions have funded the most successful period in Chelsea’s history, winning 21 trophies – including five Premier League titles and the Champions League twice. He is owed £1.5 billion by the club.
British billionaire Nick Candy was the latest high-profile business magnate to throw their hat into the ring for Chelsea’s sale, amid a host of suitors for the Champions League holders.
Swiss tycoon Hansjorg Wyss and American investor Todd Boehly were also in the running, with more than 10 credible parties understood to have been compiling bids.
MailOnline
