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UK sanctions on Russian billionaire Roman Abramovich could accelerate Chelsea FC sale

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Yahoo Finance's Josh Schafer breaks down how sanctions on Russian billionaire Roman Abramovich could impact one of the world's largest sports teams: Chelsea FC.

Video transcript

[MUSIC PLAYING]

JARED BLIKRE: Welcome back. The wagons are circling around Russian oligarchs. The UK just sanctioned Chelsea Football Club owner Roman Abramovich and raising doubts about how the billionaire might go about a sale of the franchise. Earlier, Abramovich had announced he intended to sell the club for, quote, "the fans, the employees, as well as the club's sponsors and partners." The measures will keep basic operations ongoing, but will sideline any player trades and even selling new tickets for future matches.

And here to talk about it all for us is Yahoo Finance's Josh Schafer. Josh, can you break this down for us? Because this could produce quite the fly in the ointment-- and we were talking about this over the break-- after they lost a tremendous amount of money by being closed through much of COVID here.

JOSH SCHAFER: Yeah, Jared. So I mean, it's a big club, I think is the first thing to highlight, right? It's one of the biggest clubs and biggest teams in the world. So Chelsea FC itself, Forbes has estimated it at about $3.2 billion. And when you look at what that's worth compared to some other clubs around the world, including ones in the US, the top of that list for Forbes is the Cowboys, the Yankees, the New York Knicks. Those clubs are all worth more than $5 billion. You have FC Barcelona coming in at just under $5 billion. So Chelsea FC is a top 25 most expensive team in the world.

And we're showing those sanctions on the screen now that you can see. Basically, they can't do basic business operations. Abramovich himself cannot sell the team as he planned. The team's store in England is closed right now. They can't sell merchandise. They can't sell new tickets. And they can't spend on new players. So really, what we're going to see here is if these sanctions continue for a longer period of time, it's going to start impacting how Chelsea can operate as a business and how successful they can be, which obviously drives their valuation.

I did just speak with a sports lawyer, Irwin Kishner, who's worked on merger and acquisitions with teams, including the New York Yankees. And he said the biggest thing to watch for here is how quickly the UK might move to sell Chelsea now. So the UK could sell Chelsea without giving any money to Abramovich.

And he thinks that that's where this is going to head. He said there's not a real deterrent right now for the open market to kind of devalue Chelsea. He thinks Chelsea still has the value, as long as the UK sells it soon. If these sanctions continue and they don't sell Chelsea soon, then that value might start to drop. So it seems like this might be the first domino in seeing one of the biggest teams in the world be sold even quicker, guys.

AKIKO FUJITA: In that case, Josh, who collects the money?

JOSH SCHAFER: Yeah, so--

AKIKO FUJITA: If the UK is able to sell Chelsea, but--

JOSH SCHAFER: Right.

AKIKO FUJITA: --Abramovich can't-- it's no longer his, right?

JOSH SCHAFER: Right, so the UK would create some sort of fund. It could be a fund similar to what Abramovich was talking about that would benefit victims of Ukraine, but instead of Abramovich, who's been linked to Russian Vladimir Putin being in charge of what he calls victims of Ukraine, it would be the UK determining who are victims of Ukraine, and might give that money to only Ukrainian victims, rather than just Russian victims. So we could see the UK kind of take control here, and then use that money to basically spread it out in some sort of fund. It would be interesting to watch for sure.

AKIKO FUJITA: Yeah, that is a fascinating twist, especially when you consider how many people would probably potentially line up to buy the--

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