What the end of oligarchs’ money means for European football

EUROPEAN FOOTBALL clubs’ revenues have been battered in recent years. For those lucky teams with generous owners that would once not have mattered much. But the days of sugar daddies bailing out clubs seem numbered. One of the originators of this owner-as-benefactor model was Roman Abramovich, a Russian oligarch who owns Chelsea, an English club. After Russia invaded Ukraine in February, Mr Abramovich put Chelsea up for sale, lest it be seized as part of sanctions placed on him by the British government. But the government has banned the sale. It may soften its stance so long as Mr Abramovich does not profit from the disposal. It has also stopped the club from selling tickets and merchandise. For now, Chelsea’s future is uncertain. But Mr Abramovich’s departure would have wider implications. What might the end of oligarch finance mean for European football?

Mr Abramovich’s purchase of Chelsea in 2003 boosted the game in Europe. Prior to his arrival, revenue from three main sources—broadcasting rights, match-day sales and commercial deals—was already rising steeply. Mr Abramovich added a fourth, through soft loans of around £1.5bn ($2bn) from his personal fortune. This enabled a spending spree that delivered 21 trophies, including two victories in the leading European club competition, the Champions’ League. It also encouraged others to spend aggressively to compete. This “short-termist culture of the sport…is one of the reasons why football has not operated according to the highest standards of governance,” says Simon Chadwick of EMLYON Business School.

A host of clubs, from Portsmouth to Barcelona, have spent beyond their means over the past two decades. Chelsea’s model was soon copied. Manchester City was bought by Sheikh Mansour, a member of Abu Dhabi’s ruling family in 2008; Paris St Germain (PSG) was snapped up by a branch of Qatar’s sovereign-wealth fund, controlled by its royal family, in 2011. Both set about pouring money into their clubs. Much of this additional cash ended up in players’ pockets through high salaries and in even more stratospheric transfer fees. In 2017 PSG spent a world-record €222m ($263m) to buy a Brazilian forward, Neymar, from Barcelona.

Neymar’s transfer will probably not be surpassed for some time. The value of broadcasting rights is no longer growing. German clubs receive less than they used to; in France, the collapse in 2020 of the broadcaster that held the rights to the domestic league resulted in Amazon’s stepping in with a cut-price offer. Even the English Premier League, widely considered the most glamorous and competitive in the world, failed to secure more money from broadcasters when it agreed a new domestic-rights deal in 2021. As for other revenue sources, match-day sales flatlined amid covid-19 lockdowns. Even with fans back in the stands, ticket sales represent a small fraction of clubs’ total income. And sponsors have tightened their belts too. The speed with which clubs have jumped to exploit the fashion for cryptocurrency assets, occasionally without doing due diligence, reflects the scarcity of big commercial deals.

This squeeze comes amid greater scrutiny of who owns and funds football clubs. When another English club, Newcastle United, was bought by Saudi Arabia’s public-investment fund in 2021, fans of football and human-rights advocates both protested. Now that Mr Abramovich has been forced to give up Chelsea, clubs have good reason to become more cautious about backers linked to dodgy regimes. By the same token, for potential owners, clubs are no longer safe places to store their wealth.

European teams are increasingly turning to American private-equity funds. Since the pandemic began, such firms have bought controlling stakes in Burnley in England; AS Roma, Parma Calcio and Venezia in Italy; and Toulouse in France. They see European clubs as undervalued when compared with American sports teams and believe there is money to be made by running them more professionally. That suggests, however, that they will control costs more tightly than owners such as Mr Abramovich.

Another consequence could be a renewed push to reform the football calendar. The owner-financed clubs were the least committed to the ill-fated European Super League, a plan to squeeze more money out of the game by giving big clubs more opportunities to play each other. It mattered far less to teams such as Chelsea and Manchester City because they already had plenty of money. Others without such generous owners, such as Barcelona, Real Madrid and Juventus, are still keen on the idea. In a bid to placate them, UEFA, the European governing body, has plans to expand the Champions League.

As for Chelsea, its fate depends on the identity of its new owner. Potential buyers reportedly include the Ricketts family, who own the Chicago Cubs baseball team, and a consortium led by Sir Martin Broughton, a British businessman. It would be remarkable if Chelsea were to find owners with pockets as deep as Mr Abramovich’s. Instead, its new owners are more likely to seek to reduce its persistent losses, which have averaged around £75m a year since 2003. The days of lavish spending, it seems, are over.

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