Chelsea sale is ‘like a purse bid’ in boxing with bank holding auction of sealed bids, says lawyer

The sale of Chelsea Football Club could come down to an auction among interested parties, who will be asked submit sealed bids, according to a leading sports lawyer.

A deadline of Friday has been set for potential buyers to formally lodge their interest with New York Merchant Bank, the Raine Group

However, with Chelsea operating under a special licence after owner Roman Abramovich was sanctioned by the UK government last week, the sale is beset by complications and uncertainties, say lawyers.

The Government claims the Russian oligarch, who has owned Chelsea since 2003, received financial benefits from the Kremlin – including tax breaks for his companies, the buying and selling of shares from and to the state at favourable rates and contracts in the run up to the 2018 World Cup in Russia, it was claimed.

An expectation now is that bidders will have to follow a process similar to a purse bid in boxing.

Potential buyers would be asked to meet qualification criteria, which could include a minimum price, commitments to completing the process by a certain date or even more detailed conditions, like agreeing to a fan representative being involved in running the club under the new owners.

If the qualification criteria were met by more than one bidder, then the buyer can be initially selected on the basis of who has offered the most money.

‘It appears to be proceeding as a ‘purse bid’ process similar to that for a world title boxing event. With a deadline of 18th March for bids,’ said Stephen Taylor Heath, Head of Sports Law at JMW Solicitors.

‘In such a scenario the banking entity handling the sale, the Raine group, would literally hold an auction style process and announce the winning bidder. 

‘The bidders may have to place a deposit to show a genuine interest and access to funds. The bidders may be allowed to undertake an element of due diligence prior to making the bids on the 18th.’

‘The question is who evaluates those bids and on what criteria as it would not be Mr Abramovich as the seller which would be the normal scenario,’ added Taylor.

The UK has said the billionaire, who has owned Chelsea for 20 years, is ‘associated with a person who is or has been involved in destabilising Ukraine and undermining and threatening the territorial integrity, sovereignty and independence of Ukraine, namely Vladimir Putin’

In boxing, promoters are asked to submit two sealed envelopes in purse bids for Championship fights. The first one demonstrates they meet the World Boxing Organisation’s criteria, the second includes the money they are offering.

All of the bids are opened at the same time and competing parties have to put up 10 per cent of the overall pot to demonstrate they have funds.

It has been reported that the bids submitted at the end of the week will go to the Government for approval. While that may be the case, lawyers believe the Government will be desperate to avoid being seen to choose the next owner of Chelsea.

Therefore, ministers are expected to put in place a process based on objective criteria, which will take the focus away from them.

If they choose to, there are plenty of suggestions for what that criteria may include in former sports minister, Tracey Crouch’s review of football governance. The government is supportive of recommendations in the report and is expected to respond formally – and positively – the report next month.

Once a ‘preferred bidder’ has been selected they would then have to pass the Premier League’s owners’ and directors’ test and show they had the money to run the club, as well as obtain any Government approval.

In the days that followed Mr Abramovich’s sanctioning, sponsors have pulled the plug on their deals with Chelsea. The mobile phone company, Three, suspended its sponsorship of Chelsea last week but its logo remained on the players’ shirts when they beat Newcastle 1-0 on Saturday.

On Saturday, the Premier League disqualified Mr Abramovich from running Chelsea. And shirt-sleeve sponsor Hyundai, which was in the final year of a £50M deal, suspended ‘marketing and communications activities’ with the west London club following that decision.

However, Mr Taylor says there will still be a role for Mr Abramovich in the sale of Chelsea,

That is because the special licence issued by the Government to allow Chelsea to operate after the sanctioning of Mr Abramovich, as well as removing him as a director, does not end his ownership of the football club.

Chelsea are in turmoil and may struggle to finish the season after owner Roman Abramovich was sanctioned by the UK

Chelsea and Newcastle met at Stamford Bridge on Saturday, with the Blues winning 1-0

British property tycoon Nick Candy (left with his wife Holly Valance) though remains interested, while several bidders are preparing bids in excess of £2billion

‘This has also required dialogue with Mr Abramovich notwithstanding the sanctions to deal with such matters as the outstanding loans,’ added Taylor, who has worked in football and boxing.

‘In order for a sale to be effective there has to be passing of legal title to the new owners. Whilst the sanctions restricted Mr Abramovich dealings with the club it did not divest ownership and so as matters currently stand, he would still be the seller.

EXCLUSIVE: Chelsea fan and British tycoon Nick Candy confirms he is still interested in making a bid to takeover the Blues with the sanctioning of owner Roman Abramovich expected to quicken the sale process of the club 

British tycoon Nick Candy has confirmed that he is still interested in taking over Chelsea

British billionaire Nick Candy has confirmed he is still pursuing a bid for Chelsea, with the sanctioning of owner Roman Abramovich expected to quicken the sale process once the confusion created by the extraordinary events has been clarified.

The 49-year-old property developer is a Chelsea fan, who is planning to attend Sunday’s Premier League home match against Newcastle and has pledged to put supporters at the centre of his plans for the club that will be jointly-funded with American investors.

‘We are examining the details of the announcement and we are still interested in making a bid,’ a spokesperson for Candy told Sportsmail. ‘Clearly this is a time of great uncertainty for all Chelsea fans.’

Candy is in talks with several potential investors over a joint venture, with the fact that the sale now has to be officially approved by the government doing little to dampen interest. 

‘The government would have to authorise this under the sanctions and the Premier League given their regulatory role.

‘Presumably there would have to be assurances from Mr Abramovich and the Raine Group with regard to the flow of sale proceeds which normally go to the seller not the club or in an administration scenario to the creditors.’

The list of potential buyers for Chelsea is still taking shape.

LA Dodgers part-owner Todd Boehly remains well-placed for a purchase, with Chicago Cubs owner Tom Ricketts also understood to be in the running. 

Property tycoon and Chelsea fan, Nick Candy, attended Sunday’s match against Newcastle. There are also reportedly three American-led consortiums interested in buying the club.

Candy is offering to provide short-term funding to Chelsea if it faces a cash crisis, according to Sky Sports, and he has also proposed giving fans a seat on the board.

‘I’ve supported Chelsea since I was the age of four,’ Mr Candy told Sky Sports. ‘My dad was asked to play for Chelsea. I love Chelsea.

‘I don’t mind where it ends up, even if it’s not with me, as long as it’s in safe hands.

‘One hundred per cent [the fans need to be included in ownership] and they should be involved. Both on the board and economically.’

On Friday, Chelsea asked the Government to ease sanctions to save them from going bust in 17 days.

The Premier League club have now been handed a new licence to continue operations and the European champions are still locked in negotiations with the Government to ease restrictions.

Under the new agreement, Chelsea’s permitted spend of £500,000 increases to £900,000 on costs for home games, the BBC reported.

Costs of travel, allowable, remain at £20,000 per game, which prompted manager Thomas Tuchel to offer to drive the team to Lille himself if necessary, for the Blues second leg encounter in the UEFA Champions League Round of 16.

The Raine Group has assessed the terms of the licence, the PA news agency reported at the weekend, and agreed a route forward for the Chelsea sale with the Government.  

Technology minister Chris Philp told Times Radio on Friday that anyone who wants to buy the club can ‘approach the Government’.

He said: ‘No proposal would be accepted which saw the money, the proceeds of any sale, ending up in an unrestricted bank account owned by Abramovich. He can’t benefit from the proceeds of any sale.’

Money from the club’s sale could go instead to benefit Ukrainians and Russians, ministers think, through the Disasters Emergency Committee but not the charity the 55-year-old wanted to set up.