Chelsea's £150m Buffer Against FA Fines: What Does It Mean?
Football finance experts have revealed that Chelsea FC would be largely unaffected by a financial penalty from the Football Association (FA) due to a £150m buffer inserted into the takeover deal. The buffer, which is part of a "holdback amount" clause, was included in the £2.5bn sale price to new owners Clearlake.
The figure has been described as a "safety net" for potential financial penalties, including fines for alleged rule breaches during Roman Abramovich's tenure. However, experts believe that the size of the buffer could indicate that a sporting sanction, such as a points deduction or suspension from competition, is more likely than previously thought.
Stefan Borson, a football finance expert and lawyer, noted that the holdback amount would not only cover financial penalties but also consequential losses from any sporting sanctions. This means that Chelsea's new owners could potentially face limited impact from a fine, as they can recoup the majority of the cost through the sale proceeds.
Kieran Maguire, an associate professor in football finance at the University of Liverpool, said that the club would still have to pay the penalty, but the owners could theoretically put the extra £150m into the club without being worse off. The buffer has effectively been taken into consideration in the offer price for the club.
The FA's charges against Chelsea include 74 rule breaches related to payments to agents during Abramovich's era. The club has self-reported some transactions and highlighted that it expects to receive a financial penalty if found guilty. However, Fordstam Limited's accounts reveal that the new owners do not expect to receive £150m of the proceeds from the sale.
The large fees banked by executives and lawyers involved in the sale have also raised eyebrows. Eugene Tenenbaum, a longtime associate of Abramovich, received a £4.8m bonus for his role in the takeover, while BlueCo 22 covered the cost of £41.6m in legal fees incurred by Fordstam.
The UK government has stated that it is prepared to sue Abramovich to release the frozen funds, worth £2.35bn, which were pledged to people affected by the conflict in Ukraine. However, repayment of these funds could only be approved by a specific division of the Treasury.
Football finance experts have revealed that Chelsea FC would be largely unaffected by a financial penalty from the Football Association (FA) due to a £150m buffer inserted into the takeover deal. The buffer, which is part of a "holdback amount" clause, was included in the £2.5bn sale price to new owners Clearlake.
The figure has been described as a "safety net" for potential financial penalties, including fines for alleged rule breaches during Roman Abramovich's tenure. However, experts believe that the size of the buffer could indicate that a sporting sanction, such as a points deduction or suspension from competition, is more likely than previously thought.
Stefan Borson, a football finance expert and lawyer, noted that the holdback amount would not only cover financial penalties but also consequential losses from any sporting sanctions. This means that Chelsea's new owners could potentially face limited impact from a fine, as they can recoup the majority of the cost through the sale proceeds.
Kieran Maguire, an associate professor in football finance at the University of Liverpool, said that the club would still have to pay the penalty, but the owners could theoretically put the extra £150m into the club without being worse off. The buffer has effectively been taken into consideration in the offer price for the club.
The FA's charges against Chelsea include 74 rule breaches related to payments to agents during Abramovich's era. The club has self-reported some transactions and highlighted that it expects to receive a financial penalty if found guilty. However, Fordstam Limited's accounts reveal that the new owners do not expect to receive £150m of the proceeds from the sale.
The large fees banked by executives and lawyers involved in the sale have also raised eyebrows. Eugene Tenenbaum, a longtime associate of Abramovich, received a £4.8m bonus for his role in the takeover, while BlueCo 22 covered the cost of £41.6m in legal fees incurred by Fordstam.
The UK government has stated that it is prepared to sue Abramovich to release the frozen funds, worth £2.35bn, which were pledged to people affected by the conflict in Ukraine. However, repayment of these funds could only be approved by a specific division of the Treasury.