Billionaire oligarch Roman Abramovich's sale of Chelsea FC is one of the most complex deals in modern sports history. 2 soccer finance experts broke down how it will play out.

• Chelsea FC was put up for sale by Roman Abramovich following Russia's invasion of Ukraine.
• Sanctions placed upon the Russian oligarch, however, have made the sale incredibly complex.

When Russia President Vladimir Putin launched an invasion of Ukraine in late February, the world of sport was by no means shielded from its earth-shaking consequences.

The Russian Grand Prix was canceled indefinitely, the Champions League final moved from St. Petersburg to Paris, and Russian and Belarusian athletes were banned from competing at the Winter Paralympic Games.

The biggest ripple, however, came at Premier League soccer club Chelsea FC, which was put up for sale by its billionaire Russian oligarch owner Roman Abramovich.

"I believe this is in the best interest of the Club, the fans, the employees, as well as the Club's sponsors and partners," said Abramovich, the former governor of Russia's Chukotka province and a Putin ally, announcing the sale.

Just days after the announcement, Swiss billionaire Hansjörg Wyss revealed he had been approached to buy Chelsea, which is valued at around $3 billion, claiming that Abramovich wanted to sell up fast to avoid any potential financial sanctions.

"Like all other oligarchs, he is also panicking," said Wyss. "He also wants to get rid of Chelsea quickly."

But any chance of Abramovich offloading Chelsea quickly was put to bed on March 10 when the UK government announced that the 55-year-old's assets had been frozen and that he had been barred from making transactions with UK citizens and businesses.

The government later said that despite the sanctions it remained open to Abramovich selling Chelsea so long as he does not profit from the deal and a suitable buyer can be found.

With sanctions in play and Abramovich basically frozen out of the deal, the proposed sale of Chelsea has become the most complex transactions in modern sports history.

"It's a bit of a crazy situation," Stephen Taylor Heath, head of Sports Law at UK top 100 law firm JMW Solicitors, told Insider this week.

Selling a club owned by a sanctioned oligarch doesn't follow the usual procedure

In the normal sale of a soccer club, the owner is a separate legal entity to the club and is generally in control of agreeing terms with any potential buyer.

Because of the sanctions placed upon him, Abramovich cannot do that and his role in the sale will be dramatically reduced.

"The club wouldn't usually play a part in the sale other than to assist in providing information to the buyer so they know what they are buying," said Taylor Heath. "But because Abramovich is sanctioned, and the position on those sanctions is that he can't sell the club, the interested parties can't negotiate with him.

"Abramovich will be playing a part in that he is answering questions for the bank handling the sale. For example, he has about £1.5 billion ($2 billion) in outstanding loans with the club which he has already publicly said he was willing to write off.

"He has to cooperate in relation to that, because he has to write those loans off in relation to the sale, so there would have to be dialogue there."

The second, and most important, complicating factor in the sale is striking an agreement on where the proceeds will go.

Abramovich said upon announcing he was selling Chelsea that the money will go to a "charitable foundation" set up by his team that "will be for the benefit of all victims of the war in Ukraine."

This has yet to be confirmed and would have to be agreed on by the UK government, which needs to grant a special license for the sale to go ahead.

"If license is given for the sale, the government will want clear with the Raine Group, the bank which is handling the sale, where the sale proceeds go. This will presumably require some assurances from Abramovich."

Kieran Maguire, a soccer finance expert and author of The Price of Football, told Insider that the money could be put in escrow — a legal arrangement in which a third party would temporarily hold the money until it is agreed where it would finally go.

"At present no sale can take place as money would go to Abramovich, but the government could sign a contract to put sale proceeds into escrow which could then be distributed towards charitable causes if Abramovich signs off on it," Maguire said.

A third complication is who decides which bid for the club will win. Chelsea has set a deadline for Friday for offers to be submitted, with Wyss and British property magnate Nick Candy among those expected to bid.

With Abramovich unable to decide who the winning bidder will be, it is unclear right now who will make the choice, though it is expected to be a decision made between the government and the Premier League — both of which have potential conflicts of interests.

Prospective buyer Nick Candy, for example, was among a number of property developers to donate a combined £11 million ($14.4 million) to Boris Johnson's conservative party between July 2019 and June 2020, according to Open Democracy.

"The government will try to keep at arms length in terms of approving the new owner, otherwise it could be considered to be a shadow director or owner itself and it would cause headache for the Premier League," said Maguire.

Taylor Heath said: "The Premier League is in the same position. The Premier League is the regulatory body of the Premier League clubs. They shouldn't really be having subjective input as to who buys Chelsea.

"The other teams could argue that selection of the new owners of Chelsea will have an impact on them because they're competing with that club in the Premier League."

Next steps

For all its complications, the sale of Chelsea isn't impossible — it will just follow a different route from the regular sale of a soccer club.

Selecting the winning bidder is first.

Taylor Heath says because "nobody wants to be seen to be the entity that chooses who becomes the owner of Chelsea" that a list of objective criteria — such as the proposed destination of the proceeds — will have to be drawn up to help decide the winner.

Next up, any proposed buyer needs to pass the Premier League's Owners and Directors Test, which outlines factors that can prohibit an individual from becoming an owner or director of a club.

These include criminal convictions for a wide range of offenses, previous cases of insolvency, and holding shares or interests in other clubs.

The test also sets out to ensure a buyer has the funds to allow the club to continue to operate in its current state for the forseeable the future.

"The Premier League's criteria for a successful bid is that the buyer can meet the club's current financial obligations, which includes the rates of the players," said Taylor Heath.

After passing the Owners and Directors Test, a deposit would then be paid and the government and Abramovich would have to agree and sign off on the destination of the funds.

From here, should all the previous boxes be ticked, Maguire says it's smooth sailing, almost.

"Provided there is proof of funds then it's a standard M&A contract [a mutually binding contract between parties in a merger or acquisition] in terms of the sale," he said.

"Apart from government scrutiny of how the payment is made to ensure does not end up in pockets of Roman Abramovich."

"It's complicated," said Taylor Heath. "It's complicated."