No sale process is ever 100% straightforward for any client. But Chelsea Football Club’s search for a legal adviser, amid the glare of public scrutiny over its former owner, the sanctioned Russian oligarch Roman Abramovich, proved trickier than most.
The club went up for sale on March 2, just over a week after Russia invaded Ukraine and the U.K. Government cracked down on Russian oligarchs with major U.K. investments. Abramovich, who had owned Chelsea for over 18 years, was sanctioned on March 10.
The club has reportedly had its bank accounts temporarily suspended and is unable to offer new contracts to staff or players, meaning a sale is urgent, as is the need for strong legal counsel.
But with many law firms having ditched sanctioned clients or those with deep ties to the Russian state in recent weeks as the legal industry reacts to the war in Ukraine, it was never going to be a simple process to find a willing adviser.
According a person involved in the process, once Chelsea instructed investment bank the Raine Group earlier in March to assist it on the sale, the bank approached a number of international law firms with the aim of finding an adviser for the club.
At what is a very difficult time for the club which is struggling to keep afloat and pay its staff, the urgency of sale is another motivating factor for the firms, aware of the clubs strong need for legal counsel.
Law firms initially sounded out included longtime adviser Skadden, Arps, Slate, Meagher & Flom, Pinsent Masons, Squire Patton Boggs and Simmons & Simmons, according to several people with knowledge of the process.
Other firms were also contacted, according to one person at one of the above firms.
Skadden ruled out any connection with the club at the start of March prior to any sanctions being introduced despite a very long standing client relationship.
Pinsent Masons also opted out to take part in the subsequent competitive process for the work, according to a person at the firm. The firm is currently advising a consortium comprising the Ricketts family, who own the Chicago Cubs and Citadel hedge fund billionaire Ken Griffin, along with DLA Piper.
DLA Piper is advising on U.S. tax and structuring matters whilst Pinsents is advising on “the sporting aspects – how to run and develop a club and have supporters at the heart of it”, according to someone with knowledge of the deal.
Pinsents has significant experience advising on matters involving football clubs. The firm counts Manchester United as a long-standing client, sitting on the club’s legal panel since 2008, and in 2020 it advised American investing consortium ALK Capital on its purchase of Northern England football club Burnley FC.
Several law firms went through to the “competitive process”, as described by one outfit involved. Squire Patton Boggs was unsuccessful in the process, with the mandates ultimately going to Simmons, sports specialist Northridge Law and EY. Taylor Wessing is also advising the Chelsea pitch owners, according to someone with knowledge of the situation.
EY declined to provide information on which aspect of the transaction it is handling.
Ahead of agreeing to advise on this matter, Simmons confirmed unequivocally that Roman Abramovich will have no involvement or financial benefit from its legal advice, according to someone with knowledge of the deal.
The implemented sanctions also mean Abramovich, the Russian state or any oligarch in the Russian economy cannot benefit from the sale, according to someone with insight into the situation. This has helped the firms feel comfortable about pitching for the work without worrying about reputational issues.
The advisers’ client is the club, rather than any third party owner, one person said.
Both Simmons and Northridge have also sought to offset any negativity surrounding their involvement by announcing that they will be “making donations from its fees from the matter to charities that deliver humanitarian aid to Ukraine” on Tuesday.
Bidders’ Advisers
The sale of one of the world’s most successful football clubs in modern times has caused a bidding frenzy among international investors keen to take on the Premier League outfit. The team currently holds the title for both the FIFA Club World Cup as well as Champions League.
The deadline to table a bid is April 11, according to wider reports, and those who have already had offers rejected or are still in the running have all sought advice of major law firms themselves.
Four bidders have been shortlisted to secure the club: a consortium including Jonathan Goldstein and Todd Bouhly, Chicago Cub owners the Ricketts family, another consortium including David Blitzer and Josh Harris and the fourth being U.S. private equity billionaire Stephen Pagliuca.
According to someone with knowledge of the situation, Weil Gotshal & Manges is advising David Blitzer and Josh Harris, whose fortune came from working for U.S. private equity firms Blackstone and Apollo Asset Management respectively, on their bid for the team.
Latham & Watkins has advised multiple bidders during the process. The firm is currently advising the consortium comprising Todd Boehly, Hansjorg Wyss and former City law firm leader Jonathan Goldstein who have made the shortlist. Latham also advised bidders The Saudi Media Group consortium led by Mohamed Alkhereiji, who are no longer in the running. It was reported the consortium found out their £2.7 billion bid did not make the shortlist on March 24.
Squire Patton Boggs advised British luxury property developer Nick Candy with his bid, who also did not make the final shortlist, it was first reported on 25 March.