‘The impact will be huge’: sponsors review Chelsea FC deals after Abramovich sanctions
Telecom brand Three has suspended its £40m-a-year sponsorship deal with Chelsea FC after the club was hit by sanctions against owner Roman Abramovich. Hyundai has also hit pause on its contract with the team. Sports sponsorship experts have said the financial fall-out from the sanctions will be acutely felt.
A spotlight was put on Chelsea following Russia’s invasion of Ukraine, which drew questions on Abramovich’s links to president Vladimir Putin.
Last week, as pressure mounted on the UK government to impose sanctions on Russian ogliarchs, Abramovich announced plans to sell Chelsea after almost 20 years of ownership.
A spotlight was put on Chelsea following Russia’s invasion of Ukraine / Chelsea FC website.
However, before that estimated £3bn deal could be done Abramovich today (March 10) had his assets frozen.
For Chelsea FC, this means it can no longer sell tickets to upcoming matches and the club’s merchandise shop will be closed.
The government has issued a special licence that allows fixtures to be fulfilled, staff to be paid and existing ticket holders, including those with a season ticket, to attend matches.
Three struck the £120m sponsorship deal in January 2020, which saw it become official shirt, mobile and connectivity partner. Its logo is currently emblazoned on all kits and all teams, including the women’s, juniors and even on esports games.
A Three spokesperson said: “In light of the government’s recently announced sanctions, we have requested Chelsea Football Club temporarily suspend our sponsorship of the club, including the removal of our brand from shirts and around the stadium until further notice.
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“We recognise that this decision will impact the many Chelsea fans who follow their team passionately. However, we feel that given the circumstances, and the Government sanction that is in place, it is the right thing to do.
“As a mobile network, the best way we can support the people of Ukraine is to ensure refugees arriving in the UK from the conflict and customers currently in Ukraine can stay connected to the people who matter to them. Therefore, we are offering connectivity packages to all Ukrainians arriving in the UK, and those in Ukraine.”
Fellow headline sponsor Nike has pumped £60m a year since 2016 into its shirt sponsorship deal. Training kit sponsor Trivago has only been in partnership with the club since last year. Both have remained silent on their position with the club moving forward.
Hyundai became the club's global automotive sponsor in a five-year deal struck 2018. It said it was reviewing its association shortly after the sanctions were announced before later suspending all marketing and communication activities with the club.
The Drum has also contacted sponsors including Unilever-owned Sure, MSC Cruises and Cadbury on whether they will continue to back the club. They had not returned our comment requests at the time of writing.
However, industry experts predict they will likely all suspend their deals with the club.
Tim Crow is founder of Crow Business Services and advises on sports marketing and rights deals. He says: “If [sponsors] are being well advised they would have been thinking about this [since the Ukraine invasion]. And if they were well advised when signing contracts they will have the right to cancel or suspend.
“My gut feeling is that you’ll see a lot of suspensions pending the sale and the situation in Ukraine. I don’t think anybody really can do nothing now. If you do nothing you risk being on the wrong side of history and not being aligned with the government. Doing nothing isn’t an option.”
Crow adds that sponsorship revenue is a relatively small part of the club’s P&L. The vast amount of its income comes from broadcast deals via the Premier League.
The government has said Chelsea matches can still be shown live and the club is allowed to receive its share of its current Premier League broadcast deal. However, club officials are due to meet government officials later today to clarify its position.
Regardless, Crow says “the financial impact of the sanctioning will be huge.”
“Chelsea is unbelievably reliant on Abramovich, and as a result this is an absolute hammer blow to its finances. What you’re going to see now is the ramifications play out. Obviously the biggest issue is to what extent the club can carry on operating. The government is keen that it can – the sanctions are aimied at Abramovich but allowing Chelsea to carry on operating.”