When Chelsea were taken over in 2003 by Russian billionaire, Roman Abramovich, people had no idea who he was. He was a young and media shy entrepreneur who made his fortune in the oil and gas industry. As of 2018, Abramovich’s net worth is $11.6 billion according to Forbes.
In an interview with the BBC, he claimed the reason he bought the London club was because he was bored and needed a new challenge. Israeli football agent, Pini Zahavi, offered him a number of clubs he could take over which included Man United and Portsmouth FC. He ultimately opted for Chelsea because he had already made London his second home and would fit in with all the wealthy Russians living there.
Chelsea at the time were suffering financial difficulties. Ken Bates had dragged the club into the modern world after purchasing it for £1 in the early 1980’s. But by 2003 the club had a huge amount of debt and was struggling to meet a £23 million interest payment. Enter Abramovich, who according to Chelsea CEO Trevor Birch – concluded the deal in just 15 minutes.
Abramovich came from humble beginnings. He was born in 1966 in Saratov, on the Volga river, into a Jewish family. But would be brought up an orphan at 5 by an uncle and then later his grandmother in Moscow. He studied highway engineering and entered the army for his national service. When he came out in 1986 the world was changing, Mikhail Gorbachev was now trying to reform the Soviet state, introducing the concepts of glasnost (openness) and perestroika (economic and political restructuring).
Abramovich seized the opportunity and started a series of businesses, some successful, some not. One involved trading in toys, especially rubber ducks out of an apartment he shared with his first wife in Moscow. It brought him a handsome income compared with others in the Soviet Union. The collapse of the Soviet Union presented ambitious men with greater, more controversial opportunities. The exact nature of Abramovich’s early
fortune is unclear, but what is known is that he soon moved into trading in oil, arguably Russia’s greatest natural asset. In the chaotic, post-communist years, that industry was fraught with danger but the rewards for those that navigated it were huge.
By 1993 Abramovich was considered of sufficient interest and wealth to be invited to a meeting on a yacht in the Caribbean featuring some of the leading businessman to profit from the post-Soviet era. There he met Boris Berezovsky, a mathematical genius who had
made a fortune in trading in Soviet made cars. The two became partners and agreed on that fateful day to try and rationalize the oil industry through vertical integration, essentially grouping different companies involved in extracting and refining oil, under one umbrella company which they would control. This was realized thanks to the infamous loans-for-shares program.
Boris Yeltsin was elected Russia’s first post communist president, in part for his role in ending a coup in 1991. He embarked on a series of painful free-market reforms. By 1996 his reelection campaign, up against the communist Gennady Zyuganov, was in the
balance. He needed money and good press, so he struck a deal with Russia’s newly
enriched oligarchs. They would ensure his election and in return would be given first dibs on the privatization of state assets. With the Yeltsin’s campaign coffers swelled, and wall-to-wall positive coverage in media controlled by his oligarchs, Yeltsin won the election. Subsequently, Russia’s most valuable state assets were sold at a fraction of the market price.
After Yeltsin’s re-election, Berezovsky and Abramovich bought Sibneft for $100 million. It’s believed it’s true worth was close to $3 billion. It made them billionaires at a time when most Russian citizens were struggling to put food on the table. Under Yeltsin, the oligarchs wielded extraordinary power and became despised in Russia for their greed and exploitation. But by the end of the 1990’s Yeltsin was ill and struggling with alcohol addiction. He was forced to step down at a time when he was deeply unpopular, largely thanks to the 1998 financial crisis when the ruble collapsed. Enter Vladimir Putin, a former KGB man who had built a power base in his native St Petersburg and was Yeltsin’s chosen replacement.
Berezovsky, as well as other Yeltson oligarchs like Mikhail Khodorkovsky – who bought Yukos oil and was Russia’s richest man, had their own ambitions for power or reform and didn’t see Putin as much of a threat. Seeing the writing on the wall, Abramovich quickly aligned himself with Putin, who had promised that he would smash the oligarchs and bring their wealth back under state control. One by one, their fortunes were taken, their assets seized by the state and the oligarchs jailed, usually on tax charges. In 2003 Khodorkovsky was arrested for tax evasion and fraud, among other charges. But not Abramovich.
Putin demanded absolute loyalty if they were to keep their fortunes, including abandoning any thoughts of political power. Part of that, according to defectors and several investigations, involved paying a form of tribute. Abramovich and others allegedly contributed millions of dollars to projects close to Putin, like investing in a Black Sea palace that has been dubbed “Putin’s Palace” and to buy a state-of-the-art yacht for Putin called “Olympia.” Abramovich has always denied this. When the BBC’s Panorama made the allegations again in 2016, his lawyers dismissed them as a “rehash of speculation and rumor.”
One man who did talk was Boris Berezovsky, who openly said he refused to contribute, thus starting a split between him Abramovich and Putin that would eventually lead to Berezovsky’s exile in London. Many of those details came from the single biggest civil litigation in British legal history, the 2012 Berezovsky vs Abramovich case, which made bear the lengths both men had gone to, to keep their fortunes. Berezovsky alleged that Abramovich on the orders of Putin, had conspired to take away his fortune and his ORT television station, which had been especially critical of Putin. Abramovich vehemently denied this. In the end, Berezovsky’s claim for billions of dollars from Abramovich failed, the judge finding that Berezovsky was an unreliable witness.
The case had laid bare how business was done, and fortunes were kept. Masha Gessen, an experienced Russian journalist who covered the trial for Vanity Fair, wrote: “In defending himself Abramovich made an important admission, being an opposition to Putin was dangerous to business and the people who ran them and had been since the earliest days of Putin’s rule.” A year later, Berezovsky was dead, by what appeared to be suicide but the coroner’s court left an “open” verdict. Abramovich has been a key Putin ally, he sold Sibneft in 2005 to Gazprom for $13.1 billion, making him one of the richest men in the world. He was the governor for the remote province of Chukotka until 2008 and was a key figure in Russia’s successful 2010 bid to host the 2018 World Cup Finals.
It is for his investment in Chelsea that he is best known around the globe. His carefree attitude to spending including £2 billion in his first ten years, has transformed the game, terrifying other top clubs who could not compete. Being a millionaire was no longer enough. Only a member of the billionaire’s Club could compete. Under his watch, Chelsea has been transformed into one of the biggest clubs in the world. Since 2003, no English club has won more silverware, the 2012 Champions League being the icing on the cake. Forbes estimates that Chelsea is now the seventh most valuable club in the world, above Juventus, AC Milan and Liverpool.
And next, they will move into a state-of-the-art, rebuilt stadium on the site of Stamford Bridge, cementing his legacy and adulation amongst Chelsea’s fans. Abramovich’s reasons for buying Chelsea remain opaque, given his secretive nature and given the publicity that buying a Premier League club was bound to get him. Given that Abramovich has kept his fortune, whilst many of Yeltsin’s oligarchs have lost theirs, buying Chelsea perhaps made sense. Football gave him a non-threatening international profile, and perhaps even insurance against it all being taken away.