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. Last Updated: 07/27/2016

Chelsea Joins the Sibneft Stable

ChelseaRoman Abramovich visiting Chelsea's Stamford Bridge stadium on Wednesday after announcing the $233 million deal to buy the club from its owner of 21 years, Ken Bates.
Roman Abramovich announced Wednesday that he is buying the Chelsea soccer club for $233 million, sending shock waves through the soccer world. British fans and reporters scrambled for information about the publicity-shy billionaire.

Abramovich, Russia's second richest man with an estimated fortune of $5.7 billion, struck the deal with Chelsea owner Ken Bates late Tuesday. Under the agreement, a newly created British firm wholly owned by Abramovich will pay ?60 million ($100 million) in cash for a 50.09 percent stake in the club's parent company, Chelsea Village PLC, and assume its debt of ?80 million.

"We are delighted to agree on this deal to acquire what is already one of the top clubs in Europe," Abramovich said in a statement. "We have the resources and ambition to achieve even more given the huge potential of this great club."

The purchase will be financed out of the personal fortune Abramovich has built in oil and aluminum.

"In today's highly competitive football market, the club will benefit from a new owner with deeper pockets to move Chelsea to the next level," said Bates, who has owned the club for 21 years. "I look forward to working with Roman Abramovich to achieve even greater things."

Abramovich, however, does not plan to personally run the club. He will be represented on the Chelsea board by Sibneft CEO Eugene Shvidler, Sibneft CFO Richard Creitzman and Millhouse Capital head Eugene Tenenbaum, a source close to Sibneft said Wednesday.

Abramovich, 36, is a large shareholder in the Sibneft oil major, while Millhouse Capital is his London-based asset management company. He also is the governor of the Chukotka region.

The London Stock Exchange on Wednesday opened an investigation into the Chelsea sale after a sharp jump in the pre-takeover share price of Chelsea Village. Exchange sources said the company's shares surged from 14 pence in April to 30 pence by the end of June, Agence France Presse reported. Abramovich's offer values the company at 35 pence per share.

News of the deal came as a shock to even the most vigilant of fans. John Russell, the head of Chelsea's main fan club, said there had been no speculation about the deal before it was signed.

"The main problem is that no one knows who Abramovich is. No one has even seen a photo of him yet," Russell said by telephone.

For some, the acquisition was a cause for outright alarm. Former British Sports Minister Tony Banks said Abramovich would have to answer questions about his intentions for the club and his previous business relationship with Boris Berezovsky, who once owned Sibneft and is being sought by Moscow on fraud charges. "We have got to ask questions about whether he is a fit and proper person to own the club," Banks, a Chelsea fan for 50 years, said in a telephone interview. "Is it a mere plaything for a billionaire or has he serious intentions?"

Others also expressed skepticism. "He's clearly got more money than sense," a Manchester-based lawyer said. "Chelsea Village is making huge losses, so how he's going to turn that around is anyone's guess."

Russian soccer officials lamented that he was not putting the money into soccer at home. The investment into Chelsea is close to the 2003 budget of all Russian Premier League clubs. "I can only think about how many soccer pitches we could build for that much money," said Vladimir Radionov, general secretary of the Russian Football Union.

But one Chelsea fan who also recognized Abramovich's name said he was thrilled. "I'm quite pleased really," said Gary Tebbutt, operations manager at Renaissance Capital's London office.

Tebbutt said Abramovich could help Chelsea get to the top of the English Premier League, providing he does not go on a shopping spree for expensive players and buys "a few quality ones to fill key positions."

Chelsea lost one of its biggest stars, Gianfranco Zola, on Wednesday when he decided to move to Italian Serie B club Cagliari despite a better offer amid the Abramovich buyout.

"We tried hard to find a solution, and when the new investors came in it was the very first issue on the agenda," Chelsea chief executive Trevor Birch said on the club's official web site. "As a result of additional resources being made available, we were able to offer terms which satisfied him," he said. "But being the man he is he felt that having given his word to his home island club he would have to leave us and join them."

Speculation swirled Wednesday around what might have prompted Abramovich to make the purchase.

"Maybe he can help Chelsea like he helped Chukhotka," said an official at a rival Russian oil major. As governor, Abramovich has won the praise of local residents by putting his own money into building schools and sending hundreds of local children to the Black Sea.

Stephen O'Sullivan, co-head of research at United Financial Group, said the motive might be as simple as Abramovich's interest in sports.

Abramovich owns the Omsk Avangard hockey team. Speculation has surfaced in recent months that he is buying out the CSKA soccer club. One source close to Abramovich said Wednesday that he already controls the club, but Sibneft spokesman John Mann denied this.

Owning more than 50 percent in both Chelsea and CSKA would pose a headache, because UEFA rules say only one team would have the right to participate in the same European competition. Both CSKA and Chelsea will take part in the Champions League this year.

O'Sullivan said the buy could have been an ego booster. "Things like football clubs are also trophy assets for rich businessmen," he said, adding that Abramovich's interests differ little from those of Harrods owner Mohamed Al Fayed, who owns the Fulham club.

Chelsea's stadium is located in one of the most fashionable parts of London, and the club has attracted the rich and famous for decades, even though it has won the English championship only once, in 1955.

Officials at Abramovich-owned companies said their offices were flooded with calls Wednesday from perplexed British reporters.

Natasha Chouvaeva, the publisher and editor of the Russian London Courier, also received scores of calls from fellow reporters.

"Everyone was asking 'Who is Putin?' last week, and this week everyone is asking 'Who is Abramovich?'" she said. "The standards have slipped."