Why Chelsea Are Facing A Points Deduction | Explained
A new report in The Guardian newspaper has shed yet more light on Roman Ambramovich's controversial business practices while Chairman of Chelsea. Alleged breaches of profitability and sustainability rules will trigger an investigation from the Premier League, but what is it that they're likely to be accused of, how much of an impact did this have, and what will the likely outcome be?
Transcript
00:00 Hello everybody, this is 442, I am Adam Cleary and just when it looked like Chelsea were
00:08 finally starting to turn a corner, oh dear.
00:12 Just to give you the cliff notes, enormous story in the Guardian today regarding financial
00:17 irregularities, what's going on here, under Roman Abramovich that could result in a potential
00:23 points deduction.
00:24 Now first off, it's actually important to state this isn't just like some random sting
00:27 being done by a newspaper on one football club, it's part of a far larger investigation
00:32 called Cyprus Confidential.
00:34 Some 3.6 million offshore company records have been uncovered by something called, I've
00:40 got it here, the International Consortium of Investigative Journalists and the Guardian
00:45 are one of the newspapers that have received some of this information and contained within
00:49 it is some stuff about Chelsea.
00:52 Specifically that their former owner Roman Abramovich, you remember him, may not just
00:56 have been conducting business in a way that flouted profitability and sustainability rules,
01:01 but did so in a way that just completely took the...
01:06 Alright, so just if you're a Chelsea fan, okay, here is the very top line as far as
01:12 you're concerned.
01:13 An investigation is now going to have to take place into Abramovich's stewardship of Chelsea
01:18 and if it turns out that the club have breached regulations in the way it looks like they
01:22 have in these papers, then they are more than likely facing a points deduction.
01:28 So small history lesson for the under 20s amongst you, Roman Abramovich, he bought Chelsea
01:32 in 2003 for 140 million pounds and then just threw the most insane amount of money you'd
01:41 ever seen in football at this club.
01:43 Like it's just worse and weirder has happened since, but at the time this was unprecedented,
01:47 you'd seen nothing like it.
01:49 Like they went overnight from having a transfer window where they went and got Emmanuel Petit
01:54 and William Gallas to one under Abramovich where they went and got Crespo and Varon and
02:00 Duff and McAlealy and Parker and Cole and Duff and Bridge and Kent Johnson and Mutu,
02:06 just all in the space of like two months.
02:08 It's just mind-blowing.
02:09 And of course he finally sold up and moved on last year when the whole Russian invasion
02:13 of Ukraine and that the UK government stopped putting all those sanctions on Russian businessmen
02:18 with ties to the country and that just meant his whole ownership, his stewardship of Chelsea
02:21 was no longer sustainable.
02:23 So he just packed up, he gave a deterred bowler by a guard and he left probably forever.
02:28 And in fairness, from the very moment he moved on, the club's finances became under investigation
02:33 because Boley and Co, they looked at the books when they took over and decided to inform
02:37 the Premier League entirely voluntarily that there was some incomplete financial information
02:43 in there.
02:44 They were saying that sometime between 2012 and 2019, so before they got there, honest,
02:49 some stuff was not being done correctly or not being done accurately.
02:52 So they gave that to the Premier League.
02:54 Now just to editorialise slightly, this is what's known as an aside, I saw that at the
02:59 time and I was like, why would you tell on yourself like that unless you know things
03:05 are so, so, so much worse?
03:07 So you're trying to get in early with good behaviour and be like, hey, we're not the
03:11 bad guys here.
03:12 We're as shocked as you are.
03:14 I think you'll find we're actually being very cooperative, your honour.
03:18 Anyway, though, that's all old news.
03:20 And this is new news or news as it's called.
03:24 What the Guardian are reporting here is that these Cyprus confidential files show a trail
03:29 of hidden payments that are directly linked to the club's footballing activities.
03:34 They involve transfers, they involve managers, stuff that had they not made these payments,
03:39 they likely wouldn't have enjoyed the success they did.
03:42 So case in point, in July 2017, a company called Conabar Holdings, who are based in
03:47 the tax haven of the British Virgin Islands, signed an agreement with Italian football
03:52 agent Federico Pastorello.
03:55 They paid him £10 million for a 75% stake in something called Excellence Investment
04:02 Fund.
04:03 It was just some like random US financial agency based out of like Denver or Delaware,
04:10 Dundee, Mifflin, one of the D's, they're not important.
04:13 What is important is that Conabar Holdings is owned by Roman Abramovich and this agent,
04:19 Pastorello, is known to have very close links to Chelsea's manager at the time, Antonio
04:24 Conte.
04:25 Well, what's wrong with that, you might ask?
04:27 Just two businesses doing a bit of business?
04:29 Well, on the exact same day, they paid him this £10 million.
04:33 Chelsea also announced that Conte had just signed a new £9.6 million a year contract.
04:41 And then of course, there is Eden Hazard, undoubtedly one of Chelsea's best players
04:45 ever, undoubtedly one of the most important players over the last couple of years, a player
04:49 without whom they would have been unlikely to have won half as much as they actually
04:54 did win, including that Premier League title that Conte got.
04:57 However, when he arrived at the club, it was reported that on top of the like £30-ish
05:01 million they paid Lille for him, his agent Jean-Bico Penake was due a significant agent
05:07 fee.
05:08 Reports at the time were that he got something like £5-6 million for his part in making
05:13 that deal happen.
05:14 But in March 2013, so sub-8 months after Hazard's arrival at the club, documents suggest that
05:19 another company based in the British Virgin Islands and owned by Abramovich, paid around
05:24 £6 million to a Dubai-based company called Gulf Value FZE.
05:29 Officially, this was for, and I've got it written down here, "Advisory Services Related
05:34 to Sport Research and Consultancy."
05:38 Mmmmmmmmm.
05:39 And that particular contract was signed for by anybody?
05:43 Anybody?
05:44 Do we think we can Hazard a guess?
05:48 It was, yeah, it was Jean-Bico Penake.
05:50 It was literally his agent.
05:51 Now as with literally everything in this story, that could be a perfectly legitimate bit of
05:56 business between two companies that has absolutely nothing to do with Chelsea.
06:01 It could be that this agent worked for several Dubai-based financial companies and they all
06:08 provide advisory services related to sport research and consultancy to loads of companies
06:15 like Leaston Holdings, who were an investment firm based in a tax haven.
06:21 I hear that there are loads of those who are positively frothing at the gash to get advisory
06:27 services related to sport.
06:30 Or it could be that they backchanneled the money required to pay Habitat agent through
06:33 two companies based in a tax haven so that A) they wouldn't have to declare it to the
06:36 UK government and therefore pay tax on it and also B) wouldn't have to declare it to
06:39 football's governing bodies, therefore circumventing profitability and sustainability rules in
06:42 the process.
06:43 I don't know.
06:44 I'm not a doctor.
06:45 But I mean, there's loads of other stuff in here as well.
06:48 Like there's some £7 million in payments to the Leimic brothers.
06:51 They're like known Abramovich associates.
06:53 They're very close Abramovich associates.
06:56 They were responsible or partly responsible for helping bring in like Robben, Ivanovic,
06:59 Matic, Carlo Ancelotti.
07:01 They've got loads of ties to the club.
07:03 There's money going to them.
07:04 There's just loads of stuff like that.
07:05 But why is any of this actually a problem?
07:08 Like football, financially speaking, is just the most transparently corrupt thing on the
07:12 planet.
07:13 Every major club, every club full stop is at it in some regard to try and see what they
07:17 can get away with.
07:18 What's different about Chelsea doing it?
07:20 Why are they being singled out here?
07:22 Well, because while football is just a yawning black hole void of morality when it comes
07:28 to money, there are still rules.
07:31 And when the big clubs break the big rules in a big way, there has to be a big reaction.
07:37 Otherwise, what's the point?
07:39 And this here is the quote in the Guardian report, which if I was a Chelsea fan would
07:43 have me slightly worried that this wasn't just going to be a little slap on the wrist
07:47 or just getting a major fine or some kind of just like transfer ban or something.
07:51 Why I genuinely think a points deduction is a reality.
07:55 Football finance expert Kieran Maguire, he literally wrote The Price of Football, which
07:59 is a book.
08:00 If you've not read it, you should absolutely read it.
08:01 Says that if there is proof that the club has used third party transactions to circumvent
08:08 the profitability and sustainability rules, then sanctions would either be financial or
08:14 a big points deduction.
08:15 The latter, so the points deduction is more likely as any commission investigating a club
08:21 circumstances will want to put out a deterrent that dissuades others from repeating such
08:27 behavior.
08:28 And that's the thing.
08:29 If there is proof of third party transactions, just to make sure this is a good explainer
08:34 and I'm doing my job, every single other company and individual I have mentioned in this video
08:41 is a third party.
08:43 Doesn't matter if they're owned by Roman Abramovich, that does not make them affiliated
08:48 with Chelsea FC.
08:49 They are an entirely separate business entity.
08:51 They have their own money and they are not allowed to spend that on footballing endeavors
08:57 that would benefit Chelsea.
08:59 That breaks the rules.
09:00 Now I, for very obvious reasons, cannot say whether or not I think that has taken place
09:06 or not.
09:07 There will be a big investigation now done either by UEFA or the Premier League or possibly
09:12 even both.
09:13 And they will establish whether any wrongdoing has occurred and they will decide what the
09:16 punishment should be accordingly.
09:18 What I can say is, if I was a Chelsea fan and done that many videos on them this season,
09:25 I might as well be, I would be quite worried about this.
09:29 It isn't set in stone by any stretch of the imagination.
09:32 And I imagine the comments will be full of like, well, what's happening with the Man
09:35 City investigation?
09:37 Why is that taking a million years?
09:39 Fair point, but ignoring all that, just this in isolation, I'd be concerned.
09:46 Like I have read this report, it is here, it is on the Guardian website if you want
09:49 to give it a read yourself.
09:50 It does not look good.
09:54 Like if this is all easily explainable and no wrongdoing has taken place, that would
09:58 simply be one of the most incredible stories of coincidence and unfortune that I have ever
10:04 seen.
10:05 Possible.
10:06 It is absolutely possible.
10:07 It's a weird old world, but oh, oh dear.
10:12 But if they do get that points deduction, when's that going to happen?
10:15 That's the big question.
10:16 Is it going to impact them this season when they're fighting a claw their way back in
10:19 Europe?
10:20 Almost certainly not.
10:22 Everton are still under investigation and are facing a points deduction.
10:26 Man City are under an enormous investigation and facing God knows what kind of sanctions.
10:31 These have all been rumbling on for over a season at this point.
10:35 If this is going to happen to Chelsea, I will be astonished if it happens this season.
10:39 I'll even be surprised if it happens next season.
10:42 The only thing I won't be surprised by is if it just happens because I've read it.
10:48 Anyway, though, this shouldn't detract in the short term from what's going on on the
10:51 pitch.
10:52 Chelsea have been really good lately.
10:53 We did a great video on them, but how they battled back against Man City time and time
10:56 again, how Pochettino's got them firing.
10:57 And I'm going to do another one later in this week about how he has managed to fix this
11:01 team when they looked crap at the start of the season.
11:05 So on the pitch, things are great.
11:06 If I was a Chelsea fan, I'd be concentrating on that.
11:09 But now.
11:10 But this is probably the biggest story in football today, at least.
11:13 So hopefully this video has helped you explain precisely what has happened, what is going
11:15 on and what is coming somewhere down the line.
11:18 So if you've enjoyed it, this is also the kind of thing we do.
11:20 It's not just me playing with little Subito figures and telling you what a box midfield
11:23 is.
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11:37 That's good enough for me.
11:38 In the meantime, though, sorry it wasn't bad news.
11:40 Chelsea fans go get me on Twitter.
11:42 I don't clearly see L E O Y X Instagram.
11:44 I think I'm on threads.
11:45 I can't remember anymore.
11:47 We'll talk about it more.
11:48 We'll turn those frowns upside down.
11:49 Get 442 on all the socials in the corner of the video.
11:52 Don't know why I even pointed out you've got eyes.
11:54 But until next time, I've been Adam Cleary.
11:56 This has been 442 and I will see you soon.
11:59 My Lord.
12:00 Did I say we'd record?
12:01 My Lord, Your Honour?
12:02 I don't know.
12:03 Goodbye.