Roman Abramovich's Unfortunate Year of Financial Struggles, Forced Asset Liquidations and Docked Luxury Yachts

Roman Abramovich was in his element as he mingled with guests at his lavish party. The billionaire businessman was surrounded by beautiful women and enjoying the luxurious setting of his private estate. It was clear that Abramovich was having a great time and relishing in his wealth and success.

Chelsea FC had just won the Club World Cup when the billionaire owner came onto the pitch to celebrate with the players and coach Thomas Tuchel. It was a momentous occasion for the team, and the owner's support meant a lot to them.

Since that balmy February evening in Abu Dhabi, things have not gone according to plan.

Just weeks after Russia invaded Ukraine, Abramovich was forced to put his prized London possessions up for sale. UK lawmakers, following decades of Russian investment and involvement in business, real estate and sports, set out to pressure those perceived as having ties to President Vladimir Putin. Abramovich, as one of the most high-profile individuals with ties to Putin, was caught in the crosshairs.

The billionaire's troubles continued in March, when he fell ill with suspected poisoning after taking part in peace talks between Ukraine and Russia. (It was unclear who was behind the attack or what type of poison might have been used, people familiar with the situation said at the time.) He was sanctioned by the European Union, and $6 billion in hedge fund investments made by US-based Concord Management were effectively frozen. Just this month, Canada said it intends to seize $26 million in assets from his Granite Capital Holdings to help fund Ukraine's reconstruction.

Abramovich's wealth has declined by more than 50% to $7.8 billion this year, and some of that is now illiquid, according to the Bloomberg Billionaires Index. He is unlikely to receive any proceeds from Chelsea's sale to US investors. In addition, his ability to travel the world by private jet or superyacht and purchase expensive properties is now restricted.

A representative for Abramovich was not available for comment.

He is one of the largest decliners among the approximately two dozen Russian billionaires tracked by Bloomberg. Some of these billionaires made their initial fortunes when Russia privatized state-run industries in the 1990s. In total, their net worth has declined by almost $95 billion this year, or more than $330 million a day since the Ukraine invasion.

The recent decline in the value of the Russian ruble has had a significant impact on the wealth of some of the country's wealthiest individuals. LetterOne founders Mikhail Fridman and Petr Aven, for example, have seen a significant portion of their wealth decline in value as a result of the ruble's decline. Beyond just the financial impact, the ruble's decline has also had a negative impact on the Russian economy more broadly.

According to Liana Semchuk, a Eurasia intelligence analyst at advisory firm Sibylline in London, the influence that Russian elites once had abroad is waning. She notes that their options regarding where to park their wealth have become increasingly more limited, as the haven that many European jurisdictions offered no longer exists in the same way. This ultimately means that their wealth is no longer so safe outside of Russia, where it has always largely been at the mercy of the Kremlin.

The nation's wealthiest people have seen their fortunes decline by nearly $95 billion this year.

The elite in Russia have been facing increasing pressure from Western nations and their allies, leading to declining fortunes for many of them.

However, the reality is more complicated. Some of the losses are smaller than those suffered this year by tech billionaires including Elon Musk or Mark Zuckerberg.

In 2022, Vladimir Potanin, Russia's richest person and the largest shareholder of mining giant MMC Norilsk Nickel PJSC, expanded his empire by acquiring Rosbank PJSC from Societe Generale SA.

Despite being sanctioned by the US earlier this month, Nornickel, the world's largest producer of refined nickel and palladium, has managed to keep its fortune relatively intact. This is due to the Treasury Department's decision not to place restrictions on the company in order to maintain stability in the metals market.

Potanin, worth $28.5 billion, did much better than Oleg Tinkov, who in April posted an expletive-filled message about Russia's "insane war" on his Instagram page.

Tinkov told the New York Times that after the post he was forced to sell his family's stake in Tinkoff Bank for just 3% of its real value. The buyer: Potanin's Interros Capital.

Although Tinkov said that criticizing the war caused him financial harm, it is unclear whether sanctions on billionaires are having an impact on Putin more than 10 months after the invasion.

Semchuk stated that the war has not weakened the state's control over the oligarchs. He believes that the West overestimates the oligarchs' influence over Putin.

Abramovich's life now revolves around the Gulf, Turkey, Moscow and Israel, where he holds citizenship. This year, he was reportedly house hunting in Dubai and Turkey, and his superyachts - the Solaris and Eclipse - are parked off the Turkish coast.

Although the sanctions have had a negative impact on the lifestyle and investment opportunities of Russia's billionaires, they remain incredibly wealthy. Fridman, who was worth about $14 billion before the war, told Bloomberg this year that he essentially had no cash.

According to David Lingelbach, professor of entrepreneurship at the University of Baltimore, Russia's super-rich are down but not out. Lingelbach believes that while the group has seen better days, they still have a lot of potential.