The news fell on the Chelsea website last Saturday at 5:00 p.m. Los Angeles time: an agreement to sell Roman Abramovich’s club to the consortium led by Todd Boehly had been reached, which will become official when Boehly, his associates and the team director he intends to put in place will have passed the ‘fitness and aptitude test’ which the Premier League imposes on any newcomer among its twenty-one shareholders
.
The process, which is ongoing, usually only takes five days and, given the identities of some who have gone through it successfully in the past, shouldn’t cause any sleepless nights for Chelsea. Bank guarantees in place? No doubtful or unpaid debts? Clean record ? Once these boxes are checked, and they will be, the deed of sale will be recorded. Chelsea will have a new regime in place before May 31, the expiry date of the exceptional license that the British government granted the club after the freezing of Roman Abramovich’s assets.
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It is not surprising that the interest of investors of the caliber of Boehly, but also of its rivals for the takeover – including the British billionaire Jim Radcliffe – has been aroused by the forced sale of Chelsea: no other club in PL have won more major titles in England and Europe than the Blues since the Russian oligarch bought them for less than 140 million pounds (equivalent to 200 million euros at the time) from Ken Bates on July 1, 2003
. It’s not every day that a genuine giant of European football hits the market.
Ten times the turnover of the Blues
What is much more surprising, however, is the size of the investment made by the Boehly consortium: five billion euros, or about four times more than what Stan Kroenke spent to acquire 100% of the shares of Arsenal. between 2011 and 2018.
Five billion euros is ten times the turnover of the Blues in 2020-21, a financial year it is true marked by the impact of the pandemic, during which the club recorded a net loss of 171 million. euros.
This is two billion more than the valuation that the financial magazine Forbes made of the club last year, and almost three more than the offer that Boehly had already made to Abramovich in 2019, long before the COVID. hits the world and Putin hits Ukraine.
Roman Abramovich
Credit: Getty Images
Moreover, we are assured that this does not take into account the repayment of Chelsea FC’s debt to its future ex-owner, which is not far from 1.8 billion euros; although, the proceeds of the sale being deposited in a frozen account, no one is yet certain of the final destination of this money.
Or Boehly and his associates, namely his LA Dodgers partner Mark Walter, the investment fund Clearlake Capital and the Swiss billionaire Hansjorg Wyss, are neither patrons, nor superfans of the Blues, nor philanthropists, nor sovereign states. ready to spend the millions by the hundreds to improve their image and increase their influence.
A return on investment
Boehly and his associates intend to obtain the juiciest return on investment possible, and as quickly as possible, even if, in view of the club’s current situation, its historical modus operandi, totally dependent as it was on the largesse of Abramovich, that sounds like a challenge. Why, then, put such a colossal sum on the table? How did Todd Boehly manage to convince Jose E. Feliciano and Behdad Eghbali, the bosses of the private investment fund Clearlake Capital, to cover 60% of the club’s acquisition costs?
It will be said that a substantial part of these five billion – 41% of the total – will not be paid immediately, but will be allocated to the development of the club over the next ten years, to finance, among other things, expansion work at Stamford. Bridge, a cramped stadium compared to the arenas of the other current members of the ‘Big 6’ and its very likely future resident Newcastle. Certainly. But that still does not explain how a club that has operated at a loss for ages has been able to attract such investors.
Stamford Bridge, Chelsea’s home stadium
Credit: Getty Images Investors who also know, we hope for them, that they are entering a market in which two major players, Manchester City and Newcastle, have almost unlimited resources because of their more than close relations with the autocracies of the United Arab Emirates and Saudi Arabia. Good luck to Chelsea in finding sponsors as generous and undemanding as those whose names are read and will be read at the Etihad and St James Park. One theory holds that Boehly and the Clearlake Capital Group share the diagnosis that much of the
sport business
American football has been in the Premier League for ages: although English football is the most popular in the world, it remains undervalued if we gauge it against US sport, which knows much better how to exploit its commercial potential, which amounts to say: knows much better how to exploit his fans. And that’s what worries some people.
A “revolution” to come
The current model of English football will never be able to produce the returns on investment that a fund like Clearlake Capital would normally expect. Usually, when one of these funds invests in a club, it is either to increase its value and sell it for a big profit (as Elliott will do, up to €250m, if the Bahraini fund Investcorp buys them Milan for a billion as expected), or because this club offers good prospects in terms of profit on the transfer market – LOSC being a school example in this area. But Chelsea does not fit into either of these categories. It is elsewhere, it is otherwise, that Boehly, Walter and the others will find their account there.
Where ? Behind the scenes, there is talk of a coming ‘revolution’ in the creation and delivery of Chelsea-related digital content. It is true that Boehly has experience in this area, and for example managed to negotiate a most profitable agreement with MLB (baseball) for its LA Dodgers, winners of the World Series in 2020. The current offer of the club’s in-house channel, Chelsea TV, is most modest, if not insignificant. Improving it will not be difficult, without requiring a considerable additional investment. The commercial potential of such a transformation is considerable.
Ngolo Kante (Chelsea) / Premier League
Credit: Getty Images Then, it is this summer that Chelsea must renew its sponsorship agreements for the jersey – and the sleeves of the jersey – of its team. Boehly is said to be hoping to find new partners in the US who would be more generous than Three and Hyundai currently are.Finally, and we can really say, last but not least we must not forget that Todd Boehly was one of the first investors to believe in Draftkings, the game of
fantasy sport
which, in the space of less than ten years, has grown to the point of being in pole position to dominate the brand new sports betting market in the United States; a market which, according to experts, could weigh more than a thousand billion dollars when it reaches maturity. Controlling one of the most successful clubs on the planet, within the most popular of leagues, will certainly provide opportunities for which competition is forbidden.
But is all this really worth five billion? Boehly and his associates believe it, and that they believe it must make one think so, even if it is difficult to say why.
The PL is indeed a SARL whose shareholders are the twenty clubs which participate in its championship, plus the FA, which does not have the right to vote within its board of directors, but remains the supervisory authority for all about competition.
Eighteen trophies in total (not including Community Shield and Supercups), four more than Manchester United, five more than Manchester City
.
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