Chelsea sale shows US investors’ desire to play in the Premier League

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Todd Boehly’s acquisition of Chelsea football club is the latest sign of American investors’ growing interest in owning the top teams in the Premier League, as they eye up attractive returns.

Boehly is leading a 25 4.25bn takeover backed by California-based investment firm Clearlake Capital, Swiss billionaire Hansjörg Wyss and Guggenheim Partners chief executive Mark Walter.

The deal – approved on Wednesday by the British government after months of negotiations – means Chelsea will join Stan Kroenke’s Arsenal, the Glazer family’s Manchester United and Fenway Sports Group’s Liverpool in the growing roster of Premier League clubs backed by American billionaire investors. All four owners have also bought leading US sports franchises.

“There’s still a perception in the minds of US investors that football is undervalued,” said Kieran Maguire, a Liverpool university academic and author of The Price of Football. “The downside risk of relegation for a club like Chelsea is negligible, and so investors like both the present and future revenue streams.”

The buyers are acquiring Chelsea for £ 2.5bn, which its former owner Roman Abramovich has pledged to charity, with a further 75 1.75bn earmarked for redeveloping the club’s Stamford Bridge stadium, talent academy and women’s team.

Abramovich put the club up for sale within days of Russian invasion of Ukraine in February. The Russian billionaire, who also holds Israeli and Portuguese citizenship, was subsequently sanctioned by the UK and banned by the Premier League from being the director of a club.

Former Chelsea owner Roman Abramovich has pledged to give the £ 2.5bn proceeds from the sale of the club to charity © Carl Court / AFP / Getty Images

Abramovich’s fortune turned Chelsea into a top tier team, breaking Manchester United and Arsenal’s grip on the English title and financing the acquisitions of star players. He bankrolled more than £ 1bn of losses in his two decades’ ownership.

“From a financial perspective, the deal will have most Premier League owners rubbing their hands together at the capital growth potential for clubs because the value is just crazily high,” said Christina Philippou, an academic at the University of Portsmouth who contributed to the UK. recent review of football finance and governance.

Joe Ravitch, co-founder of Raine Group, the merchant bank that ran the auction on behalf of Abramovich, previously predicted in an interview with the Financial Times that Chelsea and other top Premier League clubs would probably be valued at more than $ 10bn each in five years’ time.

Analysts, football executives and investors said the club’s prime west-London location and its ability to expand its undersized stadium and tap digital revenue opportunities, such as connecting to fans in the metaverse, a virtual world online, presented an opportunity for Boehly.

The Premier League’s new $ 2.7bn six-year US broadcast deal with Comcast’s NBC also makes English clubs more attractive to American owners.

Uefa’s plans to expand the Champions League from 32 to 36 teams in 2024 could be worth more than £ 150mn a year to a club such as Chelsea, while Chelsea’s women’s side also has untapped commercial potential, according to Philippou.

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The Premier League has long been a focus of interest for foreign investment, not only by Americans but Emirati and Saudi royalty.

Each ownership group has a different background – the late Glazer patriarch, Malcolm, was encouraged to buy Manchester United by his sports-loving adult children – but are drawn to the global exposure that steering a Premier League club generates.

In recent years, private equity groups have followed, often buying minority stakes to take advantage of the increasing value of international broadcast rights and their effect on team prices.

“What is commendable about American owners is they absolutely understand the need for clubs to be sustainable,” said one of the most senior figures in English football.

Another long-serving football executive said: “These guys are not short-term players, they’ve got plenty of money, they’re ambitious, and they want to make it a success. I think it’s very positive for the league. “

With a capacity of around 40,000 fans, Chelsea’s Stamford Bridge lags behind rival grounds such as Manchester United’s Old Trafford, the largest ground in the Premier League at 75,000, putting Chelsea at a disadvantage in terms of ticket sales and hospitality.

Chelsea’s Stamford Bridge ground has a capacity of about 40,000, way behind the likes of Old Trafford, home of Manchester United © Carlos Jasso / AFP / Getty Images

Redevelopment is more likely than relocation, according to analysts, because a non-profit entity – Chelsea Pitch Owners – which is run by fans owns the freehold of the stadium.

However, the football executive questioned “how much extra growth we’re going to see now.”

“There’s only so much you can get from the stadium and so much of it depends on television. Player salaries are going up leaps and bounds, ”he said.

Chelsea’s revenue was £ 434mn in the 2020-21 season, up from £ 407mn the previous year, bolstered by winning the Champions League, but the club has consistently posted losses under Abramovich’s ownership. Abramovich lent around £ 1.5bn to Chelsea at no interest cost and never took a dividend.

A key question is whether Boehly can strike the right balance between financial returns and on-pitch performance.

“A fan wants a winning team,” said the executive. “If Father Christmas owned the team the fans would be happy as long as they’re winning.”

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