Raheem Sterling strikes a pose that captures the ambition every football player wants to convey when joining a new club. Only the California palm trees behind him suggest this isn’t just any transfer in the English Premier League.
The Beverly Hills photo shoot for Chelsea FC’s £50mn signing underscores how things have changed at the Premier League club since a consortium led by US financier Todd Boehly and California-based investment firm Clearlake Capital acquired it from sanctioned Russian oligarch Roman Abramovich. It might also reflect its global ambitions.
The site is only a 20-minute drive away from the baseball franchise where Boehly and co-owner Mark Walter, Guggenheim Partners’ chief executive, made their names as sports investors: the Los Angeles Dodgers. The Crypto.com Arena, home of the LA Lakers basketball team, another of their investments, is nearby.
After winning a hurried auction of the club in May, the owners — Boehly, Walter, Clearlake and Swiss billionaire Hansjörg Wyss — are now beginning to reveal how they might run, and grow, a business that was financially dependent on Abramovich for two decades.
Under the Russian’s ownership, Chelsea won the Premier League five times and the Champions League twice, cementing the team in the upper tier of English and European football. But the club also lost about £900mn over the 19 years he was in charge, typically ending the year in the red as the billionaire splashed cash on buying and paying the salaries of world-class talent.
By the time the oligarch put the club up for sale after Russia’s invasion of Ukraine shone a spotlight on his relationship with Vladimir Putin, the club owed him about £1.5bn, debt written off as the UK tightened sanctions.
Far from tightening the purse strings, the new owners have rivalled Abramovich’s spending during the summer transfer window when Europe’s clubs shape and bolster their squads. Chelsea has a net spend of nearly £130mn on five confirmed signings, even before the transfer window officially closes on Thursday.
The hefty spending, aided by roughly £800mn of debt financing, comes after the consortium paid £2.5bn to acquire Chelsea, with a further £1.75bn committed to investment in players and infrastructure. It’s the biggest sum ever paid for a football club.
For Chelsea fans, it is an astonishing turnround from six months ago when the club’s future seemed in doubt. With Abramovich under sanctions, only a special government licence allowed Chelsea to continue playing football matches. The club couldn’t sell merchandise or new tickets. With the government adamant that the oligarch should not benefit from the sale, people close to the talks feared the worst for Chelsea until assurances had been provided.
Now, some in the Premier League are questioning the wisdom of the owners’ largesse. “Their first problem is justifying the price,” says an executive at a rival team. “They’ve paid a lot of money for a club that loses money [. . . ] it was constantly subsidised by Roman.” Chelsea, Boehly and Clearlake declined to comment on this story.
However, in committing hundreds of millions to building a team capable of sustaining top-flight success, the owners are signalling their belief that the team and the league it plays within are yet to reach their true economic potential. It is a bet that the global fan base for football, and for Chelsea in particular, is untapped enough to reap even bigger returns.
Central to the thesis is that Chelsea is a global brand and asset with the ability to exploit its own intellectual property. The consortium, which has shared control between by Boehly and Clearlake, also sees opportunities for the Premier League to generate more revenue from selling the rights to screen live matches to broadcasters.
“Effectively, [Chelsea] was a distressed sale in a content and media heavy asset where you own your global rights,” says a person with direct knowledge of the owners’ thinking. “If you put a dispassionate investor hat on, it’s a good investment.
“I know the bright lights of sports and Chelsea take that away, but it is a media and technology investment.”
Yet for the gamble to pay off Chelsea first need a team that can compete with rivals owned by deep-pocketed petrostate royals and billionaires. Boehly himself has taken on the role not just of chair but also of interim sporting director, with direct control of transfers. For better or worse, the new Chelsea will be a team stamped with his authority.
“I think he’s enjoying it but I hope he will realise that to buy is the easiest thing in football,” says Italian football agent Giovanni Branchini. “There are a lot of difficult things in running a club.”
The purchase of Chelsea wasn’t the first time Boehly had swooped in unusual circumstances, based on a belief in the unrealised potential of a famous sports team.
Boehly and Walter were part of a consortium fronted by basketball legend Magic Johnson that paid $2.15bn in 2012 to snap up the Los Angeles Dodgers baseball franchise out of another special situation: bankruptcy.
“People thought it was extreme risk,” junk bond pioneer Michael Milken told Boehly in a podcast dated September 2020, “but once again, risk is an understanding of what the assets are, what the structure is, and you and your partners divided the company into two parts: one a media company and one the baseball team itself.”
The new owners realised that the forthcoming renewal of the Major League Baseball team’s media contract was an opportunity. According to the Wall Street Journal, Fox had offered about $3bn to extend the deal by 17 years, while the LA Times reported at the time that the contract would be worth at least $4bn. To Boehly, Fox’s bid was “very much a floor”.
A familiar tale in sport played out as another broadcaster, Time Warner Cable, was willing to pay more. “We ended up with approximately $9bn paid out over 25 years from an investment-grade credit, right, which therefore made us very comfortable [with] the value that we were paying, which was at that time the highest price ever paid,” Boehly told Milken on the podcast.
But the media rights were only part of the equation. The Dodgers owners also splashed out on star players in a bet that a winning roster — and “really good energy” in the stadium — would benefit the media contract negotiations, highlighting the commercial rationale behind squad spending.
“Ultimately, we got really comfortable that it [the franchise] was going to be worth more than $2bn,” Boehly said. “Our timing was impeccable.”
The Dodgers are now worth more than $4bn, according to Forbes, second only to the New York Yankees in the MLB rankings, and the team won the World Series in 2020 for the first time in 32 years.
Although the Dodgers are a team in another sport altogether, the investment case appears to be strikingly similar to how Boehly sees the prospects of Chelsea.
At the SuperReturn International private equity event in Berlin this June, Boehly said Premier League clubs “don’t realise how big their opportunity is”, according to Bloomberg. “Let’s get a hold of our destiny and think about how to optimise this,” he said in a keynote speech covering private investments and sport.
With the aim of driving global commercial strategy, Chelsea hired Tom Glick as “president of business” in July. Glick, formerly chief commercial officer of the parent group of Manchester City and ex-president of business operations at the US National Football League’s Carolina Panthers, is responsible for increasing revenue, spending on the men’s and women’s teams and investing in infrastructure.
A person close to the team says Boehly and Clearlake’s cofounder Behdad Eghbali plan to work with the league and other clubs to increase the value of those rights.
The Premier League expects its broadcast deals to generate more than £10bn in the next three seasons, with international contracts now surpassing the value of domestic rights.
But based on one key measure, Chelsea’s new owners think that figure falls short. The Premier League’s 20 clubs are set to generate total revenue of £6bn this season, a 10 per cent increase on the previous campaign, according to Deloitte estimates.
However, the NFL’s annual revenue with 32 teams totalled $18bn in 2021, according to Sportico. This despite the fact the NFL plays to a largely domestic audience over only an 18-week regular season period.
By contrast, the Premier League is a truly global product watched in 190 countries with a season that lasts nine months. So the owners believe there are significant avenues yet to be explored. “There is a huge spread in media revenue,” says another person close to the Chelsea consortium. “That’s the opportunity.”
Closing that gap could be crucial to fulfilling the prediction made by Raine Group banker Joe Ravitch, who advised on the sale of the club. He previously told the Financial Times that “Chelsea and all of the top Premier League clubs will [each] probably be worth in excess of $10bn in five years”.
The new owners face a very different challenge to the one Abramovich took on in 2003, when he used his fortune to break the duopoly held by Manchester United and Arsenal.
The price of success is rising in the Premier League, where clubs are fresh from breaking summer transfer spending records and continue to expand capacity or build modern stadiums.
Today, the competition is steeper and more entrenched. Billionaires and state-linked investors control the other so-called Big Six clubs that typically compete for the top four finishing positions that grant qualification for the prestigious and lucrative Uefa Champions League.
Under the ownership of Abu Dhabi royal Sheikh Mansour bin Zayed al-Nahyan since 2008, Manchester City has transformed from lower-division underdog to six-times winner of the Premier League.
The Glazer family, which bought Manchester United in a £790mn leveraged buyout in 2005, has increased revenues from just short of £117mn to more than £600mn in 2018/19, the last campaign before the pandemic.
US billionaire John Henry’s Fenway Sports Group controls Liverpool FC. Another US sports mogul, Stan Kroenke, owns London-based Arsenal. Tottenham Hotspur, the only member of the traditional Big Six not to have won the Premier League since its inception in 1992, is majority-owned by London-born Joe Lewis, who resides in the Bahamas.
Chelsea’s new owners aren’t the only wealthy investors to join the world’s richest football league in recent times. In October last year, a consortium led by Saudi Arabia’s $620bn Public Investment Fund acquired Newcastle United for £305mn.
That takeover, which suffered months of delays because of the oil-rich country’s alleged connections to pirating live sport and questions over state influence, will add another club to the ranks of the Big Six, Boehly has predicted.
That means competition for Champions League qualification will only grow steeper. Missing out is costly: Uefa distributes €2bn a year to participating clubs, and Chelsea earned €120mn for winning the cup in May 2021, a valuable windfall.
Chelsea’s Big Six rivals are also better placed to make revenue the old-fashioned way: by selling tickets to punters. With a capacity of about 40,000 people, the club’s Stamford Bridge stadium lags behind rival home grounds such as Manchester United’s Old Trafford, the largest ground in the Premier League at 75,000. United’s match day revenues came to £112mn in 2018/19, versus Chelsea’s £67mn.
If the new owners hope to increase stadium capacity, it will not be easy. Leaving Stamford Bridge for an entirely new stadium, as north London rivals Tottenham did, would need approval from a fan-led non-profit that owns the freehold of Stamford Bridge.
Chelsea Pitch Owners was created after property developers sought to build housing on the site of Stamford Bridge in the 1980s, prompting then Chelsea chair Ken Bates to buy the freehold. The club then established CPO and lent it money to fund the acquisition of the stadium, which Chelsea rents for a nominal amount.
After Abramovich’s bid to buy the freehold from CPO failed in 2011, he opted to pursue redevelopment of Stamford Bridge. But he withdrew plans to build a new 60,000-capacity stadium on the site of Stamford Bridge in 2018, after withdrawing his application to obtain a UK visa. Planning permission has since lapsed. “The stadium needs a lot of investment,” says one rival. “That’s got to be done.”
On completing the takeover, Boehly and Clearlake committed to “redevelopment of Stamford Bridge”, and there is no indication of any plans to depart, says a person close to them.
For now, Boehly and his partners will be hoping the millions spent in the transfer market begin to make a difference to Chelsea’s so-far patchy season. After two wins, a draw and losses against Leeds and Southampton, how would a downturn in form affect Boehly, Clearlake, Wyss and Walter?
“Unless they’re really very lucky there’ll be a period where they’ll lose football matches,” says the co-owner of another team. “That’ll be the test. What do you do then? You’ve got to decide on the manager, the pressure is unbearable. Roman just used to fire them.”
Prolonged lapses in performance risk angering the fan base, which other American buyers have found to be hazardous. At struggling Manchester United, fans have joined enormous protests against the Glazer family. A fixture against Liverpool in May 2021 had to be postponed after anti-Glazer demonstrators staged a pitch invasion.
But Boehly’s decision to take a hands-on approach to building the team might buy him and his co-owners some goodwill, says Marlon Fleischman, an agent at Unique Sports Group, which represents players including Chelsea’s Reece James.
“They know how to negotiate, they know what represents good value, and I think they want to show that they want to be part of it,” he says. “They don’t want to be owners that don’t have a face and don’t have a feel with the fan group. That’s a good thing.”
Not everything will go right in Chelsea’s new era. But, says Fleischman, the owners’ experience in other sports will serve them well in the Premier League. “They know how to run sport franchises,” he says. “It’s not their first rodeo.”
Additional reporting by Antoine Gara and Sara Germano in New York. Data research and analysis by Daniel Clark