Chelsea owners in £150m talks with US investors as Todd Boehly takeover claim resurfaces
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Thanks to Chelsea’s rapacious approach to recruitment and retention, carousel of staff changes, and haphazard commercial strategy, many have doubted Clearlake and Todd Boehly’s credibility as owners.
As businesspeople, their credentials have never been in doubt. After all, Chelsea’s boardroom boasts some of the Avengers of the $5 trillion private equity marketplace.
But the ultimate aim of private equity is to turn a profit, not win Premier League titles. In any case, the West London club are currently some way from doing either of those things.
Since a group of investors led by Boehly and Behdad Eghbali’s Clearlake Capital bought the club in May 2022, red ink has flowed freely at Stamford Bridge.
As well as wracking up financial losses of around £450m, the owners have overseen a negative net spend of around £650m in the transfer market.
For context, that £650m figure is almost exactly half the negative net spend accumulated throughout Roman Abramovich’s near 20-year reign – and the Russian oligarch wasn’t exactly known for frugality.
Yes, Boehly, Eghbali and their peers in the boardroom have bankrolled some of that investment from their own pockets via share issues. About £300m’s worth, in fact.
However, the Americans have also loaded Chelsea with around £800m worth of new debt through a huge loan deal with another private equity firm, Ares, and a revolving credit facility (an overdraft, basically).
There have been some green shoots this season. Enzo Maresca looks a to be a rational appointment, especially in terms of nurturing the hugely expensive but inexperienced squad Chelsea have assembled.
But before last night’s victory over a Wolves side with the worst defensive record in the division, Chelsea had won none of their last five in the league.
When the Blues were being talked about as title contenders earlier this season, it looked like the internal power struggle between Boehly and Eghbali’s factions in the boardroom had been temporarily set aside.
But with recent performances having tapered off, the civil war will likely resurface at some stage.
By all accounts, the owners’ differences run deep. The future of Stamford Bridge, for example, is a sticking point. Boehly wants to move to a new site, while Eghbali favours expanding the existing ground.
And unless things have changed since the gory details were leaked to the football finance press in September, it likely that the only way the dispute will end is with one buying the other out.
Chelsea are at least in the clear in terms of Premier League Profit and Sustainability Rules (PSR) – for now.
The league announced last week that no clubs had breached the spending limits for 2023-24, meaning Chelsea’s accountants appear to have performed an extraordinary feat of escapology.
Later on in the week, it emerged that Chelsea are negotiating a financial settlement with the Premier League over historic PSR breaches in the Abramovich era.
That might sound concerning on first reading, but it would actually be a major victory given that sporting sanctions – such as a points deduction or a transfer embargo – were very much a possibility.
And in the latest news, the Blues may well be about to receive yet another PSR boost before the end of the January transfer window.
Chelsea could get chance to verify controversial PSR-busting deal
Chelsea’s compliance with PSR relied on the Premier League giving the green light to a number of intra-company property sales.
For instance, Chelsea sold two hotels at Stamford Bridge to a sister company within the BlueCo ownership group and recorded a £76m profit on the transaction for PSR purposes as a result.
Essentially, they took money out of one of their pocket and put it in the other. Critics argued this went against the spirit of PSR, but it was entirely within the rules.
The hotel sale was approved by the Premier League some time ago. However, per The Guardian, the proposed sale of Chelsea’s women’s team via a similar method is yet to be rubber-stamped.
Chelsea announced last year that they were looking to spin out Chelsea Women as a separate corporate entity as opposed to a subsidiary of the men’s team. Effectively, this was a takeover from within.
Reports suggested they valued the reigning Women’s Super League champions at around £150m. If that was the value the intra-group sale went through at, it explains their continued compliance with PSR.
That valuation raised eyebrows given that eight-time Women’s Champions League winners Lyon were sold for just £45m last February.
If the Premier League, who it appears are still assessing whether the transaction meets its fair market value criteria, don’t give their blessing then the club could retrospectively be charged with breaching PSR.
While Manchester City did secure several victories in a recent legal challenge to the league’s Associated Party Transaction (APT) rules, deals must still be deemed to be agreed at a reasonable price.
Now Chelsea may have the chance to demonstrate that the women’s team sale did represent fair market value as, according to Sky News, a group called Monarch Collective are in talks to buy a minority stake.
The US investment firm specialise in women’s sport and raised $150m for new acquisitions last year. They own stakes in NWSL franchises Angel City and San Diego Wave.
Speaking at the Qatar Economic Forum last summer, Todd Boehly said that Chelsea’s women’s will one day be worth “hundreds of millions”.
With the Monarch Collective talks, he has the opportunity to prove that and, in so doing, demonstrate the fair market value of the intra-company sale last year.
As lawyer, football finance expert and former Man City adviser Stefan Borson put it on X, there is “no better way to demonstrate fair market value than a willing arm’s length buyer.
“Chelsea will argue that the minority investment is at a discounted value as they have no control.”
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Clearlake vs Todd Boehly: Who is winning the Chelsea power struggle?
The women’s team was priced into the £2.5bn Boehly and Clearlake paid to buy the club from Roman Abramovich two-and-a-half years ago.
In that deal, Clearlake acquired a 61.5 per cent equity stake while Boehly and his co-investors Mark Walter and Hansjorg Wyss took the remaining 38.5 per cent.
That means Clearlake have the high card over Boehly, who personally owns around just one-third of that 38.5 per cent, when it comes to the potential for one to buy the other out.
It has also been suggested that Clearlake may be content to sit it out as opposed to spending around £300m to buy out Boehly, whose power at the club is diminishing anyway.
Clearlake CEO Behdad Eghbali is understood to wield far more influence on day-to-day operations at Chelsea than Boehly, who will be replaced as chairman in 2027 as per the terms of the takeover.
