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Soccer - 09 May 2022
The consortium led by Todd Boehly, the US businessman, billionaire, and part-owner of baseball’s Los Angeles Dodgers, has agreed to terms to take full control of English Premier League soccer side Chelsea for £4.25 billion ($5.2 billion) after a lengthy sale process.
In a statement, Chelsea said that Boehly’s consortium, which also includes Californian private equity firm Clearlake Capital and Swiss billionaire Hansjoerg Wyss, will pay £2.5 billion for the club’s shares, and that the sale is expected to officially complete in late May.
This will bring to an end a protracted a complicated process that began in late February, when owner Roman Abramovich, the Russian billionaire, first put the club up for sale after his country’s invasion of Ukraine.
Abramovich was then sanctioned in early March as a result of alleged economic ties to Russian president Vladimir Putin, with Chelsea then needing a special operating license from the UK government to continue fulfilling fixtures.
With the sanctions meaning Abramovich cannot take receipt of any UK income, the £2.5 billion for the sale itself will instead go into a frozen bank account to be donated to charity at a later date.
It has been reported that the new owners have agreed to not sell a majority stake in the London club until at least 2032 and that the consortium has provided assurances over both dividends and debt.
The other £1.75 billion involved in the sale will go towards investing in the club - into the men’s stadium at Stamford Bridge in west London, the women’s team’s venue, and the club academy, among other things.
The takeover, although agreed on by Chelsea, Abramovich and Boehly’s consortium, still requires final approval from both the UK government and English soccer authorities.
It will also require Boehly and other key personnel in the consortium to pass the Premier League’s owners’ and directors’ test.
This will need to happen by the end of the month, with the government having put a deadline on the sale of May 31.
Conrad Wiacek, head of analysis at GlobalData Sport, commented: “With the consortium led by LA Dodgers owner Todd Boehly likely to complete the purchase of Chelsea in the coming weeks for a reported fee of $4.25 billion, the attractiveness of Premier League teams as investments is reaching the equivalent of US sports team, even without the closed-league structure.
“While the NFL’s Denver Broncos are likely to be sold for close to $5 billion, the value of Chelsea FC has grown exponentially since Roman Abramovich initially bought the club in 2003 for a reported £140 million. This growth in value is partly due to on-field success but most of this growth in value should be directly attributed to the growth in the media rights of the English Premier League.
“With the league generating close to $10 billion annually, equivalent to the NFL, which signed a 10-year, $100-billion agreement in the middle of the Covid-19 pandemic, teams can expect to be traded for similar amounts. While smaller clubs who have to deal with the threat of relegation, clubs such as Chelsea will continue to be an attractive proposition for investors due to their continued presence at the top end of the table and Champions League qualification.
“Although the new owners will have a job to do to bring on new sponsors for next season, the termination of mobile operator Three’s $50-million annual front of shirt deal presents an opportunity to capitalize on the Premier League’s global footprint, especially with a potential cryptocurrency partner.”
As well as being part-owner of the Dodgers (with a 20% stake), of Major League Baseball, Boehly owns a stake in the basketball franchise LA Lakers, as well as in the women’s basketball Los Angeles Sparks outfit. As of the latest estimate from Forbes, he has a net worth of $4.5 billion.
Clearlake, meanwhile, has over $72 billion of assets under management, while Wyss is worth in the region of $5 billion.
His consortium came out ahead of three others in the negotiations with Chelsea and the UK government.
Sir Martin Broughton, former chairman of Premier League rivals Liverpool and of British Airways, headed up one that also featured World Athletics president Sebastian Coe (as well as motor racing and tennis stars Sir Lewis Hamilton and Serena Williams), while another featured Stephen Pagliuca, co-owner of the NBA’s Boston Celtics.
Both these submissions were informed that they had been unsuccessful in late April, while on the same day that Boehly’s bid was given preferential status by Chelsea, British billionaire Sir Jim Ratcliffe - majority shareholder of the petro-chemicals giant Ineos - made an eleventh-hour attempt to muscle in on the process.
However, his bid was dismissed last week, as it had arrived over a month past the initial bid deadline of March 18.
Last week also saw a spokesperson for Abramovich deny that the Russian billionaire had asked for a personal loan of £1.6 billion he had made to Chelsea over the years to be repaid.
The loan, which Abramovich had made to Fordstam, the holding company which runs Chelsea, had been the subject of reports earlier this month, suggesting that Abramovich was attempting to call it back in before any sale could be completed, dispute the sanctions.