Home Private Equity Behind the deal: Boehly’s Chelsea buyout

Behind the deal: Boehly’s Chelsea buyout


Prestige, power, publicity and even pleasure: the world’s wealthiest people buy football clubs for a myriad of different reasons.

But Todd Boehly, who led the consortium that recently bought Chelsea FC, has another p-word on his mind: profit.

The billionaire business magnate teamed up with the US private equity firm Clearlake Capital to buy the West London club for £4.25bn in May, after it was put up for sale by Roman Abramovich, who was slapped with sanctions by the UK government in response to Russia’s invasion of Ukraine.

The transfer of Chelsea FC from a Russian oligarch to a US institutional investor group signals a wider shift in the market for football clubs: assets that were once the loss-making trophy toys of tycoons and royals are now increasingly being seen as financial opportunities with the potential for huge returns.

Spiralling player wages, battles to avoid relegation and backlashes from fans have all deterred opportunistic buyers over the years, but private equity giants CVC, Oaktree Capital and RedBird Capital Partners are among those to have bought stakes in European football clubs or leagues in the past 12 months.

Boehly, who runs Connecticut-based investment group Eldridge Industries, has become the poster child for this new breed of institutional investors piling into the sport.

A college wrestling star in his teenage years who has built up an estimated $4.5bn fortune, the floppy-haired casual dresser appears undaunted by the task ahead.

Arriving at the SuperReturn private equity annual conference in Berlin in June with an entourage of advisers, Boehly gave a speech laying out his plans for Chelsea, a club which finished third place in last season’s top division of English football, the Premier League.

Media mindset

With a vast empire spanning media, entertainment and sports, Boehly’s plans for Chelsea lie in the blending of all three sectors. Monetising television broadcasting rights is at the heart of his plan, with a goal to take English football down the path of US sports leagues.

“We think the Premier League itself is way undervalued,” Boehly told the assembled suits. “We think the approach with which those clubs go to market is years behind the US model.”

Roughly four billion fans watch European football, compared to just over 170 million fans who watch the US National Football League (NFL). But whereas the NFL generates $15bn of media money every year from broadcasters such as NBC, Fox, and Amazon, Boehly said that global club football profit is “a fraction” of the media money generated by the NFL.

“Part of my goal is to illustrate that there is so much opportunity for all of us,” he said. “Let’s not worry about [being a] big club or little club….Let’s figure out how to get more revenue in the rather than fight over the revenue that is in the room.”

Boehly cited Major League Baseball franchise LA Dodgers, which he bought with a consortium a decade ago, as a case in point. He led a deal with Time Warner Cable to create a new regional network to broadcast all Dodgers games. “Everyone said we were nuts [for buying the LA Dodgers]. We paid $2.15bn, the largest price paid for a team, and the next year we sold the media rights for $9bn.”

Shaking up television rights is not the only change Boehly wants to effect in the Premier League. He has recently criticised parachute payments, which are cash injections for football clubs that fall from the Premier League to the second division, the Championship, to soften the financial blow of relegation.

“The teams that have a business model that yo-yo up and down [the leagues] get the benefit of the parachute payments. What they do is sell their best players, get the proceeds when they go down, and buy the best players in the Championship [the second division]. They compete in ways that really are a little bit predatory.”

Team talk

The 48-year-old says his number one priority is putting the right team in place. In true private equity parlance, he describes his team as a “portfolio” and talks about compiling “investment memos” on every player. Those memos have been coming in thick and fast during this summer’s transfer window.

In early July, England international Raheem Sterling joined the club from Manchester City for £47.5m, marking Boehly’s first big signing. The club has also signed Napoli’s star centre back Kalidou Koulibaly for more than £33m.

Despite such mega-money moves, Boehly insists that UEFA’s financial fair play rules are starting to get teeth and clubs will no longer be able to sign players “at any price” due to the risks of sanctions.

As spending rules get tighter, Boehly wants data to play a key role in sourcing talent. Analytics were key to the success of the LA Dodgers winning the 2020 World Series, he said. “When we bought [US baseball player] Freddie Freeman this year, we thought we’d moved our probability of winning the world series from 17% to 19%. We are constantly looking at how to continue to modify and adjust our probabilities to win.”

Boehly is keen on monetising the players themselves too. “We are also going to be thinking about [the question of] how do we get more revenue for the players?…If you look at [the NBA’s] LeBron James, for example, he has a whole business and a whole team dedicated to what’s not on the court.”

He added: “So I think there is an opportunity to capture some of that American mentality into English sports and really develop them.”

As for the back-room management staff, head coach Thomas Tuchel looks safe in his job for now. But there has been a shake-up. Technical and performance advisor Petr Cech and director Marina Granovskaia have both departed this summer. Chair Bruce Buck has also stepped down after 19 years in the role.

Tom Glick, a sports marketing and operations veteran who was previously Manchester City’s chief commercial and operating officer, has joined in the newly-created role as president of business. He will oversee day-to-day operations, including “managing its global commercial strategy, driving revenue growth, enhancing fan engagement, and creating exceptional experiences for the club’s fans”.

Fans might be happy with the summer signings so far, but Boehly acknowledged in Berlin that ticket price rises might not go down so well. “We’re going to increase prices in the West Stand because we put $5m in, so we’ll see how that gets received.”

The future of the club’s Stamford Bridge stadium is also unclear. Chelsea gained consent in 2017 to demolish its 41,000-seat stadium at Stamford Bridge and replace it with a 60,000-capacity arena on the same site. Plans were backed and approved by the Mayor of London, but the planning application expired and it was not progressed by Abramovich.

If they choose to re-apply for planning approval, Boehly and his consortium will need deep pockets and patience.

“It’s not just that construction costs have gone through the roof – which they have – but you’re talking about a very constrained site in the middle of Fulham through which you have to get materials and access for lorries,” Hogan Lovells’ global head of real estate Daniel Norris told Private Equity News’ sister title Financial News earlier this year.

One man likely to play a role in the club’s real estate plans is Jonathan Goldstein, a London developer involved in the consortium whose knowledge of property could prove key.

Fanning the flames

As for broadening the fan base, Boehly has cited Formula One racing as a model for success. “They’ve got the under-35-year-old demographic fully engaged, and they’ve got women fully engaged.”

He has also flagged the growth of so-called loyalty feeds, in which fans compete for prizes and spend more money at the stadium with loyalty points. “We basically have 140,000 tickets a year where we can sell to fans that aren’t season ticket holders. In order to get those seats, you become a member. If members engage in activities that make you more of a superfan, you get more points, and if you have more points, your odds of getting a ticket to Chelsea versus Liverpool go up. We’re just scratching the surface on that.”

Gambling is likely to play a larger role moving forward too. Boehly said in June that “we are in the early days of sports betting”. The tycoon has experience in the sector, with his company Eldridge holding a stake in DraftKings, a sports betting platform.

Despite his predictions for the future of gambling, Boehly is hoping his own investment into Chelsea FC is no wild bet.

Stadium costs, league reforms and the perennial danger of losing matches could dent his plans to turn a profit out of the west London team in blue, but as the new season of the Premier League draws near, the smooth-talking tycoon seems confident of scoring big.

To contact the author of this story with feedback or news, email Sebastian McCarthy

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