Saturday, November 26 2022

Todd Boehly’s group has reached an agreement to purchase English soccer giant Chelsea.

The group, which is backed by Clearlake Capital, finalized a deal a week after being given “preferred bidder” status. The agreement ends one of the fastest, most competitive and most bizarre major franchise sales in recent memory—one involving war, sanctions, frozen assets, government intervention, a surprise late bid and even a potential poisoning.

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Boehly’s group also includes Swiss billionaire Hansjörg Wyss, London real estate magnate Jonathan Goldstein and Guggenheim Partners CEO Mark Walter, who is a partner alongside Boehly in the Los Angeles Lakers and Los Angeles Dodgers.

The sale price has not been disclosed. Representatives for Boehly, Chelsea and the Raine Group, which is handling the sale for Russian businessman Roman Abramovich, didn’t immediately respond to requests for comment.

The former president of Guggenheim, Boehly is already a prominent investor across sports, media, technology and entertainment. His franchise portfolio includes stakes not only in the Dodgers and Lakers, but in the Los Angeles Sparks, and his fund Eldridge has invested in more than 60 companies, including DraftKings and Cloud9. Boehly also helped take ticket platform Vivid Seats public last year in a $1.95 billion deal.

He’s had his eye on Chelsea for a while. In 2019 he reportedly made an offer to buy the club from Abramovich, but was rebuffed because the price was short of $3 billion.

Sportico previously valued Chelsea at $3.35 billion, making it the fourth most valuable team in England behind Manchester United ($4.65 billion), Liverpool ($4.14 billion) and Manchester City ($4 billion).

The Boehly group beat out a trio of other finalists: a consortium led by Boston Celtics owner Steve Pagliuca; a consortium led by Philadelphia 76ers/New Jersey Devils owners Josh Harris and David Blitzer; and Ineos chairman Jim Ratcliffe. One of the richest people in the U.K., Ratcliffe was a late entrant to the bidding, with a $3.1 billion (£2.5 billion) offer.

Chelsea has been owned by Abramovich since 2003. He reportedly paid about $230 million (£140 million) for the London club, and quickly spent to make Chelsea one of the best soccer teams in Europe. The Blues, as the club is known, have won the English Premier League five times during Abramovich’s tenure as owner, plus a pair of UEFA Champions League titles as Europe’s best team.

In that span, the economics of owning a top-tier soccer franchise changed dramatically. As deep-pocketed billionaires and sovereign wealth funds poured money into the sport, player costs soared. Chelsea routinely loses more than $100 million per year, on annual revenue that should eclipse $600 million next year. Investors buying into clubs like Chelsea are doing so for the long-term appreciation and prestige, not the year-to-year profits.

Abramovich announced he was selling the club on March 2 in the wake of Russia’s invasion of Ukraine. As part of that announcement, he said he would forgive the roughly $2 billion that he’s personally lent the clubs, and that he wouldn’t profit off the sale. Instead he said he would give the “net proceeds” to victims of the war in Ukraine.

Sanctions on Russian oligarchs spread quickly across Europe, and on March 10 the U.K. government announced that it was freezing many of Abramovich’s assets. That threw a wrench into the sale—which had already garnered interest from billionaires on all six inhabited continents—and Chelsea was allowed to continue operating under a special license. On March 28, The Wall Street Journalreported Abramovich was showing symptoms of being poisoned after attending peace negotiations in Kyiv.

Among the first priorities for Boehly’s group will be a new stadium. Chelsea currently plays in 40,000-seat Stamford Bridge, which opened in 1877 and is by far the smallest venue among England’s “Big Six” clubs. It could cost another $2 billion to secure a modern home for the club.

With the Chelsea sale reaching an end, many of these same bidders will turn their attention to the NFL’s Denver Broncos, which are also on the market. Sportico values the Broncos at $3.8 billion.

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