Chelsea raise $500m from new US investor as multi-club model targeted

September 22 – Premier League Chelsea looks to have become more about the money than the football. The club, bought by Clearlake Capital and fronted by US investor Todd Boehly for £4.25 billion, has raised another $500 million in cash from US investor Ares Management.

The news comes as Clearlake co-founder Jose Feliciano, a Chelsea board member, said the club now faces a period of greater austerity with reported cuts of £80 million in the playing budget expected after Chelsea’s near £1 billion spending spree in the summer transfer window.

The new money is not going to be thrown at players but is targeted at building Chelsea’s commercial infrastructure – which ultimately means a new stadium. Roman Abramovich pulled out of plans to redevelop Stamford Bridge as potential costs reportedly rocketed to £1.5 billion+.

As many as 13 players in the current bloated squad are expected to be shipped out to bring wage costs down and recoup some of that spend. Though with Chelsea having behaved like a newly pocket-monied kid in a sweet shop in the last transfer window, it is hard to see them getting much value from a group of generally poor performing players.

Having said that cuts and financial management were on the way, Feliciano, speaking at the IPEM private equity conference, seemed to couch his remarks saying: “Ultimately, we are extremely aligned with that supporter and fan base because the best way to make our club more valuable is to win. The team had a tough first season, our first season. We have a tremendous amount of talent.”

Quite how the two statements in the same interview align is a little confusing. It is an interesting belief that the owners aligned with their supporter base as most fans don’t care about owners’ money, they do care about whether the team wins or not, and this version of Chelsea so far don’t look to be winners.

Under Abramovich, Chelsea won five Premier League titles, five FA Cups, three League Cups, two Champions Leagues, two Europa Leagues, two Community Shields, one Super Cup and the Club World Cup in February. They became a powerhouse in European football. Now, in football terms, they look more like a pay day for a lucky few.

The Ares Management investment is significant in that it has more money than Clearlake with more than $35 billion under management in its private equity division.

Based in Los Angeles, like Boehly and Clearlake, Ares has raised $3.7 billion to invest in sports teams, leagues and franchises, and has already made two investments in Lionel Messi’s new MLS team Inter Miami, the last being a cash injection of $75 million.

Ares also has a 33.96% stake in Atletico Madrid’s holding company, bought for €181 million, and was a backer of John Textor’s Eagle Football takeover of Ligue 1’s Olympique Lyonnais.

Chelsea’s holding company – BlueCo – is looking to build a multi-ownership club model and earlier this year a bid was turned down for Portuguese top-flight side Portimonense, though in June a deal was agreed to buy a stake in France’s Strasbourg.

Chelsea have been linked with a deal for Sporting Lisbon.

Acquiring more clubs would undoubtedly help Chelsea’s player trading and development business, even with UEFA’s stricter club transfer and loan rules. It allows the holding company to do their player hustling on a wider platform. But whether it puts a winning team on the pitch in the Premier League remains to be seen. Under Abramovich, Chelsea had an almost immediate impact, using his money to drive the club upwards. The Americans are still learning the game, with one of the biggest learnings perhaps being that it isn’t as easy as it looks on a spreadsheet.

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