BlueCo’s private equity-inspired approach to running Chelsea Football Club has not yet paid dividends.
Todd Boehly, Behdad Eghbali and a dozen or so other big names from different branches of the private equity sector have committed nearly £5bn since buying Chelsea in May 2022.
That includes the £2.5bn takeover fee, which, incidentally, the UK government are still trying to force Roman Abramovich to release for its supposed intended recipients, victims of the Ukraine war.
But it also encompasses the additional debt that BlueCo have taken on, as well as the money they are committed to spending to either revamp Stamford Bridge or move to a new stadium entirely.
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With no European football next season, a borderline mutiny among large sections of the fanbase and an onerous UEFA-imposed financial regimen hanging over them, it seems vanishingly unlikely that Chelsea’s owners will be making a profit from their investment in Premier League football any time soon.
However, speaking to the Financial Times, comments made by Colin Neville, a partner at Raine Group, the firm which brokered BlueCo’s takeover from Abramovich, suggest that Boehly, Eghbali and their peers are not naive about the length of time it will take to make a return.
That is despite the median private equity investment timeline (i.e., the time between buying and selling an asset at a profit) being around 7.5 years, more than half of which has already elapsed at Chelsea.
“It’s the world’s largest sport,” Neville told the FT. “If you’re looking to underwrite on a risk-adjusted basis, you feel pretty good these brands will be around for a long, long time.”
In layman’s terms, if you want to invest in something you know has staying power, invest in football.
But what is the pathway to profitability and the £5bn-plus valuation that BlueCo need to hit to make a return?
“Everyone thinks there is a key to the Pandora’s that is turning football into a profitable industry,” says University of Liverpool football finance expert Kieran Maguire, speaking exclusively to the Chelsea Chronicle.
“They are waiting for someone to unlock that door. It has not materialised as yet.
“There is a separate issue of the non-financial element. I go back to a quote from Florentino Perez, who says buying a club is like being a work of art. You’re only really likely to make money when you exit the investment.
“That is somewhat similar to the private equity model we’ve seen in football. BlueCo haven’t become the first ones to unlock that door yet after the Raine Group advised them on the Chelsea takeover.”
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