Chelsea, Clearlake Capital, and Saudi Arabia’s PIF: Debunking Football Conspiracy Theories

As rumours circulate about Chelsea’s financial practices, we dive deeper into the intricate web of investments, sales, and transfers. Are Saudi Arabia’s Public Investment Fund (PIF) and Chelsea’s majority owner, Clearlake Capital, truly working in tandem? And are they possibly bending football’s financial fair play (FFP) rules in the process? Let’s sift fact from fiction.

The Rumour Mill

The question on everyone’s lips seems to be: Is Saudi Arabia, through its PIF, funding Chelsea? The thought has sparked passionate debates amongst fans and rival teams alike, each hoping to decipher the economic labyrinth underpinning the clubs. But is there any truth behind these claims? Or is it all smoke and mirrors?

Analysing the Evidence

The kernel of the argument lies in the following:

• Chelsea’s pre-tax loss of £121million ($154m today) for the 2021-22 season, along with the £153m loss the previous season.
• A total spend of £600m on new players since the acquisition of the club by a consortium led by Todd Boehly and Clearlake Capital.
• Saudi Arabia’s PIF’s investment with Clearlake Capital and its stake in four major Saudi Pro League (SPL) clubs.
• Chelsea’s decision to move on high earners like N’Golo Kante to SPL clubs, with more such transfers in the pipeline.

The perception that the surplus Chelsea stars are being sold at inflated prices to PIF-controlled SPL clubs is adding fuel to this fire of suspicion.

Does a Financial Connection Imply Foul Play?

Christina Philippou, a principal lecturer in accounting, economics and finance at the University of Portsmouth, delves into the issue in an article by Matt Slater in The Athletic today. She highlights the importance of recognising both actual and perceived conflicts of interest in industries, a sentiment echoed by the recent White Paper on football governance.

Chelsea has publicly declared its ultimate owners. Boehly, along with Clearlake’s co-founders Behdad Eghbali and Jose Feliciano, can be identified on the Companies House website. They provided about 60 per cent of the £2.5billion needed to buy the club last year.

However, the lingering question remains: whose money is Clearlake actually investing?

The Saudi Connection: Clearlake, PIF and Chelsea

Founded in 1971, Saudi Arabia’s PIF has been investing domestically until it began to venture into overseas firms in 2014. It grew in size and ambition under the control of Mohammed bin Salman (MBS), the Crown Prince of Saudi Arabia.

In contrast, Clearlake Capital, based in Santa Monica, California, was established in 2006. Its business model revolves around acquiring and selling midsized American companies. Over the past 17 years, it has made around 450 different investments, with about $75billion (£59billion) of assets under management.

PIF’s investment in Clearlake is almost certain. However, whether it would inflate the purchase of footballers to aid Chelsea’s FFP standing is not as straightforward.

Decoding the Complexity

Jordan Gardner, a consultant with sports consultancy Twenty First Group, dismisses the conspiracy theories, explaining that PIF’s investment in Clearlake does not necessarily imply any conflict of interest.

Dr Christopher Davidson, an expert on the Middle East, supports this view, adding that the Gulf funds are known for diversifying their portfolios, not using intermediaries for questionable transactions.

Christina Philippou also casts doubt on the alleged foul play. She points out that many clubs are attempting to shed expensive, unwanted players due to limited buying markets, and Saudi Arabia’s SPL clubs have indicated their readiness to buy.

Regulatory Action and Conclusion

While the Premier League and Clearlake have maintained that no Saudi money was involved in Chelsea’s takeover, there are calls for a more comprehensive regulatory system, including from Gary Neville, co-owner of League Two club Salford City.

As we delve deeper into these complex financial networks, it is essential to avoid conflating proximity with conspiracy. The fact remains that success breeds both admiration and suspicion. And while it’s essential to call out questionable practices, we must also avoid casting unfounded aspersions. Whether we’re dealing with a major footballing swindle or a simple case of advantageous dealings remains to be seen.