Chelsea FC’s Financial Strategy
In the world of football, where financial prowess often translates to success on the field, Chelsea FC’s owners are contemplating a significant increase in their borrowing, potentially by up to £250 million. This move is seen as a continuation of the lavish spending that has marked their brief stewardship of this iconic English football club.
Advised by Bank of America
Bank of America Corp. is playing a pivotal role, providing counsel as the owners contemplate accruing more debt under the existing loan agreements. The discussions are confidential, with Chelsea’s proprietors already having £800 million in loans, with a possibility of extending these to £1.05 billion.
Lenders and Chelsea’s Game
In a recent match against Aston Villa FC, lenders were given an invitation to witness the game, indicating the ongoing deliberations about the borrowing. However, no conclusive decisions have been made regarding the final amount of any additional borrowing.
Financial Firepower for Clearlake Capital and Todd Boehly
The infusion of fresh funds would empower Chelsea’s majority owner, Clearlake Capital, and US investor Todd Boehly. Since acquiring control in May 2022, they have channelled hundreds of millions of pounds into acquiring new players. The duo is also exploring the redevelopment of Chelsea’s Stamford Bridge stadium in West London and considering investments in additional football clubs. Recently, Chelsea secured £500 million of subordinated debt from US direct lending titan, Ares Management Corp., in a distinct transaction. At present, the club’s owners are not exploring the inclusion of new equity investors.
Performance on the Field
Despite the substantial financial outlay, success on the field has been elusive for Chelsea, with the club finishing 12th in the English Premier League last season, marking its worst performance in 29 years. The current campaign has also been challenging, with the club occupying the 14th place in the league.
While accruing debt is not a novel concept in football, it often raises eyebrows among fans who are concerned about the long-term financial sustainability of their beloved clubs. This concern is reminiscent of the backlash from Manchester United Plc supporters against the US Glazer family post their leveraged buyout in 2005. Consequently, the English Premier League has prohibited full LBOs of teams in the division this year.