Chelsea FC sale set to rank among sport’s biggest ever

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Chelsea Football Club has racked up more than $1 billion in net losses since Russian oligarch Roman Abramovich acquired the Premier League football club nearly two decades ago. But bidders are lining up to pay what could be one of the highest prices for a professional sports team as a dearth of big-name clubs in the market drives up valuations.

The Russian oligarch, sanctioned by the British government over his Kremlin links, put Chelsea on the block last month. The auction drew a crowd of bidders despite the losses, including many Americans who already own sports franchises back home.

The bidders, according to people familiar with the matter, include a group led by Los Angeles Dodgers investor Todd Boehly; the Ricketts family, owners of the Chicago Cubs, who joined Ken Griffin, the hedge fund billionaire; Stephen Pagliuca, co-owner of the Boston Celtics and co-chairman of private equity firm Bain Capital; and Philadelphia 76ers co-owners and private equity veterans Josh Harris and David Blitzer.

Chelsea have attracted bids of around $3 billion, some people have said. At this level, a sale could become the largest sports team transaction ever, according to Dealogic data on publicly announced deals.

He may not retain the title for long. The sale of the National Football League’s Denver Broncos is expected to eclipse all others. The highest sale price yet for a sports team is the $2.4 billion from the 2020 acquisition of Major League Baseball’s New York Mets by billionaire hedge fund manager Steven A. Cohen , according to Dealogic.

A deal for Chelsea is expected by the end of April, according to some people familiar with the matter.

Some American investors have a keen interest in the Premier League. Fenway Sports Group, or FSG, owns the Liverpool football team. The Florida-based Glazer family controls Manchester United, which is listed on the New York Stock Exchange. Arsenal FC was bought in 2018 by Stan Kroenke, owner of the Los Angeles Rams. Fortress Investment co-founder Wes Edens and Egyptian billionaire Nassef Sawiris run Aston Villa FC

This interest underlines the growing popularity of the Premier League with the American public. NBCUniversal, owned by Comcast Corp., agreed last year to pay nearly $2.7 billion to extend its Premier League broadcasting rights for six years. That’s nearly triple the $1 billion worth of the broadcaster’s current six-year contract, which expires next month.

US interest in the Premier League comes as demand from Russian and Chinese investors dries up due to the war in Ukraine and China’s earlier moves to clamp down on overseas investment.

Mr Abramovich bought Chelsea in 2003 for around £140m, or around $184m at current exchange rates.

In nearly 20 years, the team generated a total net loss of £894 million, or $1.2 billion, according to documents filed with the UK Companies Registry. At the same time, Mr Abramovich has disbursed a total of almost $2 billion in loans to the club to support it financially.

Mr Abramovich, who is not involved in the sale process, said he will not receive any proceeds from the sale of the team and will forfeit any loans the club owes him.

Part of the reason for the heavy losses over the years: Mr. Abramovich has spent heavily to attract and develop top players. He turned the club into a consistent performer often competing for titles. He won the Champions League last year, the most important tournament among European clubs.

Chelsea enjoy broad brand recognition and are based in London, a global hub, explaining the high level of buyer interest from US investors who already own teams, said Alec Scheiner, partner at RedBird Capital Partners. The investment firm has a stake in FSG, which owns the Boston Red Sox and Pittsburgh Penguins.

The trick for any new buyer will be navigating the expensive redevelopment of Chelsea’s charming but antiquated Stamford Bridge stadium in the heart of Tony West London. The existing facility can accommodate just over 40,000, making it the ninth largest Premier League venue.

Chelsea bidders are betting on developing new revenue streams. “Otherwise you’re buying the team just as a vanity project,” said Liverpool University’s Kieran Maguire.

Chelsea first submitted a renovation plan in 2015 for the stadium to increase seating capacity by nearly 45 per cent to 60,000. Mr Abramovich in 2018 canceled plans to spend more than £1bn dollars for the project after the UK blocked its visa renewal.

From WSJ

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