The sanctions against the previous club owner Roman Abramowitsch have plunged Chelsea into great economic uncertainty and made it economically incapable of acting. The English top club was subject to strict financial requirements, among other things, was not allowed to negotiate new players or contracts.
After weeks of worrying, the top English club announced on Saturday (May 7th, 2022) that they had reached an agreement with a group of investors led by the American Todd Boehly who want to take over Chelsea. For a total investment that, according to English media reports, amounts to 4.25 billion pounds, around five billion euros.
Total investment of five billion euros – Boehly Group takes over Chelsea
The sale is “expected to be completed by the end of May, subject to obtaining all necessary regulatory approvals,” the club said in a statement. If the British government and the Premier League agree to the takeover, the fresh capital could flow as early as May.
Kieran Maguire, lecturer in football finance at the University of Liverpool and operator of the “Price of Football” podcast, classified the importance of the takeover for Chelsea in an interview with Deutschlandfunk.
Maximilian Rieger: Mr Maguire, Chelsea are set to be taken over by a consortium led by Todd Boehly – who is that?
Kieran Maguire: An American investor, he owns the LA Dodgers, among others, among several other American sports franchises. Apparently, buying Chelsea Football Club seems like a lucrative deal to him and his fellow investors. This is remarkable given that Chelsea spent more money on player transfers or wages, while posting more losses, than any other club in the Premier League in Roman Abramovich’s era.
Riders: Five billion euros is a huge investment – how does Boehly intend to make a profit from it?
Maguire: The figure of five billion should be treated with caution. The actual purchase price is likely to be around three billion. In addition, Boehly has committed to investing a further two billion euros over the next ten years. You can imagine it like buying a house for 300,000 euros. With the knowledge that you will invest another 200,000 euros in the future, for example for an extension. The purchase price is still only 300,000 euros. The whole takeover construct is a bit confusing at first glance. But in the end, three billion euros will be transferred to an account once the contract is signed.
New injection of billions for Chelsea – sorely needed
Riders: Three billion euros now, later another investment of two billion – what does that mean for Chelsea?
Maguire: First of all, Chelsea will continue to exist as a football club. Indeed, that status was in jeopardy, as the license that allows Chelsea to continue doing business – unlike Abramovich’s other businesses in the UK – expires on May 31. So the good news for the club is that there seems to be some certainty that they can continue as a professional club.
Sanctions against Abramovich – Chelsea are looking for new owners
The stadium should be the main focus of further future investments: Stamford Bridge has a capacity of just 41,000 spectators. This is relatively small, especially compared to Manchester United (75,000 spectators). Or Manchester City and Liverpool, whose stadiums hold around 55,000 spectators, both clubs are also planning to increase capacity. Arsenal and Spurs have a capacity of around 60,000. So Chelsea has a locational disadvantage here. It is therefore to be expected that the new owners will probably invest money to expand the capacity. Or to pursue other ways of getting a bigger stadium. They won’t have any other choice, especially with regard to UEFA’s new, complicated financial guidelines: This will make it even more important in future to generate the highest possible income from the core business.
If you take the latest available figures, Chelsea receive an estimated 40 to 50 million euros less per season than, say, Manchester United or Tottenham. If you start the race with this gap to the competition from the outset, it becomes all the more difficult to survive in the competition and to meet the necessary expenses for it.
Abramovich billions remain frozen
Riders: You mentioned Roman Abramovich and the three billion euros that will be used to buy the club. What happens to this money?
According to Abramovich, this money should go to a fund that should benefit quote: “the victims of the conflict in Ukraine.” But this statement was always somewhat nebulous. The British government has set the clear condition that none of the money can flow back to Abramovich. Because there was a specific concern that it could mean: Vladimir Putin is also a victim of the Ukraine conflict. This could then mean that the money flows back to Russia.
Therefore, it is now planned that the money should only be transferred to an account that will be frozen to a certain extent. Or an account from which the money can only be withdrawn with the consent of the British government. It is expected that the government will use trustees to administer the account. And to monitor the reuse of which charity the money ends up with.