US billionaires in bid to buy Abramovich’s Chelsea

Chelsea FC has racked up more than $1 billion in net losses since Russian oligarch Roman Abramovich bought the Premier League soccer club nearly two decades ago. But bidders are lining up to pay what could be among the highest prices for a professional sports team, as a dearth of top clubs on the market drives valuations higher.

The Russian oligarch, sanctioned by the UK government for his links to the Kremlin, put Chelsea up for sale last month. The auction has attracted a large number of bidders despite the losses, many of them Americans who already own sports franchises at 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 teamed up with Ken Griffin, the hedge fund billionaire; Esteban Pagliuca, co-owner of the Boston Celtics and co-chairman of the private equity firm Bain Capital; and Philadelphia 76ers co-owners and private equity veterans Josh Harris and David Blitzer.

Chelsea has attracted offers of around $3 billion. At that level, a sale could end up being the largest sports equipment transaction in history, according to Dealogic data on publicly announced deals.

He may not hold the title for long. The sale of the National Football League’s Denver Broncos is expected to eclipse all others. The highest sale price to date for a sports team is the $2.4 billion in 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 in late April, according to people familiar with the matter.

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

That interest underscores the growing popularity of the Premier League with the American public. Comcast Corporation-owned NBCUniversal agreed last year to pay about $2.7 billion to extend its Premier League broadcast rights for six years. That’s nearly triple the $1 billion value of the station’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 restrict overseas investment.

Abramovich bought Chelsea in 2003 for around £140m, equivalent to about $184m at current exchange rates.

Over almost 20 years, the team has generated a total net loss of 894 million pounds sterling, equivalent to $1.2 billion, according to documents filed with the UK corporate registry. At the same time, Abramovich has disbursed a total of around US$2 billion in loans to the club to support it financially.

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

Part of the reason for the big losses over the years: Abramovich spent heavily to attract and develop the best players. He transformed the club into a constant player who often competed for titles. He won the Champions League last year, the most important tournament among European clubs.

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

The trick for any new buyer will be navigating the expensive refurbishment of Chelsea’s charming but dated Stamford Bridge stadium in the heart of West London. The existing facility seats just over 40,000, ranking it ninth among Premier League venues.

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

Chelsea first unveiled a renovation plan in 2015 to expand seating capacity by almost 45% to 60,000. Abramovich canceled plans in 2018 to spend more than $1 billion on the project after the UK blocked his visa renewal.