Chelsea deal should help stadium upgrade

Mark Walter and Todd Boehly have agreed to sell their stakes in Chelsea FC to Clearlake Capital in a deal that values the club at about £5bn including debt and will help the US financiers alleviate pressure on their insurance empires. The deal will put US private equity firm Clearlake, an existing investor in Chelsea, in control of the football club and give both Walter and Boehly a small gain on their investment, according to people familiar with the matter.   The pair are set to receive £950mn in cash for their combined 25 per cent holding, the people said.

“Chelsea Football Club today announced affiliates of Clearlake Capital Group will acquire the ownership interest of Todd Boehly . . . Clearlake will also acquire Mark Walter’s ownership interest and therefore acquire full control of the club,” Chelsea said in a statement, which did not disclose financial terms of the transaction.

Clearlake will finance the purchase using its own capital and large direct investments from its billionaire co-founders Behdad Eghbali and José E Feliciano, the people added. The £5bn valuation includes Chelsea’s debt, which stood at just under £1.4bn as of June last year, spending commitments and net cash raised by player sales during the summer transfer window.

The deal, which is scheduled to complete by the end of this year, is expected to pave the way for Chelsea to upgrade its stadium and training ground and will lead to Boehly stepping down as chair. The consortium of Clearlake, Walter and Boehly acquired Chelsea in 2022 when Russian oligarch Roman Abramovich was forced to sell after sanctions were imposed on him following Russia’s full-scale invasion of Ukraine.

Although Clearlake was the majority owner, it only had joint control of the club under Chelsea’s governance arrangements. Clearlake often clashed with Boehly and Walter on strategy, most notably on stadium expansion plans, and held years of on-and-off negotiations over a potential deal that would see the financiers sell down their stakes.

Talks intensified in recent months as Walter and Boehly sought to sell assets to raise cash to support their sports and financial services empires, the FT reported in August. The pair, who were longtime colleagues at investment firm Guggenheim Partners, helped pioneer the practice of investing insurance premiums into riskier assets like private loans and sports franchises, such as the Los Angeles Dodgers baseball team.

US prosecutors have been probing Walter’s empire. His insurance companies earlier this year said that they had lent money to entities related to him without disclosing the links. The insurers are now rushing to sell assets and cut their affiliated investments. In August, Walter agreed to sell the Los Angeles Lakers basketball team to investor Joshua Kushner and former Disney chief Bob Iger for $12.5bn less than a year after he bought it.

Boehly, considered Walter’s protégé, has also come under pressure, notably around the high number of affiliated assets at his insurer Security Benefit. “I will be coming into significant liquidity personally as a result of exiting certain investments,” Boehly told investors on a call last month. He predicted the asset sales would “generate billions of dollars of liquidity”.

Clearlake will not raise any new debt to finance its purchase of Walter and Boehly’s interests in Chelsea, according to a person familiar with the matter, but will offer investors who financed the original purchase of Chelsea the opportunity to increase their investment in the club as co-investors.

Swiss billionaire Hansjörg Wyss, a member of Walter and Boehly’s side of the consortium, will increase his stake in the football club from just over 12 per cent to 13.5 per cent, the people said. Walter and Boehly’s options for selling their stakes in Chelsea were limited by an “anti-flipping” provision, put in place as part of Abramovich’s sale in 2022, that prevented them from marketing their holdings to investors outside the original consortium.

The deal, which comes months after Chelsea reported an annual pre-tax loss of £262.4mn, the biggest in Premier League history, values the west London club at a discount to rival Liverpool FC. Last month Fenway Sports Group offloaded part of its stake in the club to a Jeff Bezos-backed consortium in a deal valuing it at more than $7bn.