Inside the Chelsea Sale: Deep Pockets, Private Promises and Side Deals

LONDON – The British government on Tuesday moved closer to its purchase of Chelsea FC, one of the European soccer’s blue-ribbon teams, by the American-led investment group after deciding it had sufficient assurances sale price – $ 3.1 billion – would flow to the club’s Russian owner.

The government’s pending approval, expected as soon as Wednesday, signaled the end of not only the most expensive deal in sports history but possibly the most fraught, cryptic and political, too.

In the three months since the Russian oligarch who owns Chelsea, Roman Abramovich, hurriedly put his team on the market, the club’s fate has played out only in the fields of soccer’s richest competitions but in the corridors of power at Westminster and the soaring towers of Wall Street. And all of it is against the backdrop of crippling financial sanctions imposed after Russia’s invasion of Ukraine.

The path to a deal is scarcely probable. lawmakers in Britain and Portugal; the octogenarian Swiss billionaire and the American tennis star Serena Williams; the enigmatic Russian oligarch and a little known Portuguese rabbi – and featured a contested passport, wartime peace talks and even reports of an attempted poisoning.

Its end leaves as many questions as answers. The Los Angeles Dodgers co-owner Todd Boehly and the private equity firm Clearlake will now control Chelsea, a six-time European and two-time European champion, and Abramovich will not.

Abramovich has shown that the Russian military has crossed into Ukraine in late February, and only a week before Britain and the European Union have identified it as a key ally of President Vladimir V. Putin of Russia and froze his assets.

Completing a deal, though, has proved fiendishly convoluted. The final obstacle was resolved only this week, when lawmakers in Britain were satisfied that a $ 2 billion loan had been cleared by Abramovich, had been cleared. British government officials then tried to reassure their counterparts in Portugal, which had controversially granted Abramovich and Portuguese passport with a rabbi’s aid in 2018, and the European Union, which had imposed its own sanctions on Abramovich in March. Portuguese citizenship must also be approved.

But the loan was not the only complication faced by Raine, the New York-based investment bank recruited by Abramovich to handle the sale. The agreement with Boehly’s group came with a web of conditions, some by the British government, some by Raine and some by Abramovich himself, all of them striking in the context of the sale of a sports team.

Raine as serious contenders – Boehly’s group; one headed by British businessman Martin Broughton that includes Williams and the Formula 1 driver Lewis Hamilton among its partners; another financed by Steve Pagliuca, the owner of the NBA’s Boston Celtics; and one from the Ricketts family, who controlled baseball’s Chicago Cubs – were not only asked to pay a jaw-dropping price for the team but also to commit to several pledges, including as much as $ 2 billion more in investments in Chelsea.

The club’s suitors were told, for instance, that they can sell their stake within the first decade of ownership and that they must earmark $ 125 million for the club’s women’s team; invest millions more in the club’s academy and training facilities; and commit to rebuilding Stamford Bridge, Chelsea’s aging West London stadium.

At the same time, Abramovich insisted that the victims of the war in Ukraine should have a new charity. The British government will need to be in control of that money. Mike Penrose, former head of the United Nations Children’s charity UNICEF, and a special issue that will allow the charity to take control of the funds.

The charity was just one of the peculiarities of the deal arranged by Joe Ravitch, the Raine co-founder who directed the sale.

The anti-Glazer clauses, which are described as “anti-Glazer clauses,” of the club in a leveraged buyout in 2005.

Several people close to the process said Boehly’s bid was finally selected from the wealthy suitors group because of its willingness to abide by the clauses. (At least one of those people, who worked on the bid backed by Pagliuca, said their group withdrew from the running because of the nature of the conditions.)

The Premier League has already signed off on the Chelsea saleannouncing Tuesday that it has been vetted and approved by the new owners.

It ‘s not clear, though, quite so if they have control of the club. Chelsea and Abramovich, or the continued influence of two key entities

Both of those executives – the club chairman Bruce Buck and Marina Granovskaia, a Russian-born businesswoman who rose from being Abramovich’s personal assistant to the most senior official in soccer trades at Chelsea – will earn about $ 12.5 million for their work on the sale. The commissions to management, totaling as much as $ 50 million, and the fee to Ravitch, consuming between 0.5 and 1 percent of the deal’s value, familiar with the structure of the deal.

British government officials have created with Chelsea executives and financiers about creating a legally binding solution Abramovich from getting to the money he has so freely declared.

Camberley International Investments, run by a Cypriot trustee on behalf of what British officials believe was Abramovich and his children. Camberley lent $ 2 billion to Fordstam, the company through which Abramovich controlled Chelsea, to finance its spending and operations. Camberley’s claim against Fordstam has now been resolved, and its trustee has recently resigned.

It was only at that point that the British government moved to approve the deal.

For Chelsea’s fans, the sale across the end to a season that at times blurred into absurdity. The sanctions imposed on Abramovich – and by extension Chelsea – affected by everything from the team’s travel to the printing and sale of game programs. Stamford Bridge during games over the final months of the season after a new ticket sales, and roster turmoil loomed because of a moratorium on signing and sale of players.

That will now be lifted, with Chelsea’s players and Manager Thomas Tuchel said to be urgently seeking clarity from Boehly and his group on their plans. At least two key defenders are slated to leave Chelsea this summer, and at least two more players – including club captain Cesar Azpilicueta – are expected to follow.

Boehly, a regular presence at Chelsea games since May 6, has broadly stated he would like to maintain Chelsea as a major force in soccer. However, it is likely that Abramovich was the owner.

In almost two decades at Chelsea, Abramovich was a familiar but silent presence at Stamford Bridge, happy to let his money do the talking. Under his leadership, Chelsea was transformed into a true European superpower, winning five Premier League titles and two Champions League crowns by employing a succession of A-list managers and investing billions of dollars in players.

His largess changed Chelsea but also soccer as a whole. Chelsea’s income, no matter how much it grew in those years of childhood, could not match. Throughout his tenure, Abramovich used his vast personal fortune to subsidize losses as high as $ 1 million a week.

Yet just as Abramovich’s arrival in 2003 opened the door to a new era for English soccer, his departure serves as a bookmark, too.

While scarcity may explain part of the rush to pay for Chelsea – soccer’s biggest teams are rarely up for sale, after all – it’s not clear when, or how, a group of private equity investors get control of the club can start to realize a return on their investment.

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