The Economics of Clearlake and Boehly Selling Chelsea Football Club
https://medium.com/@contcon30001/the-economics-of-clearlake-and-boehly-selling-Chelsea-football-club-1bde322bffea
I’ve worked in mergers & acquisitions and finance my entire career in the U.S, and with private equity firms some of which are much bigger than Clearlake Capital. This paper tries to simplify the economics around Clearlake Capital (“Clearlake”) and Todd Boehly (“Boehly Group”) selling the Chelsea Football Club (“Chelsea FC”, “CFC” or “Club”). I draw from publicly available information and tell you where I make assumptions. Importantly, this analysis is from a financial statement perspective of the companies within the organization of the Clearlake Capital and Boehly Group’s investment entities (collectively the “Buyer Group”). It does not attempt to address any Premier League PSR or SCR issues or constraints.
What did Clearlake Capital and Boehly Group Pay for Chelsea FC?
£ 2.50b Equity purchase by Clearlake and Boehly Group
£ 1.75b Future capital investment requirement
£ 4.25b Purchase price (at sale)
£ .45b Recapitalization 22 Holdco Limited (additional equity)
£ 4.70b Purchase price (adjusted)
Clearlake and Boehly Group effectively paid £4.70b for Chelsea FC. In finance and accounting purchase price is measured on an Enterprise Value basis, meaning the cost of purchasing the equity + any future capital commitments or debt assumed in a transaction.
To fund the future capital investment requirement and the working capital of CFC, the Buyer Group took out debt of ~ £1.35b.
Where is the Debt and What Does it Mean?
The Buyer Group organization chart of companies is widely available online, and at first glance appears complicated. But for our purposes we can simplify it to four of the companies.
Blues Investment Midco, LP (Clearlake owned) and Blueco 22 Holdings, LP (Boehly Group owned). These entities are the equity holders in CFC. Clearlake owns 61.54% and Boehly Group 38.46% of the equity. The two entities infused £2.50b at time of sale. As equity holders in LPs Clearlake and Boehly Group have no liability for debts of CFC. Said another way, the Buyer Group is not on the hook for any of the debt of CFC operating entities.
Blueco 22 Limited. Commonly referred to as intermediate Holdco., this entity rolls up all the operations of CFC and has ~£755m of debt through a senior revolving credit line with JP Morgan and Bank of America. Interest is payable monthly at Sonia +3.25% (~7%), or ~£5m a month or ~£60m a year. The credit line is fully drawn upon and is due July 2027. This debt is senior debt, which means it has first right to CFC’s assets in event of default.
22 Holdco Limited. Commonly referred to as a parent Holdco, this entity rolls up Blueco 22 Limited and has a 2nd debt infusion of £596m from Ares Management. It is important to note Ares Management is itself a private equity firm, and as such demands higher returns even when acting as a lender in leveraged buyout deals like the CFC transaction. Also, since the debt is subordinated, meaning in event of default it gets repaid only after the JP Morgan and BOA debt, it has higher interest rates and several unique features that make it more problematic to the long-term finances of CFC.
The 1st unique feature is that it is a PIK loan (paid in kind), which means the interest payments on the loan are accrued into the principal amount and payable at the end of the term which is August 2033. Said another way, the monthly interest gets added (compounded) to the principal and the loan continues to grow until the end of its term. The reason for a PIK is typically to avoid reducing operating cash flows during the loan period, although it is very risky as a financing instrument due to the compounding nature of the loan. The Ares loan has interest payable at Sonia +7.5% (~11%), which means the loan payoff in August 2033 will be ~$1.28b.
The 2nd unique feature highly likely to be in the Ares debt is a make-whole provision, which means that in the event the loan is paid off prior to August 2033, the full amount of the interest for the entire loan period is due. Example, if the Buyer Group wanted to pay off the Ares debt in December 2026, they would still owe all the compounded interest through August 2033. In practice the amount due in an early termination is typically the present value of the interest payments throughout the term. In Ares case a make- whole provision would guarantee a targeted yield and compensate them for the risk of the debt being subordinated. Since the Ares loan documents aren’t public, we assume make-whole provisions are in place. This provision is very common in leveraged buyout deals where the lender is a private equity firm and will be important when we analyze a value the Buyer Group would consider selling CFC.
The 3rd unique feature of the Ares debt is public disclosures appear to indicate existence of warrants, which are derivative financial instruments that act as equity options. Meaning the holder of a warrant can convert instrument into equity shares if conditions of the warrant are met. Again, not having the Ares loan document in the public realm we can only go by disclosures that are public and those appear to indicate the options are sweeteners designed to allow Ares to participate as an equity holder, albeit to a much lower extent than the Buyer Group.
Valuation of Chelsea Football Club, and is There Hope for Supporters?
We know several things.
1. Purchase price is Enterprise Value. Meaning debt + equity.
2. Buyer Group cash proceeds from a sale just to break even on their investment is £2.95b (£2.50b initial + £ .45b recap). This is somewhat simplified as they will likely look at break-even having a minimal imbedded return.
3. Ares debt features (namely make-whole provision and warrants) will make the cost of their debt higher than the £595m reported loan.
4. The most reliable indication of value is past investment sales of clubs. The 3 largest Premier League club valuations as determined by investment transactions are:
Manchester United FC £4.60b (2024; minority investment; with debt value likely £5.0b+)
Chelsea FC £4.25b (2022; excludes recap)
Liverpool FC £4.2b (2023; minority investment; maybe higher with debt)
What Drives Value in Top Table Premier League Clubs?
Broadcasting (TV revenues, competition bonuses for Europe & Domestic tournaments), Commercial (retail, sponsorships, venues — hotels, entertainment outside stadiums) and Matchday (tickets, stadium concessions) are the three main categories of revenue for Premier League clubs. Lets take a look at Chelsea and Arsenal’s revenues as % of total in each of the three categories for 2025.
Chelsea
~18% Matchday
~49% Broadcasting
~33% Commercial
Arsenal
~22% Matchday
~40% Broadcasting
~38% Commercial
Broadcasting and Commercial revenues are by far the biggest and most important for top tier clubs, comprising 78–82% of the revenues for the two clubs above. Broadcasting and Commercial revenues are largely dependent on a club’s success on the pitch, which determines Premier League table standings and qualification for European and Domestic tournaments, the most important of which is the Champions League (“UCL”). In 2025, the final four clubs in UCL averaged £100m in total revenues from the competition versus the final four clubs in Europa Cup averaging £27m. Gameday success is also a strong drive of Commercial success; winning clubs drive expansion of fan bases which drive retail sales and sponsorships. Most important for valuation is that winning drives sustainable future cash flow, which drives Enterprise Value. Simply put, winning trophies and competing for top 4 in the Premier League table consistently increases the financial value of a club.
A frequent criticism of Chelsea FC supporters against Clearlake and Boehly Group operating model is that it appears to emphasis a “player trading” strategy, meaning buying players at low transfer fees (or no if through academy programs) and selling them at higher transfer fees. The problem with this as a source of profit is that it is not sustainable cash flow. Some players you’ll sell higher than you paid for them, and some players you will not. Some years you will record a profit in net transfers, other years you will not. It is hit or miss. The strategy is more like that of a commodity trading firm. Brighton FC is often mentioned utilizing the player trading strategy, but as the table below shows their results are inconsistent in terms of profitability.
Brighton & Hove Albion (Net Transfer Fees)
2023 £121 million
2024 (£191 million)
2025 £70 million
The Brighton player trading model has resulted in zero net profits over the past three years. I’d argue it also distracts club leadership from the main drivers of revenue and profits for top tier Premier League clubs — namely on pitch winning which drives Broadcasting and Commercial revenues. Fielding mostly young players results in on-pitch mediocrity. It also causes the more seasoned players in the club wanting to compete for European and Domestic competitions to question staying.
Will Clearlake and Boehly Group Sell CFC?
The simple answer is they will sell if they believe the Enterprise Value is lower tomorrow than it is today. Conversely, they will not sell if they believe the Enterprise Value tomorrow is higher than it is today.
A rule of thumb in private equity is that investors are looking for cash on cash return of at least 2x to exit (or $5.9b to Buyer Group in case of CFC). Below are the purchase prices for CFC at Buyer Group breakeven and 2x cash return.
@ BREAKEVEN
Sale Price
£4,550.9M
Less: Senior Bank Debt
(£755.0M)
Less: Ares Principal
(£595.9M)
Less: Ares Make-Whole Penalty
(£250.0M)
Total Net for Owners
£2,950.0M
@ 2X CASH RETURN
Sale Price
£7,550.9M
Less: Senior Bank Debt
(£755.0M)
Less: Ares Principal
(£595.9M)
Less: Ares Make-Whole Penalty
(£250.0M)
Total Net for Owners
£5,900.0M
Note: Make-Whole penalty is estimated at present value in 2026 sale. We did not include effect of Ares warrants as we cannot estimate it; but it is likely at add £75m — £100m to sales prices.
As shown above, CFC would need to sell at £4.55b for the Buyer group to breakeven on their equity investment, and £7.50b to achieve a 2x cash return. Given the losses incurred by CFC since the Buyer Group took control in 2022, it would be difficult to argue they have increased the sustainable cash flow of the Club. It is equally unclear how their existing operating model of young player trading, limitations on Stanford Bridge expansion, and mid table Premier League standing will turn the situation around. After 4 years of Buyer Group ownership the value of Chelsea FC likely remains ~£4.2b, which is what they paid in 2022.
Is There Hope for Chelsea Supporters?
Short answer is yes. Supporter protests and voices will put pressure on the Buyer Group to change strategy and focus more on sustainable cash flow.
Debt Cliff #1 in 2027. The JP Morgan and Bank of America loan of £755m is due July 2027. If CFC does not have the cash to pay, then there are two options: banks will seize the collateral of CFC (effectively the equity shares) and force a sale; or the Club will refinance the debt. Refinancing is much more probable, and it is likely those discussions are happening now. Banks will do due diligence on the Club’s operating results and will inquire about the fan protests and negative press before agreeing to refinancing. It is therefore imperative for fans to continue to be heard. While the Buyer Group is likely to find banks willing to refinance, it will be at higher interest rates. Too high a rate may cause the Buyer Group to rethink its operating model or consider a sale, as higher financing costs reduce the cash flow that drives Enterprise Value.
Ares Management. Recall this debt is subordinated. If financial results remain poor and supporters continue to speak out, Ares will become increasingly concerned about the financial ability of the Club to payback its debt.
Clearlake Itself. My experience is private equity investors are smart. The priority is the value of their investment. If Clearlake is like other private equity firms, it consistently runs forecasts of cash flows to determine the Enterprise Value of CFC. Being smart people, at a certain point they will realize the existing operating model and leadership of the Club is not driving increases in sustainable cash flow and is driving Enterprise Value of CFC down. Rationally either their operating model will change, or they will decide the Buyer Group cannot increase Enterprise Value and consider a sale. Not qualifying for UCL competition, delay and complications of expanding Stamford Bridge Stadium, and potentially higher refinancing costs will put pressure on CFC’s cash flow forecasts. The private equity people I know course correct. Chelsea fans can only hope Clearlake Capital will too. As for Todd Boehly and his group (which were the primary source of CFC’s problems in my opinion) they are not the decision makers and will exit the investment when Clearlake decides to exit.
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Premier League Brighton & Hove Albion versus Chelsea kick off 20:00 Venue: American Express Stadium Tue 21 Apr 2026
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Premier League Brighton & Hove Albion versus Chelsea kick off 20:00 Venue: American Express Stadium Tue 21 Apr 2026
puppet says FAILURE
That starting 11 is tragic, this could be big numbers, and he may get the chop
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Fan protests were significant as Chelsea fail against Man United – opinion
Liam Rosenior is playing 5 Defenders at the back against Brighton in a must win game… 🤔
Delap to have a Worldy
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Premier League Brighton & Hove Albion versus Chelsea kick off 20:00 Venue: American Express Stadium Tue 21 Apr 2026
