The Board

[Vesper 30,226]

sell to the Kuwaiti royal family

net worth of of well over £300 billion

[Pizy 18,953]

Btw, how do we STILL not have a fucking long term shirt sponsor 2+ years into this ownership? 

[Vesper 30,226]

Chelsea FC’s main shareholders are exploring their ownership of the English Premier League football club after little more than two years in charge, amid a deterioration in relations, people familiar with the matter said.

California-based private equity firm Clearlake Capital — Chelsea’s majority owner — and US businessman Todd Boehly are assessing whether they can potentially buy each other out, according to the people.

The relationship between Clearlake co-founder Behdad Eghbali and Boehly, who together led a hard-fought takeover of Chelsea in 2022, has deteriorated in recent months, according to the people, as a period of heavy spending at the club has failed to bring success on the field.

Differing opinions on Chelsea’s recruitment policy, the team’s underperformance and the failure to make progress on building a new stadium, have all contributed to the rift, the people said, asking not to be identified discussing confidential information.

Clearlake owns more than 60% of Chelsea, with Boehly holding the rest alongside US businessman Mark Walter and Swiss billionaire Hansjörg Wyss. Bloomberg News reported last year that Boehly was dialing back his involvement at Chelsea after a difficult first season in charge.

Both Clearlake and Boehly remain committed to the club and running it in a professional manner, the people said. Boehly and a representative for Clearlake and Eghbali declined to comment. A spokesperson for Chelsea didn’t provide comment.

Read More: America’s Love Affair With Investing in the Premier League Fades

The Clearlake, Boehly-led consortium acquired Chelsea from Russian oligarch Roman Abramovich in a £4.25 billion ($5.6 billion) deal. In the roughly two decades under Abramovich’s ownership, the club had risen to become one of the most successful teams in English football, winning multiple domestic honors, as well as trophies in elite European competitions.

While the new owners have spent more than £1 billion on acquiring players since taking over, Chelsea’s success has faded. The club has sought to balance its books and comply with Financial Fair Play regulations by offloading homegrown players, including fan-favorites like Conor Gallagher, and the sale of hotels close to its Stamford Bridge stadium in west London. In some cases, players, such as Brazilian winger Angelo Gabriel, have been bought and sold before playing a competitive game for Chelsea.

Boehly recently told Bloomberg News that Chelsea’s owners were “laying a long-term foundation, establishing a great leadership team and responding to the environment.”

Read More: Clearlake Doubts Go Way Beyond Chelsea Football Club

[Vesper 30,226]

The End of the Cheap Money Era Catches Up to Chelsea FC’s Owner

The Californian private equity firm has at least $10 billion in distressed debt among its portfolio companies, a snapshot of the difficulties the buyout industry is facing right now. 

https://www.bloomberg.com/news/articles/2024-07-09/Chelsea-fc-owner-clearlake-faces-investor-doubts-over-debt-issues?embedded-checkout=true

 

Clearlake Capital Group is best known beyond financial circles for owning Chelsea Football Club, an English Premier League team that’s been criticized at times for buying unproven players at sky-high prices.

As the California-based private equity firm raises money for its latest fund, some investors and creditors are asking similar questions about the value of acquisitions it made at the height of the buyout boom.

Back in 2020, Clearlake was turning away people clamoring to get into its sixth flagship fund. The firm had delivered in the past, dishing out best-in-class returns to its limited partners — the pensions, insurers and others who back its wagers. Companies bought from its previous cash hoards such as healthcare software company Provation and self-storage supplier Janus International were well on their way to generating stellar profits for Clearlake and its LPs.

But only a few years on from raising more than $7 billion for fund six, the world is very different. The firm used that fresh influx of investor dollars to carry on spending at the start of the decade, snapping up businesses when valuation multiples were high and piling them up with debt. Today stubbornly elevated interest rates are weighing heavily on many such assets.

Clearlake isn’t alone in having to navigate the end of the cheap money era; many of its buyout industry peers are facing the same difficulties. Investors are still signing on in droves to its latest $15 billion fundraising, pointing to its money-spinning track record in previous funds.

And yet the firm does offer a snapshot of the challenges confronting private equity right now, especially anyone who spent big between 2020 and 2022. It’s the PE firm with the most distressed debt among its portfolio companies, at least $10 billion, according to data compiled by Bloomberg at the end of June. The data captures loans trading below 80 cents on the dollar and bonds with both prices below 80 and spreads wider than 10 percentage points.

“A peak like 2021 is going to make for a poor vintage when you want to realize value,” says Christina Padgett, associate managing director at Moody’s Ratings, speaking about private equity acquisitions in general.

Conversations with more than a dozen people familiar with Clearlake — including investors, bankers and rivals — highlight concerns about assets bought at the M&A boom’s zenith, particularly by the sixth fund.

A slew of businesses Clearlake acquired between 2020 and 2022 such as investment software maker Confluence Technologies and Quest Software Inc., an enterprise IT specialist, are under strain, and some LPs are asking whether the private equity firm’s breakneck growth left it overstretched.

Clearlake is also among the industry’s leading users of continuation vehicles — a controversial practice of selling assets to a new fund the firm manages as well — setting up five deals in the past. It’s now exploring a sixth, for digital-marketing company Constant Contact, people with knowledge of the matter say.

A spokesperson for the firm declined to comment for this story, although others with knowledge of the situation point to the progress in its latest record fundraising as evidence of investor support. Even those who are critical in private about fund six are handing Clearlake more money, expressing the hope that its financial smarts will help it navigate a tough period for buyout groups.

Like rivals, Clearlake often plays hardball with lenders to its companies during distressed situations, shielding its own LPs from much of the pain.

Glory Days

Clearlake was founded in 2006 by José E. Feliciano and Behdad Eghbali to target technology, consumer and industrial companies through traditional buyouts and distressed investments, but it really hit its stride at the end of the last decade. These were the industry’s glory days when debt was cheap, inflation low and pension funds were awash with dollars to plow into private markets. A long-running M&A boom made asset prices go up everywhere, and firms rushed back to investors as fast as they could to nab more money.

As Jay Powell’s Federal Reserve holds fire on rate cuts, the buyout gold rush is history. And LPs are short on cash to allocate, making them more demanding.

Clearlake’s investors didn’t fret too much about its rapid growth when earlier funds were giving them handsome payouts and raking in impressive multiples of invested capital, a key performance yardstick in private equity. Its fourth and fifth funds have already given LPs back more than the capital they put in and have more assets still to sell. These successes have made its lofty fees and fondness for continuation funds tolerable to most backers.

The firm’s assets have swelled to more than $80 billion thanks to an aggressive push between 2015 and 2021, when it went back to the market every couple of years or so to raise a new buyout fund, with each one roughly doubling in size.

“Clearlake would be a poster child for the excessive popularity of that particular asset class,” says Jeff Hooke, who just retired from teaching at Johns Hopkins Carey Business School. “When you have multiple funds and start a new one every couple of years, you’ve invested the money pretty quickly.”

A recent due-diligence report for the State of Connecticut, whose pension plans invest in multiple Clearlake funds, found its soaring assets under management “may cause concerns of strategy drift through the lack of discipline and focus,” while acknowledging the firm’s investment team has grown in line with assets.

Connecticut’s pension consultant wrote, too, that Clearlake “historically utilized higher leverage levels in its portfolio companies, raising concerns in current market conditions.” In common with many peers, the firm didn’t hedge enough against interest-rate shifts, although it does now. It has about $15 billion in hedges on its portfolio, a person with knowledge of the matter says.

Regardless of any investor misgivings, Feliciano and Eghbali’s latest efforts to tap LPs appear to be on track. Clearlake waded into an unforgiving fundraising environment for buyout firms last year when it started gathering cash for its eighth buyout fund, telling backers that it aimed to surpass the $14 billion raised for its seventh fund, which closed in 2022.

A year on, it has nearly $10 billion of commitments toward a $15 billion goal, a person with knowledge of the situation says, and it hasn’t had to offer investors extra incentives.

Trouble Spots

As backers weigh how much they want to commit to the latest fund, some have been paying closer attention than usual to its investments of recent years, especially from the heady days of 2020 to 2022.

Plenty are having a torrid time. Confluence, bought in 2021, has been downgraded by Moody’s, who noted that its “highly levered capital structure and weak liquidity” indicates “aggressive financial strategies.”

Clearlake is also looking at combining parts of Quest and cybersecurity outfit RSA Security — two other heavily indebted software companies in fund six — into a new business and selling a stake. It previously sold a division of RSA to repay debt and used proceeds to return money to investors, irking some lenders.

FinThrive, a healthcare e-billing company acquired in 2021, is in creditor talks about an overhaul that could include a below-par debt exchange.

And trouble isn’t confined to fund six. Wheel Pros, a custom-wheels outfit acquired in 2018, did a distressed-debt swap last year to buy time. S&P Global Ratings says it’s still vulnerable to default, and investors have dumped a new loan placed as part of the swap, driving its price down to near 60 cents on the dollar. Wheel Pros was rolled into a continuation vehicle in 2021 and, according to Connecticut’s report, its internal rate of return was -20% as of Dec. 31.

Elsewhere, Pretium Packaging, a plastic-bottle maker bought in early 2020, did a debt restructuring last year that S&P viewed as a selective default.

The deal for which Clearlake is famous, Chelsea, wasn’t loved by some investors but it’s too early to judge financially. The firm had the investment marked at Dec. 31 slightly above what it paid, despite the team reporting a £90.1 million ($115 million) pretax loss last year. Football Benchmark, which provides financial data on clubs, estimates Chelsea is worth £2.8 billion, about £500 million more than what Clearlake splashed out in 2022.

Its owners hope their vast outlay on young talent will pay off ultimately and let it compete with elite rivals such as Abu Dhabi-owned Manchester City.

Patient Capital

Such calls for patience apply equally to the broader business. The nature of PE investing means sponsors like Clearlake have long time horizons to let wagers play out. They don’t have to price assets more than once a quarter, and one slam-dunk bet can offset a lot of duds. The firm remains chipper about some recently minted investments such as BetaNxt, a wealth-management fintech.

Another feature of the buyout world is how fiercely firms work to safeguard returns for themselves and their backers when refinancing distressed debt, often at lenders’ expense. Take the restructuring of Clearlake-owned Valcour Packaging, a maker of bottle caps, which recently offered more than 90 cents on the dollar to a bunch of creditors who promised to fork up new capital.

Anyone outside that group who doesn’t play ball will be pushed toward the back of the line and can trade in their debt at 60 cents. Such bruising tactics can make enemies among lenders just as you’re having to do a lot of renegotiating.

Clearlake’s muscular approach also helps it protect returns even in dire situations. A December report from Pennsylvania State Employees’ Retirement System showed that the multiple on invested capital was more than five times on Wheel Pros, the company sold on to a now struggling continuation fund. Pretium’s was more than double.

Fund six had a net IRR of 24% as of Dec. 31, according to Connecticut’s documents, and the state’s pension plan has committed $200 million to Clearlake’s eighth fund even after its due-diligence report. Other backers took a closer look at Clearlake’s recent dealmaking and reinvested too.

People familiar with Clearlake’s strategy point out that it’s also an investor in distressed assets as well as growth opportunities, which may let it take advantage of depressed prices in today’s private markets. “We’ve had relatively decent US economic growth since the pandemic,” says Padgett at Moody’s. “So there may be decent businesses with bad balance sheets.”

Still, there’s no cause for investor complacency quite yet. PE uses a metric known as the “distributed to paid-in-capital ratio” to show how much it’s returning to investors. A ratio of one means investors got their money back. Fund six was 0.1 at the year end, according to the Connecticut documents, showing how much work remains to be done to realize value from the portfolio.

When Clearlake hosted its annual meeting for LPs a few weeks back, it made a surprising choice as star speaker: former British Prime Minister Boris Johnson. Like him, the buyout industry hit a peak of popularity at the turn of the decade before falling from favor. Getting back to those heights won’t be easy.

For Padgett, this is true for PE firms on the whole — and for the funds that lend to their companies. “Both private equity and credit are going to have more meager returns than they’d originally anticipated,” she concludes.

[ZAPHOD2319 4,819]

1 hour ago, TheHulk said:

Yeah but he doesn't give a fuck about winning, Boehly least wanted to build success, even if he failed hardcore as well. We're fucked in short.

If you read what he says, he wants Chelsea winning in the worst way. He just fucked up thinking Brighton people are looking at winning now instead of finding these diamonds in the rough. After we pulled them away from Brighton, Brighton spends the most in the PL window.

[Fulham Broadway 17,333]

Chelsea owners ‘exploring’ sale as Boehly, Eghbali ‘relationship deteriorates’

Come back Roman...

[Vytis33 1,276]

Was never right what they did to Roman.  Forced sale of the club you rightfully purchased and yet you get none of the proceeds?  Never heard of anything so ridiculous 

[DDA 9,943]

Let’s hope Bohely wins this one. He is the one I want to take us forward. The fucking Eggman is a useless fucker from what I can make out.

Edited September 7, 2024 by DDA

[OneMoSalah 8,886]

Thank fuck one of the two halves of this abomination of an ownership group will be gone then. Just a pity that one half will remain and be fully in control.

Absolutely killed this club since they took over.

[We Hate Scouse 10,327]

9 hours ago, DDA said:

Let’s hope Bohely wins this one. He is the one I want to take us forward. The fucking Eggman is a useless fucker from what I can make out.

Also the Clearlake side that have fucked us over with ticket increases, removal of subsidised coaches and talking of fans as customers. 

I have absolutely no doubt they see a huge financial opportunities in the Stamford Bridge land for development and will not be phased by the hurdle of the CPO.

I think either way it's a concerning step for the club, however, Boehly is definitely the lesser of two evils.

[milka 3,393]

The downfall of Chelsea Football Club

[IMissEden 21]

50 minutes ago, milka said:

The downfall of Chelsea Football Club

This is basically why I’m on here and not Reddit or twitter. Those platforms since they attract way higher number of kids than here, and I guess certain types of adults, the knee jerk there pffffff, no understanding whatsoever of what “form” is, or foresight re how lots of pieces do or don’t work together, and which pieces are what value. Just clueless, majority of fans who pined for everything we’ve had since. 

[IMissEden 21]

Boehly has experience with top sporting teams. The others don’t. Literally, end of. In the department of, who is better. 
 

But no, Boehly will be gone. That’s not a question. Not at all. This is a business. There are more people on one side, vs the other in there. End of. It’s already known who owns more, who has more say, who xyz. No idea why on earth it’s even been in the air for 3 seconds, the idea that Boehly will buy CFC 😹😹😹😹😹😹😹That is not what he does. Even in his Dodgers and NBA investments he hardly does much. Egh WANTS a team. You see in his eyes that his mind is on fire in rage and confusion all the time, a constant (I don’t like it) emotional reaction to the club. He is obviously the one who wants to be here more. Boehly has had the premier league experience, had his nice dinners. 0 reason to stay longer ATP. 

[IMissEden 21]

15 hours ago, Pizy said:

I’m betting that Eghbali and Clearlake will buy Boehly out. 

Anyone and there are many, betting on one guy who doesn’t have the cash, already tapped his partners to raise current smaller stake, somehow is going to buy out the majority owners, who have more money, and more people invested. Jesus Christ lol. Indeed I agree w your statement as all should. Like come on. Seriously. Seriously. Seriously. 

[IMissEden 21]

15 hours ago, ZAPHOD2319 said:

I hope Eghbali wins out. All the improvements in ownership structure has come from his people.

There is no improvement vs prior to takeover. They have instilled nothing but instability. Boehly first year handling transfers with 0 sporting director instilled by Clearlake is no stain of his cleared up by Eghbali and his people. I think you’re genuinely misinformed or confused lol 

[IMissEden 21]

It’s also obvious the others are heavy handed, where Boehly has some grace. He will bow out. He isn’t that type of personality. Which is better for him, bad for us. He is probably already gone in all but dotted lines on the £ side. 

Edited September 7, 2024 by IMissEden

[IMissEden 21]

1 hour ago, We Hate Scouse said:

I think either way it's a concerning step for the club, however, Boehly is definitely the lesser of two evils.

Everyone not seeing that nuance should be banned strictly for bringing the boat down 

[Vesper 30,226]

17 hours ago, TheHulk said:

What a project, already want out. Both are equally trash, can't say who buying who is better.

I think Boehly is a genuinely nice bloke, but he just does not understand football enough at this point.

He should have purchased a smaller club and learned from his mistakes there, instead of buying a top 5 to 7 or so club on the planet and making hundreds of millions of pounds in blunders here.

Clearlake are just mercenary hedge funders looking to turn a profit by inventing some new paradigm of club ownership, structure, and transfer policy (which is NOT working atm).

I will say it again (as I did when all the different groups were bidding for us)

I so wish Nick Candy had hooked up as the front for the Kuwaitis (or some other massive state fund in the gulf) and bought us

life-long Chels lad, and knows how to get shit done the proper way, especially the new stadium (as he made his billion plus as a huge property developer)

Edited September 7, 2024 by Vesper

[TheHulk 2,482]

 

[TheHulk 2,482]