MANCHESTER, England (AP) — Against the geopolitical backdrop of Russian aggression. ukraine In early 2022, a consortium led by American private equity giants seized the opportunity to buy one of soccer’s crown jewels.
What followed at Chelsea was ferocious and at times perplexing.
Unprecedented expenses. Coach’s merry-go-round. A dramatic collapse on the field and the introduction of financial mechanisms more akin to Wall Street than sports.
Needless to say mock — with a truck load — the new American owners appeared to have made one blunder after another in the unforgiving world of elite soccer.
Then in July, Chelsea became world champions.
The journey from chaos to the top of the world was as rapid as it was unconventional.
shake up soccer
Co-owner Todd Boley boasted that he “always knew” success was coming. He beamed proudly alongside Donald Trump at MetLife Stadium as Chelsea players lifted the Club World Cup.
Behdad Eghbari, an Iranian-American billionaire and co-founder of Clearlake Capital, also took note.
Boley and Clearlake made the decision to move when Chelsea’s previous owner was Russian. Roman Abramovich was sanctioned It was then forced to sell at short notice as part of the British government’s crackdown on “oligarchy and banditry” with ties to the Kremlin.
Some of the new regime’s initiatives coincide with tightening of the sport’s financial rules. Meanwhile, some fans are unhappy with soaring ticket prices and the “Americanization” of the prestigious British club.
But importantly, there were also successes.
Alex Burke, from Chelsea supporters’ group We Are the Shed, said: “The club has been lucky to some extent because there have been a number of events over the last few years that supporters could have undoubtedly protested appropriately.” “But there was a very volatile feeling around the team and the club as a whole and they almost got away with it.”
spending power
Chelsea were no strangers to turmoil under Abramovich, who took over the club in 2003 and turned it into a powerhouse. While coaches were repeatedly hired and fired, contracts for superstars became the norm.
Author Nick Purewal said Chelsea bosses saw similar traits in Mr Boley. los angeles dodgers —So does Clearlake when evaluating potential buyers.
“Abramovich was an unusual individual to run a football club on his own…one person was responsible for the whole thing,” said Purewal, author of Sanctions: Inside the Sale of Chelsea FC.
He said Boley and Clearlake were seen as having “similar decisive behavior in business…quick decision-making and quick action.”
And they had money.
They bought Chelsea for $3.2 billion and spent over $600 million on transfers in their first season.
However, the team that won the Champions League two years ago finished 12th in the Premier League, Chelsea’s worst result in nearly 20 years.
After winning 21 trophies under Abramovich, the new owners looked deep inside.
Wall Street meets soccer
But opinions are changing as private equity principles such as cost diversification, rapid restructuring, and long-term planning are beginning to pay off.
Last season, Chelsea qualified for the lucrative Champions League and also won the UEFA Conference League. Then the Club World Cup was held, with prize money of about $100 million.
Kieran Maguire, a football finance expert and host of The Price of Football podcast, said the strategy was “partially working” but had cost the club more than $1 billion in transfers and was heavily reliant on Champions League qualification.
“The danger is that if we don’t qualify for the Champions League for a few seasons, it will be a huge financial blow,” he said.
In an era of increasingly strict spending rules, the risks are clear and Chelsea $36.5 million fine In July, he was accused of breaching UEFA’s 2024 accounting regulations. This was a record fine for a European club in a single season.
“They will feel vindicated by some of their recent successes, but it comes at a price. There are still health warnings,” said Dan Plumley, vice-chancellor at Sheffield Hallam University, who specializes in team sport finance and governance. “I don’t know if people will see this as a blueprint.”
financial expertise
Even if Boley and Clearlake’s lack of soccer experience was evident early on, their expertise in the financial field was also evident.
The players have signed unusually long-term contracts of up to eight-and-a-half years, meaning their fees can be spread out over the life of the contract (an accounting measure known as amortization). Some considered it revolutionary. Others are used as game systems. Since then, both UEFA and the Premier League limited amortization Up to 5 years.
The sale of the club’s hotel and its women’s team to a subsidiary of its parent company also provided a financial boost, but some see this as a new loophole being exploited.
trust your data
Chelsea are still spending big, but they have gotten smarter. At the core of the government is faith in numbers. Huge investments in data and reconnaissance are driving decision-making.
The priority is to sign young players to long-term, incentivized contracts. 18-year-old Brazilian forward Estevao. Chelsea had the youngest team in the Premier League last season.
Mr Maguire said the strategy was high risk but potentially high return, offering two opportunities to optimize investments.
“A: They’re having success on the pitch and that’s generating additional income,” he said. “Or B: They sell players, but because they have long-term contracts, there is no price discount and they keep their full market value.”
Manager’s merry-go-round
Lessons have been learned about how to treat Chelsea managers after Thomas Tuchel, Graham Potter and Mauricio Pochettino were given short reigns.
Current Chelsea manager Enzo Maresca made a bold appointment considering his inexperience. Last season he won two trophies and led the club back to the Champions League.
His possession-based style of football is what Chelsea are looking for in all age groups at the club.
However, the structure of the club is structured to avoid relying too much on one person, taking a business-like approach: “What if I get hit by a bus tomorrow?”
For example, many clubs have two sporting directors, whereas many clubs only have one.
keep fans
The introduction of in-stadium DJs last season was too much for some fans.
An even bigger problem is ticket prices, which have increased for the second year in a row.
But in soccer, success tends to cure most illnesses.
Some fans were considering protesting ticket prices ahead of the new campaign. But, as Burke said, “As world champions, we wanted to celebrate it first and foremost because we were in the first game of the season.”
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James Robson is https://twitter.com/James Saran Robson
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AP Soccer: https://apnews.com/hub/soccer
