When the deadline is, who could buy, how much it’s worth and why academy is a secret weapon

American merchant bank Raine Group is running the bidding process for Chelsea football club on behalf of owner Roman Abramovich.

The Russian oligarch was forced to sell the club he has owned since 2003 after being sanctioned by the UK Government for links to Vladimir Putin and supporting the Russian president’s war in Ukraine.

With the deadline for bid submissions on Friday, the explores who is supposedly in the mix, the pros and cons for investors and how what happens next will shape the future of one of Europe’s biggest clubs.

Who will buy Chelsea?

English football clubs usually sell for three to four times annual revenues, and Chelsea are valued by financial assessors at around £ 1.6bn. Abramovich is said to want £ 3bn, although he was never going to set a low asking price.

There is much going in its favor: the glitzy west London location, status as a giant of European football, the state-of-the-art Cobham first-team training and academy facilities, a history of on-field success.

“From a UK and Premier League perspective Chelsea were at the vanguard of money coming into the game,” says Jon Kenworthy, partner at law firm DLA Piper who advise global companies on large transactions. “A club like Chelsea ticks a lot of boxes. It is professionally run. For a lot of people it will tick that box as a trophy asset. “

There are believed to be more than 20 bids submitted, although many have been dismissed and there is no doubt that people are using the link to fluff their own ego. Take Conor McGregor, for example, the former UFC world champion who very publicly linked himself to a takeover, despite having an estimated worth of £ 135 million.

British property tycoon Nick Candy (center) is a regular at Stamford Bridge (Photo: PA)

The fact remains, however, that clubs like Chelsea simply don’t become available often. American Todd Boehly and Swiss billionaire Hansjorg Wyss – the first person to reveal Abramovich was trying to sell – have formed a promising consortium. Chelsea fan Nick Candy (above), a British property tycoon, has spoken frequently of his interest in him although there has been skepticism about his ability of him to afford a takeover. The Ricketts family, owners of the Chicago Cubs baseball team have joined forces with Ken Griffin, chief executive of the Citadel Asset Management hedge fund, to place a bid by Friday.

There is a lot of American interest – as first revealed by the before it became public that Chelsea was for sale. Robert “Woody” Johnson, the owner of the New York Jets NFL team, is another said to be preparing a bid. As is Josh Harris, co-founder of US private equity Apollo Global Management, is exploring a bid. There is claimed to be interest from Turkey and Pakistan.

Academy could be Chelsea’s secret weapon

The academy and its proven success is a major asset in Chelsea’s favor. Not only do they have attacking midfielder Mason Mount and full-back Reece James, two young England internationals, starring in their current medal-winning first-team, worth upwards of £ 100m if sold today, there are so many more who did not quite make it. The academy prints money – analysis by researchers at the CIES Football Observatory shows Chelsea have made £ 210m from selling academy players since 2015, the most of any Premier League side. Last year, Tammy Abraham moved to Rome for £ 34m.

Now envisage a Chelsea that does not have the transfer spending power of the Abramovich era. Could they create a side capable of dominating football brimming with products from their academy? It’s not an unbelievable prospect.

This scores highly with private equity firms and it was aptly timed that a group of private equity executives appeared on a panel at the Financial Times Business of Football Summit the day after the for sale signs went up.

“Chelsea has an incredible talent pipeline and I think that’s highly valuable,” says Mark Affolter, a partner at Ares Management, who is now on the board of directors at Atletico Madrid after his fund purchased at 33.96 per cent stake in the La Liga club . “When we’re interested in a club we look at how talent is managed and Chelsea have incredible management of that.”

Will new owners have same spending power as Abramovich?

Cubs owner Tom Ricketts is among a number of US billionaires interested in buying Chelsea (Photo: Getty)

It seems only likely that Chelsea could enjoy the affluent free-spending enjoyed under Abramovich if the club was bought by a wealthy state or country with soft power motives. But how many more of them are out there?

The Saudi Media Group claimed to have lodged a bid but questions remain how close the group are to the Saudi state, whose Public Investment Fund owns Newcastle. The UK Government will oversee the sale, to ensure Abramovich receives no proceeds and that any charitable donations go to the right place, and will closely scrutinise prospective buyers.

More realistic are shrewd American sports billionaires. But not only would most investors not want to inject the same kind of capital as Abramovich, they would find it much harder under Financial Fair Play rules. Abramovich simply came into football on the right side of FFP. That said, creative accountants and complicated sponsorship deals are proven to get around financial restrictions.

“From a private equity view point Chelsea is a club that has potential for enormous success,” Tim Williams, managing director of Tifosy Capital and Advisory, says.

“There’s a need for capital, a need to do work on the stadium. But they’re a huge brand in the biggest league in the world – what’s not to like? The only note of concern is that it’s clear over the last 20 years Chelsea had access to enormous capital. The club would have to go through some governance and some restructuring. “

Stadium and other problems

As the previously reported, Stamford Bridge is considered a significant drawback by every investor. With its capacity of 41,837, the stadium is relatively small compared to European rivals of similar stature, and trying to expand or build a new stadium nearby is fraught with difficulties.

A spokesperson for Ineos, whose owner Jim Ratcliffe previous explored buying Chelsea, said “there is no substance to the stories” that the Englishman would revive his interest.

Ratcliffe believes it would take at least a decade to resolve the problem with the stadium and it is estimated the cost of any stadium overhaul would start at £ 1bn. Ratcliffe has also previously said the sums quoted were unrealistic, citing the £ 150m Abramovich paid for Chelsea in 2003 and the £ 790m the Glazers paid for Manchester United in 2005. Newcastle United cost PIF £ 305m last year.

Stamford Bridge is surrounded by a cemetery and residential areas and any attempt to relocate the stadium elsewhere – Battersea was previously explored by Abramovich – can be thwarted by the Chelsea Pitch Owners, a non-profit who own the pitch and rights to the club’s name.

There is also uncertainty around if a mandatory fans’ Golden Share will become enshrined in law this spring, a recommendation of MP Tracey Crouch’s fan-led review that would allow them to veto removing the club from the Premier League or Champions League.

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