Chelsea are now worth £500m more than the £2.3bn paid in 2022 takeover – why?
By Liam Twomey
This summer marks the second anniversary of Clearlake Capital and Todd Boehly’s acquisition of Chelseafrom Roman Abramovich, conducted under the watchful eye of the UK government.
The final price paid was approximately £2.3billion ($3bn), with the new ownership pledging a further £1.75bn investment into the club. In the two years since, they have committed around £1.2bn just on transfer fees for new signings, though that has been partly offset by generating more than £350m through player sales.
On the pitch, the sweeping scale of the change has come at a considerable cost, with Chelsea finishing 12th and sixth in the two Premier Leagueseasons under the new owners. Incoming head coach Enzo Maresca, the third permanent hire made by Clearlake and Boehly, will be expected to lead them back into the Champions Leaguequalification places next season.
And yet despite the on-pitch struggles, Chelsea are worth around £500million morein 2024 than Clearlake and Boehly paid for the club in 2022. That is according to the latest European elite club valuation report published earlier this month by Football Benchmark, the football business data analytics platform established nine years ago by leading accounting firm KPMG.
Operated independently by Ace Advisory since 2022, with former KPMG partner Andrea Sartori as founder and CEO, Football Benchmark provides information on the financial performance of clubs, market valuations of footballers and the social media performance of players and clubs. Its analysis is utilised by top European football clubs, sports organisations, governing bodies, rights holders, investors and sponsors.
Its calculation of the “enterprise value” of elite European clubs is based on an algorithm that adopts the revenue multiple approach, which measures the value of a company relative to the revenues it generates. “The base multiple is an analysis of past transactions, with a higher weight given to the most recent transactions,” Sartori tells The Athletic. “Then the club-by-club multiple takes into account five parameters.”
Those are:
Profitability:Taking into consideration the staff costs-to-revenue ratio of the previous two financial years, as well as a club’s profit/loss before player trading.
Popularity:The number of followers and level of engagement across a club’s main social media platforms.
Sporting potential:Football Benchmark’s own market valuation of a club’s squad, since there is a strong correlation between higher squad value and on-field success.
Broadcasting rights:The impact of TV rights deals at a domestic league level, as well as the distribution method of those rights.
Stadium ownership:Whether or not a club own their home ground.
Chelsea’s enterprise value rose nine per cent from 2023 to 2024, though they actually dropped from seventh to ninth in Football Benchmark’s ranking of Europe’s most valuable elite clubs. This is because, with a handful of exceptions, larger market forces are pushing up the value of the sport’s biggest clubs across the board.
“One reason is new competitions are coming, or competitions have been revamped,” Sartori explains. “The fact that the Champions League will now have 36 teams, with more matches played and money to be distributed, impacts the value of clubs. There are also 12 clubs who will benefit from the new Club World Cup (in the summer of 2025).”
Chelsea are one of the clubs in line to participate in that inaugural expanded FIFA Club World Cup, being played in the United States next summer. While The Athletic has detailedthe significant financial, logistical and legal hurdles that FIFA, football’s worldwide governing body, still faces to get the competition off the ground, this potentially lucrative new revenue stream is already having an impact on elite club valuations.
It will be at least another 12 months before Chelsea can once again count on revenue from Champions League participation, but sitting out of Europe’s top club competition for two years in a row is not as financially devastating for them as it would be for a club with similar aspirations in another country. “A big English club can afford to miss the Champions League and feel less of the impact, because of the huge revenue that comes from the Premier League media deal,” Sartori says.
One thing that shines through in Football Benchmark’s enterprise values is the huge financial disparity that has opened up between Europe’s 10 biggest clubs and the rest. Arsenal, ranked just behind Chelsea in 10th, are rated as worth £1billion more than the 11th most valuable club: last season’s Champions League runners-up Borussia Dortmund.
“Look at that top 10 and what do you find?,” Sartori asks. “The big six clubs of the Premier League, and four mega international brands (Real Madrid, Bayern Munich, Barcelona and Paris Saint-Germain). All the other clubs are either playing in a smaller league, have significantly less revenue or don’t have the commercial appeal of the clubs (in the top 10).”
Recent high-profile deals that have underlined the attractiveness of these top clubs to wealthy investors — not least the Clearlake-Boehly purchase of Chelsea and INEOS paying £1.3billion for a 25 per cent stake in Manchester Unitedin February this year — are also factored into the algorithm that determines Football Benchmark’s enterprise values.
“There is a tendency to pay a premium for these top clubs, so they can be considered ‘trophy assets’: clubs which very rarely come on the market, and for whom investors are prepared to pay a premium, even if their financial performance would not necessarily justify it,” Sartori says.
Much of this underpinned Clearlake and Boehly’s conviction that their acquisition of Chelsea represented good value, despite many external analysts questioning the wisdom of a £2.3billion purchase price that was approximately five times the club’s revenue.
The fact Chelsea are being valued at £2.8billion two years later, despite falling far short of the club’s modern-era standards on the pitch in that time, indicates that their fundamental logic was sound. But while more growth could lie ahead, Sartori warns the broader financial landscape of elite European football’s future is more complicated.
“Personally, I don’t think we have significant space to grow media revenue in domestic leagues,” Sartori says. “We have reached a sort of plateau. There is no space in the calendar to create new competitions and play more (games). I also think there is going to be an element of downward pressure on player market-value and salaries, because of the new UEFA financial sustainability regulations and the new financial regulations coming in the Premier League.
“I don’t see revenue growing from a media perspective, and I don’t expect the value of players to go up as much as in the last four or five years — unless there is a disruptor in the market, like Saudi Arabia (last summer), or the Chinese market a few years back.
“But profitability of clubs is going to improve despite revenue not growing significantly, because of the regulations. So all in all, the value of clubs could go up further.”
This is where Chelsea believe their success in dramatically lowering their wage bill, which ballooned to £404million in the club’s accounts for the 2022-23 season, will help them. Clearlake and Boehly are also bullish about the talent assembled by co-sporting directors Laurence Stewart and Paul Winstanley, which new appointment Maresca will be tasked with maximising.
But in other areas, there is a lot of work to do.
All of the other clubs in Football Benchmark’s top 10 have larger, more modern home stadiums than Stamford Bridge, with no significant progress on redevelopment of the west London venue in the first two years of Clearlake-Boehly ownership. Commercial growth has been modest, and no primary shirt-front sponsor has yet been secured for next season. The Chelsea women’s team is entering an exciting but uncertain new era under Sonia Bompastor after the departure of Emma Hayes this summer.
The results of this ownership group’s bold commitment to tying coveted young talent to ultra-long contracts are also several years away from fully playing out, and it remains to be seen how well Chelsea can do in offloading those players whose signings do not work out.
But in a purely financial sense, Clearlake and Boehly’s big investment is trending in the desired direction.
https://www.nytimes.com/athletic/5558822/2024/06/13/chelsea-valuation-analysis/
Chelsea are now worth £500m more than the £2.3bn paid in 2022 takeover – why?
By Liam Twomey
This summer marks the second anniversary of Clearlake Capital and Todd Boehly’s acquisition of Chelseafrom Roman Abramovich, conducted under the watchful eye of the UK government.
The final price paid was approximately £2.3billion ($3bn), with the new ownership pledging a further £1.75bn investment into the club. In the two years since, they have committed around £1.2bn just on transfer fees for new signings, though that has been partly offset by generating more than £350m through player sales.
On the pitch, the sweeping scale of the change has come at a considerable cost, with Chelsea finishing 12th and sixth in the two Premier Leagueseasons under the new owners. Incoming head coach Enzo Maresca, the third permanent hire made by Clearlake and Boehly, will be expected to lead them back into the Champions Leaguequalification places next season.
And yet despite the on-pitch struggles, Chelsea are worth around £500million morein 2024 than Clearlake and Boehly paid for the club in 2022. That is according to the latest European elite club valuation report published earlier this month by Football Benchmark, the football business data analytics platform established nine years ago by leading accounting firm KPMG.
Operated independently by Ace Advisory since 2022, with former KPMG partner Andrea Sartori as founder and CEO, Football Benchmark provides information on the financial performance of clubs, market valuations of footballers and the social media performance of players and clubs. Its analysis is utilised by top European football clubs, sports organisations, governing bodies, rights holders, investors and sponsors.
Its calculation of the “enterprise value” of elite European clubs is based on an algorithm that adopts the revenue multiple approach, which measures the value of a company relative to the revenues it generates. “The base multiple is an analysis of past transactions, with a higher weight given to the most recent transactions,” Sartori tells The Athletic. “Then the club-by-club multiple takes into account five parameters.”
Those are:
Profitability:Taking into consideration the staff costs-to-revenue ratio of the previous two financial years, as well as a club’s profit/loss before player trading.
Popularity:The number of followers and level of engagement across a club’s main social media platforms.
Sporting potential:Football Benchmark’s own market valuation of a club’s squad, since there is a strong correlation between higher squad value and on-field success.
Broadcasting rights:The impact of TV rights deals at a domestic league level, as well as the distribution method of those rights.
Stadium ownership:Whether or not a club own their home ground.
Chelsea’s enterprise value rose nine per cent from 2023 to 2024, though they actually dropped from seventh to ninth in Football Benchmark’s ranking of Europe’s most valuable elite clubs. This is because, with a handful of exceptions, larger market forces are pushing up the value of the sport’s biggest clubs across the board.
“One reason is new competitions are coming, or competitions have been revamped,” Sartori explains. “The fact that the Champions League will now have 36 teams, with more matches played and money to be distributed, impacts the value of clubs. There are also 12 clubs who will benefit from the new Club World Cup (in the summer of 2025).”
Chelsea are one of the clubs in line to participate in that inaugural expanded FIFA Club World Cup, being played in the United States next summer. While The Athletic has detailedthe significant financial, logistical and legal hurdles that FIFA, football’s worldwide governing body, still faces to get the competition off the ground, this potentially lucrative new revenue stream is already having an impact on elite club valuations.
It will be at least another 12 months before Chelsea can once again count on revenue from Champions League participation, but sitting out of Europe’s top club competition for two years in a row is not as financially devastating for them as it would be for a club with similar aspirations in another country. “A big English club can afford to miss the Champions League and feel less of the impact, because of the huge revenue that comes from the Premier League media deal,” Sartori says.
One thing that shines through in Football Benchmark’s enterprise values is the huge financial disparity that has opened up between Europe’s 10 biggest clubs and the rest. Arsenal, ranked just behind Chelsea in 10th, are rated as worth £1billion more than the 11th most valuable club: last season’s Champions League runners-up Borussia Dortmund.
“Look at that top 10 and what do you find?,” Sartori asks. “The big six clubs of the Premier League, and four mega international brands (Real Madrid, Bayern Munich, Barcelona and Paris Saint-Germain). All the other clubs are either playing in a smaller league, have significantly less revenue or don’t have the commercial appeal of the clubs (in the top 10).”
Recent high-profile deals that have underlined the attractiveness of these top clubs to wealthy investors — not least the Clearlake-Boehly purchase of Chelsea and INEOS paying £1.3billion for a 25 per cent stake in Manchester Unitedin February this year — are also factored into the algorithm that determines Football Benchmark’s enterprise values.
“There is a tendency to pay a premium for these top clubs, so they can be considered ‘trophy assets’: clubs which very rarely come on the market, and for whom investors are prepared to pay a premium, even if their financial performance would not necessarily justify it,” Sartori says.
Much of this underpinned Clearlake and Boehly’s conviction that their acquisition of Chelsea represented good value, despite many external analysts questioning the wisdom of a £2.3billion purchase price that was approximately five times the club’s revenue.
The fact Chelsea are being valued at £2.8billion two years later, despite falling far short of the club’s modern-era standards on the pitch in that time, indicates that their fundamental logic was sound. But while more growth could lie ahead, Sartori warns the broader financial landscape of elite European football’s future is more complicated.
“Personally, I don’t think we have significant space to grow media revenue in domestic leagues,” Sartori says. “We have reached a sort of plateau. There is no space in the calendar to create new competitions and play more (games). I also think there is going to be an element of downward pressure on player market-value and salaries, because of the new UEFA financial sustainability regulations and the new financial regulations coming in the Premier League.
“I don’t see revenue growing from a media perspective, and I don’t expect the value of players to go up as much as in the last four or five years — unless there is a disruptor in the market, like Saudi Arabia (last summer), or the Chinese market a few years back.
“But profitability of clubs is going to improve despite revenue not growing significantly, because of the regulations. So all in all, the value of clubs could go up further.”
This is where Chelsea believe their success in dramatically lowering their wage bill, which ballooned to £404million in the club’s accounts for the 2022-23 season, will help them. Clearlake and Boehly are also bullish about the talent assembled by co-sporting directors Laurence Stewart and Paul Winstanley, which new appointment Maresca will be tasked with maximising.
But in other areas, there is a lot of work to do.
All of the other clubs in Football Benchmark’s top 10 have larger, more modern home stadiums than Stamford Bridge, with no significant progress on redevelopment of the west London venue in the first two years of Clearlake-Boehly ownership. Commercial growth has been modest, and no primary shirt-front sponsor has yet been secured for next season. The Chelsea women’s team is entering an exciting but uncertain new era under Sonia Bompastor after the departure of Emma Hayes this summer.
The results of this ownership group’s bold commitment to tying coveted young talent to ultra-long contracts are also several years away from fully playing out, and it remains to be seen how well Chelsea can do in offloading those players whose signings do not work out.
But in a purely financial sense, Clearlake and Boehly’s big investment is trending in the desired direction.
https://www.nytimes.com/athletic/5558822/2024/06/13/chelsea-valuation-analysis/
