Chelsea owner Todd Boehly under the magnifying glass

Boehly has proved his critics wrong before, including those who said he paid too much for the Dodgers. And while he’s the one most associated with the new ownership, it’s Santa Monica, Calif.-based private equity firm Clearlake that owns the largest stake at 61 percent, though voting rights are split evenly .

“Iconic sports properties require an overpayment on the day of purchase to even out over time,” said Marc Ganis, co-founder of Sportscorp, a Chicago-based consulting firm. “He understands that marquee franchises don’t come around very often and that their management and the future of the industry would make the price paid look very good a few years from now.”

Boehly was part of a group that bought Bruce Springsteen's music catalog for $550 million last year.

Boehly was part of a group that bought Bruce Springsteen’s music catalog for $550 million last year. Recognition:AP

Boehly declined to comment on the article but told an audience of private equity investors in June that England’s top football division is significantly undervalued.

“They don’t realize how great their opportunity is,” said Boehly at the event in Berlin. “We’re starting to see the power of these platforms.”

Boehly is worth $6.1 billion, according to the Bloomberg Billionaires Index, which puts him in line with other Premier League club owners, some of whom are American financiers. Still, he’s not as wealthy as Abramovich, while the Gulf kings who own Manchester City and the Saudi sovereign wealth fund behind Newcastle United are in a very different league than his consortium.

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Few outside of Wall Street knew much about Boehly until about a decade ago when he teamed up with his Guggenheim business partner Mark Walter to buy MLB’s Dodgers for $2.15 billion. Last year, the couple bought a stake in the NBA’s Lakers, and Walter is also part of the Chelsea ownership group.

Boehly’s major sporting interest was wrestling. Raised in Maryland, he attended the All-Boys Landon School and was a member of the team that won back-to-back Interstate Athletic Conference championships. He studied at the College of William and Mary, where he met his wife Katie, and at the London School of Economics.

He started in finance at Credit Suisse Group, then moved to venture capital firm JH Whitney & Co. before joining Guggenheim in 2001 to build their lending business.

His most notable transaction occurred in 2010 when he led an investor group that acquired Security Benefit Life Insurance, a Kansas-based annuity provider. With a $50 million loan from Michael Milken, Boehly bought a personal interest alongside Guggenheim.

Milken, the junk bond pioneer jailed for his role in an insider trading scandal in the 1980s, was a Guggenheim client, and regulators said the firm violated its fiduciary duty by not providing investors with personal loans have disclosed. Guggenheim paid a $20 million fine in 2015 without admitting or denying wrongdoing.

That same year, Boehly left Guggenheim to found Eldridge. He struck a deal to buy a portfolio of Guggenheim’s assets – including Security Benefit, the Hollywood Reporter and Dick Clark Productions – which formed the original nucleus of his investment company.

“Iconic sports properties require an overpayment on the day of purchase to even out over time. He understands that marquee franchises don’t come around very often and that their management and the future of the industry would make the price paid look very good a few years later.”

Marc Ganis, co-founder of the consulting firm Sportscorp

Today, Greenwich, Eldridge is valued at about $8.6 billion according to Bloomberg’s wealth index, with 69 percent of the company owned by Boehly. Boehly’s personal investments, including his professional athletic endeavors, make up the remainder of his fortune.

Security Benefit is Eldridge’s most valuable asset with approximately $46.9 billion in assets under management and is valued at $5.6 billion. It’s an engine that provides policyholders with a quick source of capital and allows the company to grow its portfolio without raising money externally. It also reported holding more than $7 billion in securitisations created by Eldridge’s associated asset managers.

Eldridge’s profits have skyrocketed recently. It was expected to make about $500 million in 2019, Boehly told Bloomberg earlier this year. That grew to about $1 billion in 2021, according to a company spokesman, and helped fuel a surge in acquisitions.

Eldridge was an investor in 16 deals in 2020 and 39 in 2021, according to PitchBook data. The company provided financing to Cathie Woods Ark Investment Management in 2020 and then topped it off last year by merging with Sony Group, to buy the rights to Springsteen’s songwriting catalogue.

Boehly has proved his critics wrong before, including those who said he paid too much for the Los Angeles Dodgers a decade ago when he was part of a group that paid $2.15 billion for the iconic franchise .

Boehly has proved his critics wrong before, including those who said he paid too much for the Los Angeles Dodgers a decade ago when he was part of a group that paid $2.15 billion for the iconic franchise .Recognition:Getty Images

But closing a deal for Chelsea required a different level of speed and control.

According to Raine Group, the consultancy that handled the sale, there were 12 “credible offers” that needed approval from the UK government. Interested buyers included Ken Griffin, the Ricketts family, Stephen Pagliuca, co-chairman of Bain Capital and co-owner of the Boston Celtics, and Jim Ratcliffe of chemical giant Ineos.

Boehly’s group won and agreed to pay £2.5bn for the club and set aside a further £1.75bn for its development. One investor familiar with the strategy described Chelsea as the year’s biggest distressed sale — a sale that presented an opportunity to buy at a 50 percent discount.

Still, the price paid has raised questions about how to turn Chelsea into a profitable venture, especially in a timeframe that’s working for Clearlake’s investors. While private equity firms are increasingly investing in football teams, it’s still unusual for them to be majority owners.

Some buyers have been able to justify the prices paid for Teams with clever property developments that have helped boost sales, and Boehly’s group includes London property developer Jonathan Goldstein. But Chelsea’s recovery is complicated – and potentially very expensive. As it stands, the club’s Stamford Bridge stadium is small compared to its direct rivals, with a maximum capacity of less than 42,000.

Another obstacle could be comparisons to the spendy Abramovich, 55, who poured so much money into making Chelsea the glamorous team they are today that the club owed him £1.5bn at the end of his tenure . The team also handed out gifts to players, including luxury cars, on which they may now owe taxes.

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For the time being, Boehly has not shied away from donating significant sums of money to the players and supports the German coach Thomas Tuchel. He and Walter have a history of fielding one of MLB’s most expensive teams. It’s paid off: The Dodgers have made the World Series three times since taking over, won in 2020, and have their best record yet this season.

“They approached the Dodgers as a big market club that needs to invest big bucks to generate big revenue and grow asset value,” Ganis said. “That’s the approach I expect Boehly to take with Chelsea as well.”

Bloomberg

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https://www.smh.com.au/business/entrepreneurship/the-billionaire-living-out-his-inner-ted-lasso-20220815-p5b9sy.html?ref=rss&utm_medium=rss&utm_source=rss_business Chelsea owner Todd Boehly under the magnifying glass

Brian Lowry

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