Chelsea FC, Clearlake/Boehly, Saudi Arabia's Public Investment Fund: the "Dangerous Liaisons"
Governance issues raised by recent players transfers from Chelsea to PIG-fueled football clubs.
While the Clearlake/Boehly-PIF story might sound a bit far-fetched, it raises true governance issues on institutional investment in sports.
Let's recap:
➡️ Todd Boehly and Clearlake Capital Group acquired Chelsea Football Club for £2.5bn + £1.75bn in May 2022.
➡️ During their 1st season of ownership, they spent over £650m in transfers - which placed them in the red with Financial Fair-Play.
➡️ And they are now about to sell multiple unwanted, high-earning players (Kante, Aubameyang, Lukaku, Koulibaly, Mendy, Ziyech, Hudson-Odoi) to the 4 Public Investment Fund (PIF)-fueled Saudi clubs (Al Ittihad, Al Ahli, Al Nassr, and Al Hilal) which were privatized 2 weeks ago.
Why does it matter?
Here are the reports (and sources) which triggered the outcry about potential conflicts of interest between the Chelsea owners and PIF:
➡️ The Daily Mail reported that Saudi Arabia’s Public Investment Fund (PIF) had invested, through its fund of funds strategy, "billions of pounds" in Clearlake's PE funds - Ben Jacobs from CBS Sports confirmed that "Clearlake and PIF had an excellent relationship."
➡️ On Boehly's side, Financial Times' Arash Massoudi explained that Todd Boehly and Jonathan Goldstein of Chelsea FC and Cain International had teamed up with PIF last year on a new hotel chain investment project, while James Nalton noticed that Boehly had visited Saudi Arabia no later than this month.
Does that mean that their football interests might be linked (and conflicted)?
To be fair, not necessarily. Clearlake has about $75 billion of AUMs (Assets Under Management) - their latest fund collected $14 billion from 300 institutional investors across 40 countries across six continents - and it is quite common for PE funds this size to have such a diversified LP basis.
So it would be a bit of a shortcut to say that PIF are pulling the strings to bankroll Chelsea and protect Clearlake's return on investment.
However, it highlights a major issue regarding institutional investors in sports.
While links between private investors are relatively easy to identify, allowing to (theoretically) prevent conflicts of interest, PE firms do not disclose the identity of their investors.
And these firms are becoming increasingly intertwined in their investments, especially in global football.
Alex Phillips, former Head of Governance and compliance at UEFA, described the situation as “absolutely problematic” from a practical governance perspective.
I can only agree with that. It is absolutely necessary that private AND institutional investors provide transparency about ALL the stakeholders involved - directly or indirectly - in the management of the clubs, in order to preserve the independence from one football club to another, and ultimately protect the integrity of the game.