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Tuesday, March 21, 2023

Chelsea Plan £800m Financing To Reduce Debt

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Chelsea are planning to take on record levels of debt to finance its plans following the deal to buy the club from Russian Billionaire Roman Abramovich after UK government sanction.

Todd Boehly led the Clearlake Capital consortium that bought Chelsea for £2.5bilion in May and committed to investing a further £1.75bilion into the squad and upgrading Stamford Bridge.

According to the Financial Times, the new owners are planning to raise a total of £800milion, a £300milion revolving credit facility for working capital and a £500milion term loan that would be part of Clearlake’s £1.75bilion investment commitment.

Under the terms of the sale of the club to Clearlake, which was led by US merchant bank Raine Group, restrictions were placed on future debt levels. Chelsea will not bear any of the interest expenses associated with the debt and the owners are not pledging any of Chelsea’s assets or revenues to obtain the financing.

Bank of America and JPMorgan are among the banks reported being involved with the financing package.

During his time as owner of Chelsea, from 2004 until earlier this year, Abramovich borrowed the club £1.5bilion, a sum that was written off when he sold Chelsea after being sanctioned following Russia’s invasion of Ukraine.

Chelsea’s planned £800milion financing would exceed any previous institutional financial commitment taken on by an English Premier League club.

In 2021, Manchester City’s parent company City Football Group (CFG), raised $650milion to further its global ambitions. Italian second-tier side Palermo recently became the 12th club to be wholly or partially owned by CFG.

According to its last accounts, Tottenham Hotspur’s net debt had risen to £706milion, a result largely of money borrowed to finance the building of the club’s new stadium.

Manchester United’s latest quarterly financial results revealed that its net debt had increased to £494.8milion.

In June, Barcelona members approved plans to sell a minority stake in the club’s licensing and merchandising division and up to 25 percent of its LaLiga broadcast rights revenue. Barcelona hopes to generate around €600milion to reduce debts that returning president Joan Laporta estimated last year had risen to €1.35bilion.

Earlier this week, Chelsea announced the appointment of Tom Glick to the new role of president of business with a brief to expand the club’s international revenues.

A series of senior executives have left the club since the change of ownership. The club is yet to appoint a sporting director, with Boehly taking on the role temporarily. Chelsea has already completed summer transfer deals to acquire forward Raheem Sterling from Manchester City for £40milion and defender Kalidou Koulibaly from Napoli for €40milion.

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