Ares Management invests $500m in Chelsea FC

English soccer giants Chelsea have raised about US$500m in new investment from Ares Management, according to the Financial Times.

The US firm has reportedly provided the capital injection, which has been described as a preferred equity deal, and arrives as the Premier League club looks for ways to fund stadium improvements to Stamford Bridge and buy stakes in more soccer teams.

Chelsea’s owner BlueCo agreed to buy a stake in Ligue 1 side Strasbourg in June and have been linked with a deal for Portuguese outfit Sporting Lisbon as the west London outfit pursues a multi-club model.

Bloomberg reported last month that Chelsea were attempting to raise as much as US$500m in fresh investment.

Ares has already made two investments in Major League Soccer’s (MLS) Inter Miami, with the latest injection of US$75m made last month. The firm also took a 33.96 per cent stake in Atletico Madrid’s holding company, in exchange for a €181.8m (US$193.4m) capital increase. It also was a key backer behind Eagle Football’s takeover of Ligue 1’s Olympique Lyonnais.

Last year, Ares announced it had raised US$3.7bn of dedicated capital to be used exclusively on investing in sports leagues, teams and franchises.

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Chelsea’s appetite for spending big sums on players has shown no sign of slowing under Todd Boehly and Clearlake Capital. Yet the club has reportedly insisted that Ares’ investment will not go towards covering its transfer bill, with the intention being to channel the funds towards projects designed to expand and grow the Blues’ business.

One of Chelsea’s biggest priorities is to improve Stamford Bridge, with the club considering whether or not upgrading its current venue would be better than building a new stadium. A previous report estimated that the team would need to pay UK£1.5bn (US$1.8bn) to knock down Stamford Bridge and build a replacement on the same site.

Chelsea had already signaled their intent to establish a multi-club ownership model with the acquisition of Strasbourg and they reportedly had a bid turned down for Portuguese top-flight side Portimonense in March. Given the purported Sporting Lisbon interest, it appears Boehly and Clearlake are determined to add a team in Portugal as they look to expand their network to other leagues.

Whether Chelsea are able to successfully pursue these projects remains to be seen, especially since they are still without a front-of-shirt sponsorship deal as of now. Co-owner Jose Feliciano admitted this month at the IPEM private equity conference that the club could be better run financially and is aiming to reduce operating expenses by more than US$100m per year.

It might mean that Chelsea look to secure further external investment, with former captain John Terry said to be part of a group interested in buying a stake.

Source: Sportspromedia

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