The way too early January 2023 Transfer Window Thread

Philip Jeff Frye

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I can understand Roman spending lots of his ill gotten gains as an insurance policy against Putin deciding to rub him out. I can understand Arab petrostates wanting to improve their PR. How does a private equity firm like Clearlake Capital, whose investors are expecting a return (and presumably a high return!), sign on to a program like this?
 

Morgan's Magic Snowplow

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I can understand Roman spending lots of his ill gotten gains as an insurance policy against Putin deciding to rub him out. I can understand Arab petrostates wanting to improve their PR. How does a private equity firm like Clearlake Capital, whose investors are expecting a return (and presumably a high return!), sign on to a program like this?
Its really interesting in a lot of ways. Boehly/Clearlake just have a totally different thesis about the future growth of football than everybody else. The owners of United, Liverpool, Spurs, and Everton are looking to sell their teams or sell minority stakes to lessen their exposure and there aren't exactly hordes of buyers lined up right now. Boehly/Clearlake think revenues and asset value of big clubs will double in the next 5-10 years and are willing to invest massively into Chelsea to ensure they are competitive enough on the field to take advantage of that boom.

Who is right? Only time will tell.
 

tmracht

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Mostly because the situation surrounding the sale devalued the acquisition cost would be my guess.
 

InstaFace

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I can understand Roman spending lots of his ill gotten gains as an insurance policy against Putin deciding to rub him out. I can understand Arab petrostates wanting to improve their PR. How does a private equity firm like Clearlake Capital, whose investors are expecting a return (and presumably a high return!), sign on to a program like this?
Roman Abramovich bought Chelsea in 2003 for £ 140M.

Todd Boehly bought it from her majesty's trustees in 2022 for £ 4,250M.

That was a compound annual growth rate of 19.7%, sustained for two decades. That's "Mitt Romney's 401k" levels of returns.

Even if you only credit the valuation of the club at the £ 2.5B that Abramovich would have received, and back out the £ 1.75Bn in promised investments in the club (which you'd think would increase its enterprise value by an equivalent-or-greater amount), that CAGR is still 16.4% annual returns.

Compared to those returns, you can sustain some negative cashflow for a while.

And the new investors will probably have an IPO as an exit option, with the inflated valuations that would entail given that it would essentially be a meme stock.
 

the1andonly3003

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Spurs apparently had an "Oh crap!" moment in their dealings today.

Matt Doherty was announced as going on loan to Atletico but Spurs already have 8 players out on loan, and that's the limit. They apparently couldn't find a loophole and in the end terminated his contract by mutual agreement, and now he can sign on a free with Atletico.
why wouldn't they just sell him for nominal fee? or for the loan fee Spurs would have gotten
 

Morgan's Magic Snowplow

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Roman Abramovich bought Chelsea in 2003 for £ 140M.

Todd Boehly bought it from her majesty's trustees in 2022 for £ 4,250M.

That was a compound annual growth rate of 19.7%, sustained for two decades. That's "Mitt Romney's 401k" levels of returns.

Even if you only credit the valuation of the club at the £ 2.5B that Abramovich would have received, and back out the £ 1.75Bn in promised investments in the club (which you'd think would increase its enterprise value by an equivalent-or-greater amount), that CAGR is still 16.4% annual returns.

Compared to those returns, you can sustain some negative cashflow for a while.

And the new investors will probably have an IPO as an exit option, with the inflated valuations that would entail given that it would essentially be a meme stock.
They only bought the club for £2.5b so you definitely need to take out the £1.75b in promised investment.

CFC owed Roman's holding company about £1.6b when he sold the club, a debt that he effectively gave up. So its probably more accurate to think of him making a £1.75b investment and then selling it 18 years later for £2.5b. Not the greatest of returns.

The owners making out like bandits are FSG, who bought Liverpool for 300m in 2010 are are now hoping to sell for...some very big number. But I think they see the low hanging fruit in terms of revenue and asset growth as already picked.
 

Royal Reader

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Even if Chelsea brought a relatively meagre return on Abramovich's investment, the narrative at the time of the acquisition was basically that he was blowing a ton of his fortune to enjoy himself. Didn't quite end up that way.
 

coremiller

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They only bought the club for £2.5b so you definitely need to take out the £1.75b in promised investment.

CFC owed Roman's holding company about £1.6b when he sold the club, a debt that he effectively gave up. So its probably more accurate to think of him making a £1.75b investment and then selling it 18 years later for £2.5b. Not the greatest of returns.

The owners making out like bandits are FSG, who bought Liverpool for 300m in 2010 are are now hoping to sell for...some very big number. But I think they see the low hanging fruit in terms of revenue and asset growth as already picked.
The Glazers will come out even better. They bought United for £790m in 2005, but £660m of that was borrowed money, so they only put in £130m of their own capital. The club currently has about £515m in debt, so if they can sell the club for the £4.9 billion they're reportedly seeking, that would be about a 33x return on the initial £130m investment, or 21.6% annualized.* To get a 33x return, FSG would have to sell Liverpool for nearly £10b.

*This is overly simplified and doesn't account for the various debt restructurings over the years, or the dividends (!) the Glazers have taken, but it should be in the right ballpark.
 

Morgan's Magic Snowplow

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The Glazers will come out even better. They bought United for £790m in 2005, but £660m of that was borrowed money, so they only put in £130m of their own capital. The club currently has about £515m in debt, so if they can sell the club for the £4.9 billion they're reportedly seeking, that would be about a 33x return on the initial £130m investment, or 21.6% annualized.* To get a 33x return, FSG would have to sell Liverpool for nearly £10b.

*This is overly simplified and doesn't account for the various debt restructurings over the years, or the dividends (!) the Glazers have taken, but it should be in the right ballpark.
Absolutely. And I've seen estimates that the Glazers have taken out close to £1b in dividends total over the course of their ownership.

The interesting thing is that these guys saw roughly 2005-2020 as the gold rush in terms of revenue and asset growth and now want to get out before they have to sink more money into their clubs to stay competitive, especially after the failure of both the Super League and Project Big Picture, whereas Boehly/Clearlake think now is the time to get in and invest massively to take advantage of a coming boom.

I don't think much of the Glazers but John Henry and Todd Boehly are both very smart, very successful investors and franchise owners and they seem to have diametrically opposite theses about the future of football as a business.
 

Jimy Hendrix

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I don't think much of the Glazers but John Henry and Todd Boehly are both very smart, very successful investors and franchise owners and they seem to have diametrically opposite theses about the future of football as a business.
I feel like what thesis to believe here comes down to whether nation states will push further into football or will retreat. The negative thesis has more nation-state involvement and ruination for any mere business or individual trying to keep up. If you think that's a fad that will slow or stop as the global economy and political environment changes, then it looks a lot better to be an American moneyman owning a commercial juggernaut of a club again.

The other difference might be Henry being jaded on how much good ol' American know how, fresh approaches and data analytics can do in this arena with Boehly being more optimistic.
 

Mighty Joe Young

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Absolutely. And I've seen estimates that the Glazers have taken out close to £1b in dividends total over the course of their ownership.

The interesting thing is that these guys saw roughly 2005-2020 as the gold rush in terms of revenue and asset growth and now want to get out before they have to sink more money into their clubs to stay competitive, especially after the failure of both the Super League and Project Big Picture, whereas Boehly/Clearlake think now is the time to get in and invest massively to take advantage of a coming boom.

I don't think much of the Glazers but John Henry and Todd Boehly are both very smart, very successful investors and franchise owners and they seem to have diametrically opposite theses about the future of football as a business.
I think the play is that the Premier League will eventually get its act together and fully monetize the digital streaming rights. For example, if LFC or ManU could sell its games on an individual basis to their far flung fan bases they could rake in billions. ManU claims to have upward of a billion worldwide fans. Even if it’s only a tenth of that , and you stream your games at 1£ a game .. well, do the math.
 

Morgan's Magic Snowplow

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I think the play is that the Premier League will eventually get its act together and fully monetize the digital streaming rights. For example, if LFC or ManU could sell its games on an individual basis to their far flung fan bases they could rake in billions. ManU claims to have upward of a billion worldwide fans. Even if it’s only a tenth of that , and you stream your games at 1£ a game .. well, do the math.
I think that’s correct but the problem is they don’t have the right to sell individual games and the only way that changes is if 14 of the 20 PL teams vote for it, which they won’t. Project Big Picture failed for precisely this reason - it would have given the big clubs the ability to make changes like this to digital streaming rights and the smaller clubs saw right through it and said no.
 

Mighty Joe Young

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I think that’s correct but the problem is they don’t have the right to sell individual games and the only way that changes is if 14 of the 20 PL teams vote for it, which they won’t. Project Big Picture failed for precisely this reason - it would have given the big clubs the ability to make changes like this to digital streaming rights and the smaller clubs saw right through it and said no.
Well, that’s why the Super League existed - however temporary. The mega clubs will never get exclusive rights to their own games under the current club system. But there has to be a compromise from what exists right now (which is pretty damned lucrative) and what it could conceivably be, given the riches on offer. The thing about Project Big Picture that everyone forgets was the massive revenue sharing being offered.
 

rguilmar

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I know he’s not a favorite around these parts, but gotta feel for Julian Araujo as his paperwork to Barcelona was filed 18 seconds too late, and according to Fab Romano, FIFA will not approve the deal.