Inside the Chelsea Sale: Deep Pockets, Private Promises and Side Deals

LONDON — The British government on Tuesday moved closer to giving its blessing to the purchase of Chelsea F.C., one of European soccer’s blue-ribbon teams, by an American-led investment group after deciding it had sufficient assurances that none of the proceeds from the record sale price — $3.1 billion — would flow to the club’s Russian owner.

The government’s pending approval, expected as soon as Wednesday, signaled the end of not only the most expensive deal in sports history but possibly the most fraught, cryptic and political, too.

In the three months since the Russian oligarch who owns Chelsea, Roman Abramovich, hurriedly put his team on the market, the club’s fate has played out not only on the fields of some of world soccer’s richest competitions but in the corridors of power at Westminster and the soaring towers of Wall Street. And all of it is against the backdrop of crippling financial sanctions imposed after Russia’s invasion of Ukraine.

The path to a deal has entangled a scarcely probable cast of characters — private equity funds and anonymous offshore trusts; lawmakers in Britain and Portugal; an octogenarian Swiss billionaire and the American tennis star Serena Williams; an enigmatic Russian oligarch and a little known Portuguese rabbi — and featured a contested passport, wartime peace talks and even reports of an attempted poisoning.

Its end leaves as many questions as answers. All that can be said for certain is that a group led by the Los Angeles Dodgers co-owner Todd Boehly and largely financed by the private equity firm Clearlake will now control Chelsea, a six-time English and two-time European champion, and Abramovich will not.

Abramovich first indicated his intention to sell Chelsea — the most high-profile of his assets by some distance — almost as soon as the Russian army crossed into Ukraine in late February, and only a week before Britain and the European Union identified him as a key ally of President Vladimir V. Putin of Russia and froze his assets.

Completing a deal, though, has proved fiendishly convoluted. The final obstacle to a sale was resolved only this week, when lawmakers in Britain were sufficiently satisfied that a $2 billion loan owed to an offshore trust, believed to be controlled by Abramovich, had been cleared. British government officials then tried to reassure their counterparts in Portugal, which had controversially granted Abramovich a Portuguese passport with a rabbi’s help in 2018, and the European Union, which had imposed its own sanctions on Abramovich in March. Both must also approve the sale because of his Portuguese citizenship.

But the loan was not the only complication faced by Raine, the New York-based investment bank recruited by Abramovich to handle the sale. The agreement with Boehly’s group came with a web of conditions, some set by the British government, some by Raine and some by Abramovich himself, all of them striking in the context of the sale of a sports team.

All four prospective suitors identified by Raine as serious contenders — Boehly’s group; one headed by the British businessman Martin Broughton that included Williams and the Formula 1 driver Lewis Hamilton among its partners; another financed by Steve Pagliuca, the owner of the N.B.A.’s Boston Celtics; and one from the Ricketts family, who control baseball’s Chicago Cubs — were asked not only to pay a jaw-dropping price for the team but also to commit to number of pledges, including as much as $2 billion more in investments in Chelsea.

The club’s suitors were told, for instance, that they cannot sell their stake within the first decade of ownership and that they must earmark $125 million for the club’s women’s team; invest millions more in the club’s academy and training facilities; and commit to rebuilding Stamford Bridge, Chelsea’s aging West London stadium.

At the same time, Abramovich insisted that all the proceeds from the sale would go toward a new charity to benefit the victims of the war in Ukraine. To ensure he does not gain control of that money, the British government will require it first be placed in a frozen bank account that it controls. Only then will it vet all the plans for the fund being drawn up by Mike Penrose, a former head of a branch of the United Nations children’s charity UNICEF, and issue a special license that will allow the charity to take control of the funds.

The charity was just one of the peculiarities of the deal arranged by Joe Ravitch, the Raine co-founder who directed the sale.

The new owners also will not be permitted to take dividends or management fees or load the team with debt — terms that bankers related to the sale have described as “anti-Glazer clauses,” a reference to the unpopular owners of Manchester United who took control of the club in a leveraged buyout in 2005.

Several people close to the process said Boehly’s bid was eventually selected from the group of wealthy suitors because of its willingness to abide by the clauses. (At least one of those people, who worked on the bid backed by Pagliuca, said their group withdrew from the running because of the nature of the conditions.)

The Premier League has already signed off on the Chelsea sale, announcing Tuesday that it had vetted and approved the new owners “subject to the government issuing the required sale license and the satisfactory completion of final stages of the transaction.”

It is not clear, though, quite what will happen if Boehly and his partners choose to renege on any of the conditions once they have control of the club. Any oversight role will fall on the charity, the only outside entity still inextricably linked to both Chelsea and Abramovich, or the continued influence of two key Abramovich lieutenants who hope to remain in their posts under the new owners.

Both of those executives — the club chairman Bruce Buck and Marina Granovskaia, a Russian-born businesswoman who rose from being Abramovich’s personal assistant to the most senior official response for soccer trades at Chelsea — will earn about $12.5 million for their work on the sale. The commissions to management, totaling as much as $50 million, and the fee to Ravitch, believed to be between 0.5 and 1 percent of the deal’s value, will be paid from the club’s balance sheet and not from the sale funds, according to a person familiar with the structure of the deal.

British government officials had clashed with Chelsea executives and financiers about creating a legally binding resolution to prevent Abramovich from getting access to the money he so publicly said he was willing to waive.

At issue was a company called Camberley International Investments, run by a Cypriot trustee on behalf of what British officials believe was Abramovich and his children. Camberley lent $2 billion to Fordstam, the company through which Abramovich controlled Chelsea, to finance its spending and operations. Camberley’s claim against Fordstam has now been resolved, and its trustee has recently resigned.

It was only at that point, with a May 31 deadline for the completion of the sale looming, that Britain’s government moved to approve the deal.

For Chelsea’s fans, the sale draws an end to a season that at times blurred into absurdity. The sanctions imposed on Abramovich — and by extension Chelsea — affected everything from the team’s travel to the printing and sale of game programs. Thousands of empty seats dotted Stamford Bridge during games over the final months of the season after a ban on new ticket sales, and roster turmoil loomed because of a moratorium on the signing and sale of players.

That will now be lifted, with Chelsea’s players and Manager Thomas Tuchel said to be urgently seeking clarity from Boehly and his group on their plans. At least two key defenders are slated to leave Chelsea this summer, and at least two more players — including the club captain, Cesar Azpilicueta — are expected to follow.

Boehly, a regular presence at Chelsea games since his takeover was announced on May 6, has broadly said he would like to maintain Chelsea as a major force in soccer. It is unlikely, though, that a group largely backed by a private equity firm will prove quite so indulgent as Abramovich was as an owner.

In almost two decades at Chelsea, Abramovich was a familiar but all but silent presence at Stamford Bridge, happy to let his money do the talking. Under his leadership, Chelsea was transformed into a true European superpower, winning five Premier League titles and two Champions League crowns by employing a succession of A-list managers and investing billions of dollars in players.

His largess changed Chelsea but also soccer as a whole, ushering in an era of unfettered spending that saw transfer fees and player salaries rise to levels unthinkable only a few years earlier. It also came at a price that Chelsea’s income, no matter how much it grew in those years of plenty, could not match. Throughout his tenure, Abramovich used his vast personal fortune to subsidize losses that ran as high as $1 million a week.

Yet just as Abramovich’s arrival in 2003 opened the door to a new era for English soccer, his departure serves as a bookmark, too.

While scarcity may explain part of the rush to pay a premium for Chelsea — soccer’s biggest teams are rarely up for sale, after all — it is not clear when, or how, a group of private equity investors who navigated such treacherous, confounding waters to get control of the club can start to realize a return on their investment.