Chelsea Suitor Boehly aims to stay long on leverage and relationships

Chelsea, England’s premier football club, is losing the deep pockets of deposed Russian oligarch owner Roman Abramovich. But if, as predicted this week, a group led by American Todd Boehly completes a multi-billion dollar buyout of the squad, Chelsea will gain a negotiator whose name seems to come up in almost every substantive conversation with players in the sports world. . Somehow, when a deal is made, people want or expect Boehly to be involved. And Boehly’s track record shows he’s happy to oblige.

Indeed, even when the going gets tough, Boehly keeps the personal connection alive. During 2020 and 2021, for example, Boehly’s special purpose acquisition company, Horizon II, sued Sportradar, a private company coveted by Wall Street.

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More than once, Boehly’s group believed it had struck multibillion-dollar deals to take Sportradar public, only to be asked by one of Sportradar’s backers to seek ever higher valuations. high. When Boehly was finally able to convince the sports data and analytics firm to sign a $10 billion deal, the SPAC market had gone from noisy to entrenched. The outside investors needed to complete the deal balked at the price and the deal fell through. In August, Sportradar decided to go public through an IPO. This left Horizon II in a position where it may well have to close up shop and return money to investors in six months, costing Boehly, as a sponsor of SPAC, millions of dollars in fees.

Yet on Sept. 14, when Sportradar founder Carsten Koerl took to the Nasdaq podium for the ringing ceremony with Michael Jordan, one of the company’s early investors, the only other person to joining for photos was Boehly. Jordan gave Boehly a welcoming pat on the back, and the trio posed with the financial headstones — lucite trophies commemorating the IPO. As dozens of Sportradar executives crowded around them for the open trade, Koerl and Boehly shared a laugh.

It turned out that Boehly’s core business, a conglomerate named Eldridge, joined a syndicate that bought $159 million worth of stock in Sportradar’s IPO. Boehly’s cut was insignificant, in that he is not among the major shareholders disclosed to regulators, but it did land him on the Nasdaq podium.

Boehly, like many colleagues over his 20 years of trading, and like the organizations mentioned in this article, declined or did not respond to requests for comment on this story. But a person involved in the Chelsea deal said Boehly’s real genius was his use of other people’s money. Despite being the lead name in the multi-billion dollar bid for the club, Boehly is not the main source of funding.

This distinction belongs to Clearlake Capital. Clearlake is a Santa Monica, Calif., $65 billion asset manager whose owners include Goldman Sachs, Ares Management and Blue Owl, the parent company of NBA team investor Dyal Capital. Clearlake specializes in operational improvements, seeking to actively boost the way investment businesses are run. His dozens of past and current investments include PrimeSport, a sports and event experience company; country club operator ConcertGolf; suppliers to the hydraulic fracturing industry; and manufacturers of healthy snacks. Presumably, Clearlake’s expertise will be put to good use in meeting Chelsea’s urgent needs, such as a new stadium and funding their massive wage bill amid English football’s rather constrained economy.

It’s a safe bet that the main money Boehly’s Eldridge contributes to the purchase of Chelsea also comes from elsewhere. Swiss billionaire Hansöjrg Wyss has invested more than $1.3 billion in Eldridge over the years and owns a “significant” share of the business, according to a press release from Eldridge. Wyss, who started a medical device company and sold it for $20 billion, now lives in Wyoming, supporting conservation and education causes.

Boehly’s ability to get others to buy into his knack for closing deals extends even to his family foundation. When he and his wife Katie started the Boehly Family Foundation in 2008, it was funded by six $5,000 donations from business associates, according to publicly available tax filings – executives who now run the company’s subsidiaries. ‘Eldridge, a lawyer who has worked on Boehly deals and two California designers. . Two years after the foundation began operations, the Boehlys donated their own $70,000. It donates modest sums each year to local police, firefighters and music education groups.

Unquestionably wealthy, and self-styled billionaire himself, Boehly doesn’t fit the typical profile of a Forbes 400 titan. He lives in a leafy Connecticut suburb of New York, in a town with a hedge fund billionaire or two and many other people who look more like Boehly, classic militants coming out of the middle class and excelling in their profession. It’s a neighborhood filled with mortgage-backed bankers and corporate bankruptcy lawyers.

While this part of his life might not be particularly ostentatious, his investments in sports have drawn attention. Boehly said Sportico‘s Scott Soshnick in an interview last fall that he finds investing in sports “intellectually difficult”, and added, “by the way, winning is precious.

Boehly’s winning talent comes from Wall Street. The William & Mary grad cut his teeth in the mid-1990s slicing and cutting debt – debt-backed bonds (CDOs) – resold to institutional investors.

In a 2013 interview with Stephanie Ruhle, Boehly, then chairman of Guggenheim Investments, a money management firm started by the wealthy New York family, expressed an investment philosophy that likely makes it appealing to team owners and investors today: he invests with a long time horizon.

“Our shareholders don’t look at us and say, what have you done for us in the last 90 days?” Boehly said. “They look at us and say, okay, where are you going in five years? Where are you going in 10 years?

The long-term view has placed Boehly in his most prominent investment before Chelsea, and it suggests how Chelsea might fare under his stewardship. Ten years ago, the Los Angeles Dodgers franchise was in the desert and a shadow of its former self. Owner Frank McCourt was bankrupt and fighting legal battles with Major League Baseball, and the team was even outbid for an aging bench player by the ever-strapped Pittsburgh Pirates.

Seemingly out of nowhere, a group led by Boehly and fellow Guggenheim executive Mark Walter bought the team in 2012. The $2.15 billion price tag — then a record for a sports team — surely meant a lot . But Boehly crafted the deal in such a way that McCourt retained future rights to use parking lots around Dodger Stadium. Today, of course, the Dodgers appear to have gone cheap at $2 billion, with a valuation of $4.89 billion, according to Sportico’s last ranking. After a 22-year championship drought, the Dodgers won the World Series in 2020, powered by a payroll second only to the Yankees. During the same period as the Dodgers acquisition, Boehly also began to assemble a list of media assets. In 2020, Boehly and Penske Media, the publisher of Sporticomerged their publishing activities into a joint venture called PMRC.

The focus on personal relationships seemed to pay off in Boehly’s subsequent acquisition of a large minority stake in the LA Lakers. At the Guggenheim, Boehly attempted to strike a deal to buy the sports and entertainment empire built by billionaire Philip Anschutz. This deal never happened – probably due to Anschutz’s price demands – but Boehly again maintained relations.

In the Sportico interview, he described starting conversations with Lakers majority owner Jeanie Buss in 2014 and building trust over the years. “We didn’t show up with an agenda,” Boehly said. “We came in with, ‘We’re friends, we’re the Dodgers, and we’re here to help.’ And when the opportunity arose to acquire that Anschutz stake, Jeanie, she called us first.

Sometimes this focus on personal relationships in closing deals has gone awry. In 2016, Boehly left Guggenheim after the company paid a $20 million fine to the Securities & Exchange Commission, punishment for Boehly taking out a $50 million personal loan from Michael Milken. Although respected for his post-Wall Street philanthropic work, Milken remains despised by regulators for aiding Ivan Boesky’s massive insider trading schemes in the 1980s. Milken is prohibited from participating in securities transactions or advise on any transaction accordingly.

Yet the relationship lives on: Boehly and his wife are now on the “honorary board” of Milken’s prostate cancer foundation.

–With help from Scott Soshnick

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