Transfer Talk Topic

[Ham]

From Twitter;

Right, lots of confusion around Chelsea, PIF and Clearlake. Journalists with no understanding of private equity are jumping to wild conclusions and I think are miles off it… So here’s a little explainer… From someone in PE (and who loves football)…

First, it's crucial to understand the basic structure of private equity (PE). PE firms, like Clearlake Capital, pool money from investors to buy and improve companies, aiming to sell them for a profit later. These investors are called Limited Partners (LPs).

LPs can be pension funds, endowments, wealthy individuals, and yes, even sovereign wealth funds like the Saudi Public Investment Fund (PIF). They invest in PE funds for potential high returns, not to directly control the companies PE firms buy.

The key here is "indirect investment." While LPs provide the capital, the control and decision-making lies in the hands of the PE firm, the General Partner (GP). In this case, it's Clearlake Capital, who decides which companies to buy, sell, or manage.

So when Clearlake Capital took a 60% stake in Chelsea FC, they did it using the pooled money from all LPs across their funds, not just PIF's investment. They did it with the intent to grow and enhance the club's value for all LPs.

Yes, PIF's money forms part of the pool Clearlake Capital uses to invest. But it doesn't mean PIF directly owns or controls any portfolio company, including Chelsea FC. Clearlake Capital, as the GP, controls the club's management and strategic direction.

Clearlake, managing $72bn across 10 flagship funds, has many LPs contributing to this pool. This diversification means no single LP has significant influence over Clearlake’s investment decisions or portfolio companies.

But what about the scenario where PIF might be a significant LP in the fund that owns Chelsea FC? Even then, PIF's role remains passive. They provide capital, expect returns, but it’s Clearlake Capital making operational and strategic decisions.

PE funds function on a fiduciary duty. Clearlake Capital is obligated to make decisions in the best interest of all LPs, not favoring any single one. Therefore, no single LP can sway the GP’s decisions to favor their specific interests.

The "control rights" or "voting rights" that PIF or any LP might have are typically limited to major fund decisions, like changes to the fund's terms or its lifespan, NOT daily operations or decisions about portfolio companies.

These safeguards ensure that the operations of a PE-owned company, like Chelsea FC, can’t be manipulated for political, personal, or any non-financial reasons by any individual LP. The goal is maximizing financial returns, not political control.

So, to be clear, while PIF's money is part of the pool that Clearlake Capital uses to invest, it doesn't mean PIF owns Chelsea FC or has any say in how the club is run. That control remains firmly with Clearlake Capital.

Given this, it's incorrect to assert that Chelsea FC is controlled by the PIF. It's controlled by Clearlake Capital, who has a fiduciary duty to act in the best interests of all its LPs - a diverse group of investors - to maximize returns.

The club's operations, including player acquisitions, infrastructure investments, and strategic decisions, are all made by the GP - Clearlake Capital.

It's easy to oversimplify the relationships in PE, but it's essential to understand that LPs like PIF don’t get to 'call the shots.' They trust the PE firm's expertise to manage their money effectively and provide a return on investment.

Ultimately, the goal of Clearlake Capital is to improve Chelsea FC's performance - both on the field and as a business - to increase its value. This increased value, when realized through a sale or other exit, is what generates returns for all LPs. (1/2)

It's a bit like how shareholders in a public company don't manage the company's daily operations. They invest and trust the management to run the business and provide returns. In PE, the LPs are the shareholders, and the GP is the management.

I hope this paints a clearer picture about PIF controlling Chelsea FC. PE can be complex, but understanding these basics helps illuminate how firms like Clearlake Capital operate, and the passive role that LPs like PIF play.

As we continue to see more high-profile investments from PE firms in sports clubs, it's more important than ever to have a clear understanding of these relationships and structures.

What’s most likely is that PIF are targeting our players because we have star Muslim players. The why is pretty obvious: 1) commercial value at home 2) interest in these players to drive growth of sport 3) More likely to be open to Saudi. 

*caveat- I’m a Chelsea season ticket holder 😅

 

 

[martin1905]

Absolutely outrageous start to the transfer window.

I don't know if there is anything dodgy going on and I really don't care, football, all elite sport in fact, is completely corrupt so couldn't care less if anything untoward is going on.

The fact that some are getting their knickers in a twist makes it even better, I'm loving it.

[Bob Singleton]

Thanks @Ham  for sharing those tweets

As I said this morning, there is no "conflict of interest", no "dodgy deals" and there really is "nothing to see here" other than our owners seeing an opportunity and going for it.  Yes, the timing of the 'rise' of the Saudi league has been fortuitous, but the business acumen of our owners was not fortuitous. It's why they run a multi-billion pound business.

[Ham]

8 minutes ago, Bob Singleton said:

Thanks @Ham  for sharing those tweets

As I said this morning, there is no "conflict of interest", no "dodgy deals" and there really is "nothing to see here" other than our owners seeing an opportunity and going for it.  Yes, the timing of the 'rise' of the Saudi league has been fortuitous, but the business acumen of our owners was not fortuitous. It's why they run a multi-billion pound business.

The ever reliable and fair Ben Jacobs...

Not sure why any on here doubt him. 

Still get the exclusives regardless of what anyone says.  The past week has been testament to that.

A thread;

 

 

[chara]

1 hour ago, ROTG said:

So winning the CL, Super cup, world club champions did not justify their transfer fee.  Let’s see if the £600m new kids on the block can deliver anyone of those trophies during their time at the club.  

I said "never quite" not didn't....what any "new kids on the block" will or will not achieve is totally irelevant to my post...

And in all honesty the Chelsea success was not solely down to the players mentioned...

But I'm sure you are well aware of that.

My post was just observations from me...not a critique of individual players ...all of whom have had "moments" some brilliant but ,as ever,for what ever reason, not players deserving of the plaudits and regrets endangered by Kante's departure..(or Zola Hazard and their ilk.)

[Floyd25]

1 hour ago, Ham said:

I hope this paints a clearer picture about PIF controlling Chelsea FC. PE can be complex, but understanding these basics helps illuminate how firms like Clearlake Capital operate, and the passive role that LPs like PIF play.

Laughing at the thought of Gary Neville trying to work this all out, bless him. 

[Bob Singleton]

Regarding gossip of players "in"...

GK: Stories regarding Onana have cooled somewhat the last few days. Now it's between Diogo Costa (Porto) and Giorgi Mamardashvili (Valencia) depending on who you believe

DM: We'll be making a substantial (but below "asking price") bid for Moses Caicedo in the next few days (once Havertz fully confirmed)

ST: Nicolas Jackson (Villarreal) is on his way to London to discuss terms in person and to visit the facilities at Cobham prior to us triggering his release clause.

 

[exiledblue]

Havertz is ok business but Kovacic is robbery

[martin1905]

8 minutes ago, exiledblue said:

Havertz is ok business but Kovacic is robbery

Agreed, getting £30m for him after the season he just had and only having one year left on his contract, we have robbed them blind.

[boratsbrother]

We have a rather nice habit of somehow always falling  up.🙂  Made even nicer by seeing fans of other clubs spitting feathers.😁

ps. Thanks to Ham for sharing the excellent and very informative post.

[ROTG]

2 hours ago, Mark Kelly said:

I really can't understand why you get so much pleasure from Lukaku and Inter having the club over. 

Had this happened under the TBSD you'd be chomping at the bit to dig them out. 

 

Since when have Inter had one the club over?  
If memory serves me Chelsea went to inter and offered them a sh1t load of money for Lukaku. 
what transpired during the season was not good for all parties and obviously left a bitter taste in TT mouth, which ending with him convincing TB to loan him out, with Inter being the only club wanting to take him, with his replacement being a legs gone Arsenal reject. 

The bottom line is rather than try a get resolution with Lukaku and his future the club have allegedly tried to shaft him with a move to the Saudi league when his record and age says he still has a lot to offer to a top PL/European team. So one can assume all bridges are burnt with TBSD and therefore both will meet at the OK corral in the coming days/weeks with the chances of getting him off the books this month are probably over. 
 

I would not be surprised I’d he’s on the plane for the US tour. 

[ROTG]

42 minutes ago, martin1905 said:

Agreed, getting £30m for him after the season he just had and only having one year left on his contract, we have robbed them blind.

Or are we getting a majority of the money back from the Sterling deal?

£15m for Sterling, absolutely bargain  

 

[Mark Kelly]

6 minutes ago, ROTG said:

 

I would not be surprised I’d he’s on the plane for the US tour. 

If he is it'll have trouble taking off. 

[Original 21]

And another one bites the dust…

[Chelsea_Matt]

26 minutes ago, Mark Kelly said:

If he is it'll have trouble taking off. 

Mark 🤣🤣🤣🤣🤣🤣🤣🤣🤣

[martin1905]

14 minutes ago, Original 21 said:

And another one bites the dust…

And people were worried about our finances and bloated squad, obviously TBSD weren't. Always knew they had a plan.

At this rate we will  we will be short of numbers, good job we will be rolling in it, thanks to TBSD. I have so much confidence in TBSD I'm gonna change my view on us finishing in the top four, I've claimed for a while now we would walk back into it next season with just a proper manager. The way TBSD have been so far have me thinking we will challenge City, no doubt we wil fall short but I'm now predicting to be their nearest challengers next season.

A fine job so far from the TBSD. 

Edited June 21, 2023 by martin1905

[east lower]

3 hours ago, Ham said:

Back to Cobham. Either plays or rots in the reserves until he understands the purpose of signing a contract.  

 

If he won’t comply and try, then set him targets that a professional should achieve. Make him report in at a certain time, clock out at a certain time. Soon as he fails, envoke the disciplinary process and manage him out through to dismissal. We lose a few bob as regards a fee, but could save some wages. 
 

Also, would mess up his international career.

[Ham]

46 minutes ago, ROTG said:

Since when have Inter had one the club over?  

Snip... 

The bottom line is rather than try a get resolution with Lukaku and his future the club have allegedly tried to shaft him with a move to the Saudi league 

Snip

Now I know for a fact that you're just on a wind up.  

[Mark Kelly]

7 minutes ago, Ham said:

Now I know for a fact that you're just on a wind up.  

Which is exactly why I didn't bite . Lol.

[east lower]

11 minutes ago, martin1905 said:

And people were worried about our finances and bloated squad, obviously TBSD weren't. Always knew they had a plan.

At this rate we will  we will be short of numbers, good job we will be rolling in it, thanks to TBSD. I have so much confidence in TBSD I'm gonna change my view on us finishing in the top four, I've claimed for a while now we would walk back into it next season with just a proper manager. The way TBSD have been so far have me thinking we will challenge City, no doubt we wil fall short but I'm now predicting to be their nearest challengers next season.

A fine job so far from the TBSD. 

Well, we’re having a bit of a Bob Marley moment (Exodus -Movement of the People). 
 

But, it was needed and although there are a couple I’d have kept hold of, they were 50/50’s. 
 

Seems like they are getting the ‘outs’ done as early as they can. Might be the first big thing they’ve got right?

[Chelsea_Matt]

I wonder if we can get our new BFFs to buy Christian Pullasickie?

[My Blood Is Blue]

Not been up to speed with todays events, but from what I can gather…

 

Kante gone to Saudi (free).

Havertz on his way to Arsenal (£60m).

Kovacic on his way to City (£30m)

Mendy on his way to Saudi (£xx?)

Ziyech on his way to Saudi (£xx?)

£50m offer for amount rejected.

 

Fair play to the owners.

 

It really is never boring at our club is it.

[Ham]

14 minutes ago, east lower said:

Well, we’re having a bit of a Bob Marley moment (Exodus -Movement of the People). 
 

But, it was needed and although there are a couple I’d have kept hold of, they were 50/50’s. 
 

Seems like they are getting the ‘outs’ done as early as they can. Might be the first big thing they’ve got right?

I'd keep Pulisic.  Just won player of the tournament for the USMNT. 

If he's fit, really fit, then he has plenty of time to prove himself long term. At his best he's brilliant. 

Not a priority to get him gone. 

 

[Chelsea_Matt]

5 minutes ago, My Blood Is Blue said:

Not been up to speed with todays events, but from what I can gather…

 

Kante gone to Saudi (free).

Havertz on his way to Arsenal (£60m).

Kovacic on his way to City (£30m)

Mendy on his way to Saudi (£xx?)

Ziyech on his way to Saudi (£xx?)

£50m offer for amount rejected.

 

Fair play to the owners.

 

It really is never boring at our club is it.

Don’t let Mr Gizmo hear you say that 🤣💀

[My Blood Is Blue]

13 minutes ago, Ham said:

I'd keep Pulisic.  Just won player of the tournament for the USMNT. 

If he's fit, really fit, then he has plenty of time to prove himself long term. At his best he's brilliant. 

Not a priority to get him gone. 

 

I often find myself thinking that, but then I remember how poor he has been for us the majority of the time. He’s just not as good as it feels like he should be and also, he always ups his game for the national team and it feels like he’s saving himself for them when he’s in a Chelsea shirt.

I’d rather Pulisic than Ziyech, so I’m glad he’s the one they’ve focussed on getting out first, but I’d rather we still sign someone else to take Pulisic’s place sooner rather than later.

Hazard for a season? Yes, please.