It has been in my emails, my direct messages, the comments below my stories, the virtual newspapers on my metaphorical breakfast table, my Father’s Day card, a note on my pillow, inside a fortune cookie at a Chinese restaurant on Friday and, eventually, my editor’s head.
“When are you going to explore the links between Chelsea, their majority owner Clearlake Capital and Saudi Arabia’s Public Investment Fund (PIF)?”
The idea that Chelsea may be “cheating” football’s financial fair play (FFP) rules by selling their surplus stars for inflated fees to PIF-controlled Saudi Pro League (SPL) clubs — and that PIF is happy to pay those fees because it “protects” its investment in Clearlake — appears to have taken hold among a broad constituency of fans and rival teams.
The evidence submitted is as follows:
- Chelsea posted a pre-tax loss of £121million ($154m today) for the 2021-22 season, having lost £153m the previous season
- Since being bought last year by a group led by US billionaire Todd Boehly but mainly funded by Clearlake, a California-based private-equity firm, Chelsea have spent £600m on new players
- PIF, Saudi Arabia’s sovereign wealth fund, has invested with Clearlake and has also teamed up with one of Boehly’s businesses to put money into a hotel chain
- PIF has recently bought majority stakes in the four biggest clubs in the Saudi Pro League, as well as pouring millions into other sports-related projects
- N’Golo Kante has signed for one of those Saudi clubs, Al-Ittihad, and Chelsea are in talks about the possible transfers to the league of six more high-earners in their squad they no longer want: Pierre-Emerick Aubameyang, Callum Hudson-Odoi, Kalidou Koulibaly, Romelu Lukaku, Edouard Mendy and Hakim Ziyech.
Don’t listen to the fake news⛔️
Kanté is an Ittihad player now! ✍️???????? to ????#WelcomeBox2Box
— Ittihad Club (@ittihad_en) June 20, 2023
So, we have a club who badly need to move on some of their well-remunerated reserves and potential buyers who seem to share a deep-pocketed backer with the aforementioned club.
One hand washes the other, right?
“It’s an interesting one, indeed, and that is part of the issue with investment funds,” says Christina Philippou, a principal lecturer in accounting, economics and finance at the University of Portsmouth and an expert on the business of football.
“In most industries, conflicts of interest relate to both actual and perceived issues, and that is why there are often declarations required in such circumstances. This is why the requirement for football clubs to declare their ultimate beneficial owners made its way into the recent White Paper on football governance.”
For what it’s worth, Chelsea have declared their ultimate owners. As you climb the corporate structure on the Companies House website, you find Boehly, the other individual investors in the consortium and Clearlake’s co-founders and managing directors Behdad Eghbali and Jose Feliciano all present and correct.
The company at the top of the tree is Blues Partners Limited, a joint venture between Boehly and the Clearlake duo. The latter have provided about 60 per cent of the £2.5billion it cost to buy the club last year and fund the subsequent splurge on players. There is no dispute, then, that Clearlake has gone big on Chelsea.
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Boehly, right, and Eghbali, left, have overseen significant spending at Chelsea (Photo: Nick Potts/PA Images via Getty Images)
The dispute, if that is the right word, has always been about whose money Clearlake is actually investing, which is where the questions about PIF come in.
Established in 1971, PIF spent more than four decades investing some of the Gulf state’s fossil-fuel wealth in domestic industries. It was all a bit dull until 2014, when the Saudi government gave PIF permission to invest in overseas firms and then, a year later, it came under the control of Mohammed bin Salman, the seventh son of King Salman, Saudi’s ruler since 2015.
MBS, as he is more commonly known, was just the deputy crown prince and defence minister back then but has been crown prince since 2017 and the kingdom’s de facto boss. And PIF has played a significant part in his rise to power, as he has used it as the private bank for his plans to diversify and modernise the Saudi economy. Under his watch, PIF has grown in size, profile and ambition, with sport becoming a key part of its portfolio. For example, it bought a majority stake in Premier League club Newcastle United in 2021.
Based in Santa Monica, a seaside suburb of Los Angeles, Clearlake was founded in 2006 by Eghbali, Feliciano and their former partner Steven Chang, who left the business in 2015.
It focuses on the consumer, industrial and technology sectors and, over the past decade, has become one of the happiest shoppers for upwardly-mobile, midsized American companies. It borrows about two-thirds of the money it uses to buy these firms, helps their management teams with strategies to grow and then sells them a few years later, hopefully for significantly more than it paid for them.
That is the plan, anyway, and it has been working. With bells on.
Clearlake has made approximately 450 different investments in its 17-year history and currently has about $75billion (£59billion) of assets under management. When Eghbali and Feliciano sold 20 per cent of the business to three investment funds in 2018, Clearlake’s own valuation was $4billion but the firm has grown impressively since then.
This month, trade title Private Equity International placed Clearlake 14th in its global rankings of private-equity firms and its most recent fund, Clearlake Capital Partners VII, was oversubscribed, raising $14billion for its next shopping spree. It attracted 300 institutional investors — banks, family offices, insurance companies, pension funds and sovereign wealth funds — from more than 40 countries across six continents.
And this is where we get to the nub of it. Those investors can reveal where they are investing if they want to but Clearlake will not (we did check) and neither do any of its rivals. What it will say is that no single investor can account for more than five per cent of a single fund and the average investor has less than one per cent of a fund.
Has PIF invested in Clearlake? Almost certainly.
Does this mean it will write a fat cheque so its Saudi Pro League clubs can give Chelsea £100million for £50m worth of footballers to get the west London club off the FFP hook?
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“This feels like a nothing-burger,” says a partner at a different US-based private-equity firm, speaking on condition of anonymity to protect relations and business interests. “Clearlake is an incredible firm — they’ve made a ton of money for their investors. I’m not sure if PIF is a big investor but anyone who has been has been well rewarded.
“Wouldn’t PIF be using Newcastle United if this was their plan, not Chelsea? The reality is all the sovereign-wealth funds are in all the big, global private-equity funds, from Australia to Abu Dhabi, Canada to PIF.”
![](https://cdn.theathletic.com/app/uploads/2023/04/05082114/GettyImages-1416693619-scaled.jpg)
Yasir Al-Rumayyan is Newcastle chairman and has been involved in the recent Saudi Pro League changes (Photo by Clive Brunskill/Getty Images)
Jordan Gardner is the former managing partner of a group that invested in Danish side FC Helsingor and is currently a consultant with sports consultancy Twenty First Group.
“People are reading way too much into the connections between PIF, Clearlake and Boehly,” Gardner says. “PIF is one of many, many investors in the entire portfolio of investments with Clearlake. At this level, there are many close relationships between various private-equity funds, sovereign-wealth funds and high-net-worth individuals.
“While the optics don’t look great, I’m sure this entirely comes down to existing relationships between these parties and has nothing to do with PIF’s investment in Clearlake. I don’t see any conflict of interest or conspiracy here whatsoever.”
That is the view in academia, too.
“The allegations don’t tally with the PIF’s modus operandi,” says Dr Christopher Davidson, an expert on the Middle East at the European Centre For International Affairs and the author of several books on the Gulf region. “While the Qatari sovereign-wealth funds have historically been more assertive and willing to use such multi-layered intermediaries, the Saudis are more traditional.
“In regards to why Gulf funds invest in American private-equity firms, the consensus is they are mostly after a more adventurous component for their portfolios beyond ‘safe’ investments in Western blue-chip companies, UK real estate and so on.”
And Philippou, who made the earlier point about “actual and perceived” conflicts of interest, believes this one is more the latter than the former.
“Yes, Chelsea have clearly been getting creative recently, such as longer contracts for amortisation purposes, but it’s also the case that a number of clubs — not just Chelsea — have been trying to shed some of their players for a while,” she explains.
“However, these sellers have faced difficulties as there are a very limited number of clubs able to afford them. It’s mainly been other Premier League clubs and a handful of the usual European suspects. But then Saudi Arabia declared that it is now a buying market and its clubs may be open to buying some of these unwanted but expensive players.”
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Neither the club nor the Premier League wanted to comment on the speculation about why SPL clubs might be looking to buy Chelsea players but both parties wanted to make it clear that the new owners at Stamford Bridge were carefully vetted for potential conflicts of interest by the league last year as part of the usual change of control process, and both the club and Clearlake have repeatedly, but privately, said no Saudi money was involved in the takeover.
![](https://cdn.theathletic.com/app/uploads/2023/05/22120236/GettyImages-1246251366-scaled.jpg)
Ziyech is among those linked with a move from Chelsea to Saudi Arabia (Photo: Ben Stansall/AFP via Getty Images)
It should also be noted that under Premier League rules, all transactions, whether they are between associated parties or not, over the value of £1million are now checked to make sure they do not exceed “market value”. So, if one club were lucky enough to convince another to spend three times as much money on a player as the market thinks he is really worth, they could be told they cannot accept that windfall.
We have a club who are very popular in the Middle East and have several well-known players they badly need to get off the books, and we have a newly-flush league that is desperate to attract recognisable stars to raise the overall standard and profile of its competition.
Is this not a very straightforward tale of willing seller meets willing buyer, with the asset they are trading being pretty happy about the transaction, too?
Maybe, maybe not.
During the time it has taken me to write this piece, former Manchester United defender and current Sky Sports pundit Gary Neville has weighed in, and he ain’t happy.
“Any chance the Premier League can look into this Saudi trading like NOW!!!” the co-owner of League Two club Salford City wrote on his Instagram feed. “Get a Regulator in asap that’s agile enough to stop these things at source! If it doesn’t look right it’s probably not right! Independence is required asap. The Governance of our game is a mess!”
No arguments about that last point, Gary; which is probably why, when the club we love is not enjoying the same good fortune as our rivals, we automatically assume it is the swindle of the century.
Sometimes it might be, but most times it is probably just their turn.
![go-deeper](https://cdn.theathletic.com/cdn-cgi/image/width=128,height=128,fit=cover,format=auto/app/uploads/2023/06/11060644/0610_SaudiFootballPlan-1024x512.jpg)
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(Top photos: Getty Images; design: Sam Richardson)