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The writer is an investor in private and public markets
Now that the club season in football has ended, and before the World Cup begins, it is a good time to assess the role that private equity plays in the English Premier League.
Nearly seven years ago, Silver Lake, a technology-focused investor, committed primary equity amounting to an approximate 10 per cent interest in City Football Group, the owner of Manchester City and other clubs worldwide. This involved partnering as a minority investor with Sheikh Mansour bin Zayed al-Nahyan of Abu Dhabi as the majority owner, investing in growth and backing a world-class manager and executive team.
Over time, Silver Lake increased its stake to approximately 18 per cent. Substantial investment in top players has been central to the strategy. But cash alone is not sufficient to win prestigious trophies every year, let alone build an enduring culture or clear team identity. Manager Pep Guardiola, who left City in May after 10 successful years at the helm, repeatedly praised the stability, expertise and trust of the ownership as vital elements of the magic formula.
We should consider the private equity investment in Chelsea in this context. Four years ago, a consortium majority-financed by Clearlake Capital acquired control as part of a multi-club investment thesis. Using a mix of equity and debt capital, the consortium has since invested heavily in young talent, with the aim of using Moneyball-style data analysis to professionalise the club’s operations.
How well is it working out? Chelsea have won two international trophies, including the 2025 Club World Cup. The club’s academy in Cobham is a consistent global leader and regularly produces elite players, many of whom transition to the first team. But against the key metric for a “Big Six” club — arriving in the final competitive stages of the Premier League and Champions League with a real chance of winning — consistent progress remains elusive. Meanwhile, discontent among supporters has grown.
Some have concluded that the Chelsea project is foundering, but this view could yet prove wrong. Certainly, managerial and player mis-steps have led to underperformance on the pitch. But the same people in charge have also made some excellent squad additions coveted by rivals. And they recently recruited an accomplished manager, Xabi Alonso, who, if given enough say in a stable working partnership, is more likely to succeed than fail given his credentials.
It is possible that a new stadium will have to wait a few years for feasible economic and planning proposals. And it will be crucial to manage the capital structure carefully. But although running a club might be much harder than it looks, calibrating covenants and maintaining liquidity should be routine. The same is true of shirt sponsorship: if a lucrative longer-term deal is not forthcoming, a series of shorter-term wins could make sense.
The approach of buying emerging players in the belief that the downside case is recovering capital spent, and the upside selling for profit or performing well in the first team, now needs enhancing with proved talent. But there should definitely be enough time to get it right. One of the provisions of the takeover in 2022 was a commitment not to sell for 10 years. And there are reasons to believe that a season out of European competition could be a blessing in disguise.
Chelsea represents a more substantial bet by private equity than Manchester City. Yet the premise of the deal — that the best football clubs are undervalued relative to top US sports franchises — remains a wager that has merit. Watch out for a few more control investments of this kind in the Premier League and in Europe.
