Ares Management, the $600bn-plus investment firm who have lent Chelsea £500m in a high-interest deal, wants to fund the NBA’s expansion into Europe. Could Chelsea feature?
Todd Boehly is among the names that have been linked with buying a franchise in NBA’s quest to bring the world’s biggest basketball brand this side of the Atlantic.
Boehly already owns a stake in the NBA’s LA Lakers, alongside fellow Chelsea co-owner Mark Walter. Clearlake Capital’s Jose Feliciano meanwhile will soon be confirmed as the new owner of the San Diego Padres in a takeover worth around £2.9bn.
Unlike Chelsea, NBA teams are consistently and enormously profitable, with margins more or less locked in by a system of salary caps, revenue sharing agreements and the absence of promotion and relegation.
Should Chelsea branch out into other sports? Or stick to football?
An NBA franchise could be extremely lucrative, but would it be against the soul of the club?
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NBA commissioner Adam Silver wants to be the man who brings that model to Europe. His legacy project is gathering speed, with expansion franchise having been offered to various football club owners, private equity firms and existing NBA owners.
London is a key target market – and Bloomberg reported this week that several titanic private credit firms are in discussions to finance the initiative, which is expected to be loss-making in its early years.
One of the names linked with providing funds is Ares Management. That’s hardly surprising. After all, Ares have piled their chips high on sport in recent years.
Their £500m debt deal is with Chelsea’s holding company, 22 Holdco Limited. Boehly, Walter, Feliciano and Behdad Eghbali and their BlueCo peers agreed to pay the equivalent of around 12 per cent (based on current market rates) in annual interest, with the principal and interest due in full in 2033.
Should Ares invest or provide capital for the NBA, could Boehly – who has bought a significant stake in The Hundred cricket team Trent Rockets and is said to be targeting other sports investments in England – be involved somehow?
“Boehly is clearly an anglophile,” Kieran Maguire, the University of Liverpool football finance lecturer said in exclusive conversation with The Chelsea Chronicle, “and he likes London and England’s quaintness.
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“He likes the idea of de-risking his entertainment and sports portfolio. Cricket is one of the areas he has targeted. If you see the returns on offer, the IPL is an incredible investment opportunity. The aim is to create some form of travelling circus within cricket so that it moves from India, to South Africa, to England, to Dubai with the same roster of players. Fans of that won’t care if they win or lose.
“It’s an opportunity to put it on Instagram and say you were there. Boehly sees other sports as being undervalued, which is why he is deepening his sports portfolio. It will likely be a similar approach with the NBA, if indeed he chooses to park some of his wealth there. We’ll wait and see.”
Whether a Boehly-owned NBA Europe franchise in London would be under the badge of Chelsea or a separate entity remains to be seen.
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