The $2 Billion Question Every Potential Chelsea Bidder Is Asking
What to do about Stamford Bridge?
The future of the iconic stadium—opened in 1877—is a puzzle that Roman Abramovich has tried to tackle since he bought Chelsea for £140 million in 2003, and it will be front and center as investment bank The Raine Group sells the soccer club for the Russian oligarch.
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In May, Sportico valued Chelsea at $3.35 billion, fourth-highest among Premier League teams. Investor interest in buying the club has been brisk since Abramovich announced plans to sell last week, following Russia’s invasion of Ukraine and concerns he will be targeted with sanctions by the U.K. for his ties to Vladimir Putin.
Raine co-founder Joe Ravitch told Reuters the sale process will not be rushed, but it will be a challenge for the next owner to conduct in-depth feasibility studies on the Blues’ next home, ahead of committing multiple billions of dollars to buy Chelsea. In addition to the cost of the club, the next ownership group will need to get comfortable with potentially spending $2 billion or more to secure a long-term modern home for the team.
The 41,800-seat Stamford Bridge is the smallest of the Premier League’s Big Six clubs by a wide margin. Manchester United’s Old Trafford seats more than 75,000, while the venues for Tottenham and Arsenal both seat more than 60,000. Liverpool’s Anfield, which also opened in the late 1800s, is undergoing a renovation by its Fenway Sports Group ownership that will increase capacity to 61,000.
Abramovich has absorbed massive operating losses at Chelsea during his tenure that led to him “loaning” the club $2 billion. The losses were fueled by spending sprees that helped Chelsea win five Premier League titles and a pair of Champions League crowns, but also as a result of lagging matchday revenue from tickets and concessions.
Sponsorship and broadcast are the two biggest buckets of revenue for elite Premier League clubs, but matchday is also significant for those half dozen teams competing for trophies domestically and internationally. Chelsea reported $70 million (£54 million) in matchday revenue for the 2019-20 season, while Tottenham (+73%) and Man United (+65%) were both dramatically higher. Only Man City earned less, among Big Six teams. The same held true for 2018-19, the last non-impacted COVID-19 season in regards to stadium capacities. Man United ranked first that season for matchday revenue with £111 million.
Tottenham got a major bump in matchday revenue when the $1.3 billion Tottenham Hotspur Stadium opened in London in 2019. In addition to Spurs games, it has hosted concerts, boxing matches and NFL games.
Stamford Bridge sits in a heavily built-up area of southeast London, surrounded by busy roads, buildings and rail lines, which makes for logistical and regulatory challenges for any new venue. Another factor: A group of fans owns the real estate, and leases the stadium back to Chelsea for a nominal rent under a 199-year deal. The Chelsea Pitch Owners (CPO) also control the rights to the Chelsea FC name, which could result in the forfeiture of the club name if it was moved from Stamford Bridge.
The CPO was born in 1993 when property developers were pressuring the club to turn Stamford Bridge into a housing development. The club set up the non-profit to safeguard against the future “threat of being evicted from our ground.” Chelsea loaned the CPO £10 million to buy the lease, and the balance of the loan sits at £8 million, which the CPO is asking the new ownership group to forgive. The CPO is now made up of 13,000 individual shareholders, and it sells shares annually at a starting price of £100.
“The effect of the arrangements is that the fans have a degree of control over their club’s future, which few others could aspire to,” the CPO said in a statement, after Abramovich announced plans to sell. “The likely sale of the Club creates a critical moment. It is an opportunity to reset relations between the Club and the fans and to find a better way of working together. It is an opportunity for Mr. Abramovich to add to his very considerable legacy of success and for any incoming owner immediately to establish a constructive relationship with fans based on trust and goodwill.”
In 2011, Abramovich tried to buy back the Stamford Bridge land, but his plan was voted down by the CPO. He received planning permission for a £1 billion redevelopment of the stadium in 2017, but abandoned those plans a year later due to the “current unfavorable investment climate,” which coincided with the U.K. not renewing Abramovich’s visa. Planning permission on the proposal expired last year.
The next ownership group can look to the U.S. for comparisons on renovating historic venues in major metropolitan areas, with little room to work and passionate fans attached to the history of the buildings.
The Boston Red Sox were sold in 2002 and faced the prospect of replacing or renovating Fenway Park, which was built in 1912. The John Henry-led ownership group included Larry Lucchino, who had overseen the building of new baseball stadiums in Baltimore and San Diego. His expertise made him a key player in the $285 million renovation of Fenway that was completed in 2012. FSG also owns Liverpool, which has been the model Big Six franchise for success on both the pitch and on the accounting ledger.
The Chicago Cubs’ home, Wrigley Field, underwent its own $575 million renovation after the Ricketts family bought the team in 2009. The Ricketts family is reportedly considering joining a bid for Chelsea. interested in Revenue soared for both the Red Sox and Cubs after the updates, with new premium seating and sponsorship opportunities.
(This story has been updated with the Chelsea original purchase price in the second paragraph.)
