Clearlake: How they do business, how It translates to Chelsea & why they do want to win

They're our majority owners and most fans don't like them. So what is their way of operating?

Right now Clearlake Capital are the majority owners of Chelsea. Most fans are now dead set against Clearlake, and their key me Behdad Eghbali and Jose Feliciano, and in favour of Todd Boehly taking control.

I’ll be very clear on my position, I don’t like how Clearlake are running the club, treating fans and players, and I strongly believe we need Todd Boehly to buy them out.

However I want to make an objective, fact based judgement without emotion. If I’m biased or emotional, they can dismiss my criticism. If I’m neutral and evidence-based as possible, its much easier for them to dismiss.

First, I’ve read in some articles, that Behdad Eghbali in particular has become quite passionate about the football club, and genuinely does want to win, even more than making money. I don’t know him and he’s rarely talked much about it publicly, so I can’t categorically say that’s not true.

But I will see this, on the surface, fans don’t see this at all. In fact we see the opposite.

There are also some quotes from Behdad and Jose about their intentions for Chelsea. Both made a business conferences to business people, their friends, so I have no reason to believe they’re lies or untrue:

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“You've got to put a good product on the field. You've got to win. Your content, your asset is that play and the opportunity to make it a platform is there.

Fenway with Liverpool and Abu Dhabi with Man City have done it well. We think there’s a way to manage player costs, and still produce a winning product”

- Behdad Eghbali, Nov 2022

“The best way to make our club more valuable is to win.”

- Jose Feliciano, FT September 2023

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There’s another quote form Behdad further down, on their goals as Chelsea owners.

Nevertheless, these quotes often seem empty, because of what has actually happened in the last two years. There have now been a lot of concerns expressed by fans about Clearlake’s intentions, how they’ve run the club so far and their end goal.

I’ve begun to have serious concerns myself in the last two months.

So to begin, I’ll take a look a Clearlake Capital, how they operate, their strategies, their modus operandi and see how this might inform the present and future decisions. I also tried to explore whether they want to win or not using their words and a business focussed approach (their approach).

As a fan, I want to know whats going to happen at Chelsea and why if they do keep control. So, I read some articles, and did a deep dive through their official website. It explained a LOT.

The first key thing here for us, is to understand them, we need adopt their perspective for just a moment.

For them, Chelsea Football Club is an asset, an investment. So I look at how they approach other investments and see how this might apply to Chelsea.

Clearlake tend to invest in companies, restructure them, make them more efficient and profitable, increase their value, then sell for a massive profit. They do this with a trademarked process called “OPS” ® - Operations, People, Strategy.

It also helps here to understand some business terms which Clearlake use.

“Value creation’ - this means essentially increasing the value of an asset (like Chelsea) and producing something of value to people (the fans) that they actually want. It involves identifying what customers (which they think we are) want, creating a product they want and delivering it at a fair price.

“Driving value”, or “value driving”, is essentially an activity which increases the value of an investment or asset. This is what Clearlake does with all their investments. Its what they will want to do with Chelsea. Matt Law has said they see their commitment to Chelsea at around a decade or a little more.

The website Stachecow.com outlines Clearlake’s approach like this:

“Clearlake uses a proprietary approach to its investments called O.P.S.® .The firm follows this in-house system to transform and grow companies. O.P.S.® focuses on operations, people and strategy.

Once an investment is made, Clearlake works to understand every aspect of the business, including its roadmap, sales pipeline, backlog, operating expenses, working capital, accounting methodologies, human resources, information technology issues and more, in order to formulate and implement value-enhancing strategies.

Clearlake’s executive team says its priority is to deliver favourable returns for its investors and believes in investing responsibly in order to deliver favourable returns.”

The question, then, appears to be, how do you increase the overall value of a football club, to make a profit for the club and its investors. (And how you don’t do that.)

So, what does Clearlake’s approach, look like with Chelsea?

Well to begin with, Chelsea is an “asset” to them. So from the info above, they would want to increase the value of the club from the time they bought it.

And so the question then is, how do you increase the value of a football club?

I’ll just say it, the best way to increase the value of any football club, is winning. And to be fair, Clearlake have actually said multiple times in business environment, they believe this strongly.

From Clearlake’s perspective, I would argue winning grows the “brand” (ugh I hate that term so much), grows the global fanbase, more merchandise sales, more global exposure, and bigger and more lucrative revenue from commerical deals, TV income, and Champions League, and match-day revenue - every single season.

It grows the value of the club, which means their investment can go up in value two or three times, which makes Clearlake and their investors billions.

I do think Clearlake want to make Chelsea a well run, efficient, well structured, profitable and more valuable football club, with assets including a new giant stadium, and sell this for a massive profit on their original £1.5 billion investment (£2.5 billion total club value) in about 10 years time.

Whether they’re doing a good job of that or know how to do it, is another question entirely. Personally, I don’t think they are, at all. I think its a mess right now.

That brings us to the accusation Clearlake simply want to buy and sell players for profit, like financial investments, and make the club profitable that way, without any thought of success.

Despite my dislike of Clearlake and their approach, I don’t understand how people can believe that.

First, lets get these quotes from Behdad Eghbali to his business friends:

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“We think, frankly, that winning, success on the pitch, and commerical success, go hand in hand. You have to have a good product to generate the sponsors, for the content to work.

Michael Jordan got the ESPN Special Award, because Michael Jordan won. You’ve gotta win right, you HAVE to do that to have commerical success.”

- Behdad Eghbali

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This is pretty clear and I know it wasn’t was a PR briefing, it was a conference with his business buddies. Its for their audience. He’s not no reason to lie to them. Chelsea fans didn’t even know about it at first.

I mean, look at it purely from a business perspective, forget football and winning for a second.

Financially, although player trading can bring in steady revenue without Champions League football, maybe up to £100m cash profit (once amortisation is taken off) a year at most, it doesn’t touch the surface of the revenue possible if you have a successful team, playing regular Champions League football in a 60-70,000 seater stadium.

I’d also say its not going to add to our revenue, purely as we’ve been doing it for a long time. We’ve made a lot of money from player trading over the years, about the same under Roman Abramovich in the latter years of his reign as we do now. Nothing has actually changed in terms of how much we make from sales.

Nor has much changed in terms of selling Cobham talent, because we sold the likes of Jermaine Boga, Marc Guehi, Tariq Lamptey, Tino Livramento and Tammy Abraham for pure profit and to comply with FFP under the previous ownership.

The only thing which has changed is we’re signing more young talent cheaply from outside, and selling some of them for profit, not just the Cobham players. We’re still keeping most of our best young players and rejecting offers for them (Levi Colwill, for example).

So to act like we simply want to do player trading like commodity trading and that’s the whole goal, makes no logical sense to me.

It’s basically arguing we’re going to keep selling players we don’t need for profit every year, and that’s our whole model. But this is in part how we’ve operated for a decade under two different owners, its not new.

That argument is just not logical to me.

And this even more apparent when you realise player trading revenues pale in comparison with the financial benefits of a successful team. Real Madrid are hugely successful in the Champions League and in La Liga every season, in a big stadium, and they make the biggest revenues in Europe almost every year. They just made over a billion euros in revenue - which is Clearlake’s goal (see below) - because they win every year.

As Jose Feliciano said, Clearlake’s revenue goals for Chelsea are very high:

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“We think we have an incredible opportunity to double revenue. We think we have one of the best media properties and sport properties in the world where we can get to a £1billion of revenue.”

Jose Feliciano, March 2023

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So lets be clear, they want to get our revenue from what it already is with player sales - around £450-550m per year - to about £900-£1 billion per year.

Chelsea have been big with player sales for over a long time now, making big gross profits from sales, including under the current owners. However, in that time, our revenues both with and without Champions League football including player sales have never got much above £500m. So its clear, to get to this £1 billion target we need to find a LOT of revenue which isn’t related to player sales. .

There’s no way to get profits and revenues that much higher just with player trading. Its simply not possible for us, because we’ve been doing it for a decade or so and our revenues have always been between £400-550m approximately.

There’s literally no way we can double our revenue if we remain a team scrapping for Champions League every year, or if we base our whole financial model on player trading. Its not physically possible.

Just carrying on player trading won’t make them or their investors any worthwhile money whatsoever. There’s got to be different revenue streams.

To get to those revenues, need regular Champions League football, getting to the final stages every year, challenging for the PL every year, winning trophies, and massive commerical deals which come with that. This is simply non negotiable. Anyone with any knowledge of football finance, will tell you this.

Clubs which don’t play regular Champions League football, which aren’t challenging in the PL and CL every year, simply don’t make the same revenues or profits as those who do.

Spurs have a 62,000 seater stadium which is used for concerts and NFL, and their match-day revenue is literally double ours, around £4m per home game, and they don’t even play CL football.

If we a move to a bigger stadium with fan parks, more commerical opportunities, with our history and potentially with a successful team, we could do better, and get up to £120m match-day revenue from football alone. With CL football it could be even higher.

CL football would see an increase in shirt sponsorship value from the recent £40m to £60m at least judging by the market. CL football is now worth more than ever, with Arsenal making £70-80m this season from reaching the knockouts alone.

And of course there’d be a stadium commercial partner (stadium sponsor, but probably not quite naming rights), which could be worth £20-30m per year. We’ve also been linked with the Jordan brand if we make the CL, who currently pay PSG about £60m per year. Of course, CL football would also increase TV money, and attract other commercial deals. The revenue could total up to £200-300m more a year than we make now.

This could mean Chelsea men making £700-800m per year in revenue, which would make it one of the highest earning and profitable clubs in world football. Which of course, increases the value of the club and the Chelsea “brand” significantly, and would deliver a huge profit for Clearlake and their investors. If we don’t have success or CL football, the exact opposite will happen.

Settling for being a top 6 side, which only plays CL football irregularly, never or rarely competes for the big trophies means you can lose a lot of that £200-300m extra revenue every year. The Chelsea “brand” will suffer a lot, and of course, Clearlake will be seen very publicly, worldwide, as failed owners/investors. Not exactly good PR for them.

So how does Clearlake’s approach to investments and business we’ve seen above, and their stated goals we’ve just discussed, affect transfer strategy?

As we know now, their plan is, buy the best young talent in the world, develop it at home or on loan, and the best players you keep as they add value by being at the club. Others you sell for profit to help the club financially and support other player investment.

We have a multi-club to control our market for players, so we can sign the best young talent to that club (Strasbourg) and sign them from there for relative peanuts and low wages, or loan talent from Chelsea there and bring it back when ready.

OK, now I’m hearing a lot of you screaming:

“If this is the case, why are they running the club this way and why make the decisions they have, and why brief all they have about Champions League qualification?”

My basic answer is this. They are new to sports, have listened to the wrong people (Paul Winstanley, Laurence Stewart for example), and simply don’t know HOW to win or build a winning culture.

They also have their set approach, which they think is best and are sticking to stubbornly as they think they know best, and finance, or “added value” is the driver for their recruitment model.

For example the reason they don’t sign more proven players as we go on about all the time, is linked to this concept of adding value and increasing value (their terms, not mine).

Clearlake see all players as investments, and the idea is for them to grow in value and ultimately add value to Chelsea. This can be either as assets on the pitch, or for those who don’t make it, or want to move on, as profits on player sales.

To them, signing a 26-27 year old on a 5 year deal doesn’t provide as much return on investment, because you can never move them on and they will only go down in value.

This aspect about experience is something which I and many fans disagree with fundamentally, and will never support or understand. It makes no sense whatsoever, to me not even from a business perspective.

To me, using Clearlake’s language, experienced, proven, elite players “add value” via what they bring to the pitch in the present, and the intangibles they bring to the young players in terms of leadership, mentality and experience. These add value to the longer term “investments” (younger players) and add immediate value by ensuring on field success.

Also their Clearlake branded approach explains the quick selling of players relatively quickly if they don’t work, and increased turnover in the early stages of investment. This happens with their other investments and it's happening here still. They invest, if its an immediate failure or you know quickly its bad, you get rid of it as soon as you can.

Key players, key investments, they keep, as they “add value” to the club (their asset) by being at the club and helping it achieve on pitch success, and their value will also go up more by being at the club and playing regularly. Levi Colwill was given a long term contract and big bids turned down because the best way he “adds value” to Chelsea is on the pitch, as a Chelsea player.

It does appear on the surface, their decision making on whether to keep or sell a player is based on this model. They consider how much value they can be perceived to add to the club and how much their value will increase whilst being at the club.

This is how they think we end up winning, playing regular Champions League football and being successful. Yes, really.

Of course, as we fans all know, this model is fundamentally flawed, as it fails to include all the intangibles - leadership qualities, mentality, experience, Chelsea DNA for example. The model is birthed purely on sa financial judgement, which quite frankly, just won’t work in football and will hinder on pitch success.

You can’t build a successful sports team based on the value they add financially and numbers on a spreadsheet. Data is important but it has to be used correctly, and well, and data has to include intangibles (which can probably be measured).

Now what about the approach to the transfer market which “looks for opportunities” which annoys all of us so much.

Well, Clearlake states they are a firm which looks for market opportunities for good investments, sometimes with distressed assets. Sound familiar?

This has literally translated to part of our transfer strategy. Garnacho for example. An opportunity to take a player (an asset) from a larger distressed asset (Man Utd, who are broke), which can add value to Chelsea (their asset). This is why we have this approach to the market - one which doesn’t always translate to football and building strong squads.

Honestly, to me, this approach when it comes to football, comes across like players aren’t even people, they are assets to be kept, bought or sold. I’ll be honest, quite frankly the way some players have been treated under this regime demonstrates this approach.

So to conclude, all of what I’ve shared explains a lot about how we operate right now. It's a long term approach, which does want on pitch success, as I’ve explained, but wants it in a specific, long-term way they believe will deliver.

Their approach involves a lot of player and maybe manager turnover in the early years and takes a longer term approach to success. They clearly want to have player trading as a solid revenue stream to fall back on if Champions League football is not there, but with the goal of regular Champions League football.

That’s why the policy on player trading in place, in my view. Nothing sinister, just creating a revenue stream to keep revenues solid.

But there is an absolute fundamental flaw in this whole model.

In my experience so far, it treats players as assets, not people. Its failing to see the human and emotional side of sport. On the surface, their approach dehumanises players and members of staff, and even fans who it sees only as customers, not supporters. This is just unacceptable for me.

What it feels like to most fans, including me, is that we’re basically seen as customers of the club, who the club serve, and are to be used to help finance the club and give them our time and money in return for the “product” (their term) on the pitch.

Certainly judging by the constant patronising, insulting briefings, we’re not seen as equals, or smart, or knowledgeable. The constant ridiculous comments we can all see through are just insulting and speak to Clearlake’s approach clearly.

I’m not a customer. I’m a fan, a supporter. I have an emotional investment with the club which goes way beyond money. I’m not here just to be given a product to entertain me. My love of Chelsea goes way beyond results and what happens on the pitch, and I’m sure most fans are the same.

By taking the humanity out of football you lose what football is all about. You lose the emotion, the passion, the sense of community, the class of how you treat players and staff. You lose your soul.

You alienate fans, you might even alienate players, you get a bad reputation in the game for your approach to “people capital”. And of course if you really think you know best you’ll never learn from your mistakes, because fundamentally, you just don’t get football.

Taking the heart and soul out of football and seeing it just as a commodity, misses the whole point of football to begin with.

This is the difference, in my mind, between Clearlake Capital and their co-owner, Todd Boehly.

In contrast to Clearlake, Boehly understands the emotion, the traditions of sport. He appreciates what club culture is, and knows the fans views are important, and they are the lifeblood of the club. He values fans and players as people, not commodities or customers.

He gets why things like Cobham are important, and why fans views matter. He understands the humanity of football and sporting culture as a whole and why it matters, and ultimately he’s a competitor who wants to win above all things.

Clearlake don’t have any of this, from what we know so far. We’ve certainly not seen it at all in their words or actions. If they do, maybe its time they showed it in their words and actions.

And this is why their approach to sports ownership seems, on the surface, to be completely and fundamentally flawed, and isn’t working thus far.

I’d love them to prove me completely wrong. I’d love them to show in their words, actions, decisions and approach they want to win, create a winning culture and prioritise on field success. I’d love them to own their mistakes and apologise.

I and many others just don’t see any sign of that right now, or of their words becoming reality. To many of us, Clearlake’s approach, whatever the intentions, has clearly shown its not working.

It’s why many of us want a change at the top and feel this potential change, with Todd Boehly, is the only hope for Chelsea’s future.

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