Chelsea Football Club's owners are considering borrowing up to £250 million to help continue funding its spending spree on new transfers, a move which has been a key characteristic of the club since it was bought last summer.
Bank of America Corp (NYSE:BAC). is currently advising the London club’s owners on a potential increase, weighing up whether to add to the existing £800 million in loans, with options in place to raise this limit to £1.05 billion, according to reports from Bloomberg.
Clearlake Capital and US investor Todd Boehly spearheaded the takeover after Roman Abramovich was forced to sell the blues amid fallout from the Ukraine war.
Having already invested heavily in new players since taking over in May last year, the owners are also considering a redevelopment of Chelsea’s Stamford Bridge stadium as well as building stakes in other football teams.
Lenders were invited to attend Chelsea’s match against Aston Villa, which ended in defeat, and because deliberations are still ongoing no decision has been made on an amount for the additional borrowing.
Last week, Chelsea reportedly raised £500 million in subordinated debt from Ares Management Corp, the US lender, in a separate transaction but it is believed the club’s owners aren’t interested in receiving funding in return for equity.
Fans may be concerned about the financial sustainability of such moves, especially as Chelsea has been unable to back up these spending sprees with on-pitch success, but borrowing in football clubs isn't uncommon.
Manchester United Plc (NYSE:MANU) was bought by the Glazer family in 2005 through a leveraged buyout, a deal funded through debt, and has resulted in the owners only putting small amounts of their own money into the club.