Is the Chelsea project broken? | The Football Boardroom

0:00Henry:K-pop Demon Hunters, Saja Boys Breakfast Meal and Huntrix Meal have just dropped at McDonald's. They're calling this a battle for the fans. What do you say to that, Rumi? It's not a battle. So glad the Saja Boys could take breakfast and give our meal the rest of the day. It is an honor to share. No, it's our honor. It is our larger honor. No, really. Stop. You can really feel the respect in this battle. Pick a meal to pick a side. And participate in McDonald's while supplies last. Last night, you spent two hours deciding what to wear to the party. This morning, it'll take you two minutes to list it on Depop and make your money back.

0:38Henry:Just grab your phone, snap a few photos, and we'll take care of the rest. The sheer dress and platform heels you'll never wear again? There's a birthday girl searching for them right now. Your one-and-done look is about to pay for your next night out. Or at least the ride home. Your style can make you cash. Start selling on Depop. Where taste recognizes taste. Welcome to the Football Boardroom. This week, we're taking a look at my old club, Chelsea. We're going to get in the boardroom and ask ourselves, who are these guys running and owning this football club? Did they really have a cunning plan?

1:13Henry:Is it time for a change? What does that mean for the playing staff? What does it mean for the coach? What does it mean for the stadium? We hope you enjoy the show.

1:28Christian, hi. How are you? Very well. Let's get straight into Chelsea because I've been talking to Chelsea fans and there are planned protests before the game against Manchester United on Saturday with some of their colleagues and friends from Strasbourg, also owned by Chelsea's owners, Bluco. And they are protesting against the direction of the club under individuals that I'm sure you know well from the business world. Tell me a little bit about Chelsea's owners.

1:57Henry:well yes i think the two people that most of our audience will be familiar with now are todd bowley and badad egbali let me tell you a little bit about their backgrounds let's start with todd bowley because when the club was bought in the summer of 22 he was very much front and center in that process so todd and and three of his associates own about um 38 of the club and Todd's biggest claim to fame in the sporting world, he's a financial, very, very serious financial investor and he made his name in American sports around the world-famous baseball franchise, the LA Dodgers, where with his mentor, a man called Mark Walter, who is also an equal shareholder at Chelsea, I may note, and who is really the dominant figure at the Dodgers still today.

2:52Henry:they bought the Dodgers in 2012 and it's been a huge success. So nothing jammy about the Dodgers? Nothing jammy about the Dodgers. Quite the opposite, I think. And what's interesting, and I'm going to come back to this when we talk about their strategic plan, but I'd like to leave you with this thought on Todd, that really his genius around that Dodgers story centred on a massive media deal that he did soon after the acquisition or at the time of the acquisition. They basically bought a bust baseball club and have turned it into a serial winning team. For our UK fans who don't follow American sports, they won the World Series in 24 and 25.

3:34Henry:They also won it in 20. So three World Series is about as good as it gets in baseball. Todd's been in the middle of that with Mark Walter and Todd's claim to fame was a highly innovative and incredibly lucrative media deal where he sold the rights to the Dodgers to a cable company for$8.5 billion. Which is presumably the reason why it's gone into Chelsea, which we can get on to. Yes. What I'm intrigued about at the moment, because you know these individuals, why would someone like him and Egg Barley get together? Well, that's a crucial question. So the most obvious answer to that question, I certainly get the sense that being in sport already, being an entrepreneur who'd made money in elite sport in America.

4:19Henry:We've seen plenty of those types be interested in the Premier League. And when Chelsea's put on the block, price talk, this thing's going to be going for two, two and a half billion pounds. The simple answer is, I think Todd Bowley needed more firepower and he looked around for a partner. And he partnered up with a private equity firm called Clear Lake Capital, led by Begdad Egbali. now that's a very different profile actually clear lake is an american-based private equity firm what is a private equity firm it is a firm that manages investments from major pension funds major institutions who back clear lake capital to invest in companies buy those companies hopefully make those companies more valuable and sell them later for profit that's the classic But there's one thing between buying a company, between buying, say, like a ball bearing factory in Wisconsin, and buying into something as complicated, as emotive as an English football club.

5:25Henry:You're right. It's not a Chelsea have been going for 150 odd years, no less than that. And, you know, they're not a startup. You are going into a world where there's so many moving parts. There's so many vicissitudes. Things change. You've got VAR. You've got a player getting injured. You've got a player falling out with a manager. You've got a manager maybe being inexperienced. It's not something as simple and formal as structured as the world that they were investing in before. Do you think they realized that they were getting into something as complicated as an English football club? I think your point's really well made.

6:00Henry:You know, this is definitely, to use the kind of business speak, straying away from the core activity of a private equity firm largely based in the USA, largely investing in technology and software businesses. It's a long way from their core business. And this is going to be key as we unpick what happened next, because I don't think they knew what they were letting themselves in for. Would you have advised them, if they'd come to you and say, you know the English media, sorry, the English football landscape, and obviously you know Chelsea, would you have advised them with their background to get into it if they think they're going to flip it and make a profit?

6:39Henry:You know, I've said before to you many times and even on this show that, you know, do you remember my French professor anecdote? You know, I think football and private equity football, particularly football and debt, is an explosive cocktail because precisely because of you suggested, you can't actually control the core driver of your success, which is on field results as a businessman. And when those results don't come through, those financially led structures can become extremely risky really quickly. And I do think there's something there's another even more fundamental issue from day one here that brought back terrible memories for me from my time getting into the game.

7:25Henry:You remember I was a private equity guy with a nice private life in 2008 who was asked to go in on an interim basis basically to referee a complete breakdown between two men from that world, Tom Hicks and George Gillette, who were the co-owners of Liverpool. And they had fallen out to such an extreme level. They refused to be in the same room together. They refused to talk together. They wouldn't talk to their CEO. they wouldn't talk to their manager and that was the shit show sorry that I agreed to get in the middle of in 08 and I've said ever since and I'll say it again You ended up in court didn't you?

8:05Henry:Ultimately I did to get rid of them but the point I'd like to make is that when Tobbole found this great opportunity to buy Chelsea Football Club and partnered up with a private equity firm led by Mr. Igbali you know they didn't have 20 years of history as partners as business associates through thick and thin you know patience tolerance for when things go wrong it was a relatively new coming together just like Hickland Gillette and what I saw at Liverpool all those years ago all Liverpool fans will remember well when things started to go wrong that relationship broke down and I they're quite different characters aren't they I mean I met them when they first came in only very briefly and Todd Bowley struck me as someone who is sort of slight blue sky thinking, sort of slightly broader perspective.

8:56Whereas Egbali, we were talking, I asked him a very innocent question about the sort of stadium and Todd passed it on to Egbali. Egbali was actually very strong on detail. I was quite impressed by how much...

9:06Henry:They're different profiles. You're absolutely right. But does that then lead to a slight or the potential of a falling out? You see all these headlines and I know there were some certainly about sort of 14, 15 months ago about a fallout between the pair. And as you experienced at Liverpool, that can only be damaging for the club. Yes, I think there is something in this. These are different profiles. Let's be clear. They are ultimately financiers. They are professional investors who are buying Chelsea for two and a half billion pounds because they've got a cunning plan to make it worth 10 billion pounds.

9:43Henry:And we'll talk about that. But on the human side, before we get to how it's gone and where they're trying to go, there are core issues right up front here. The fact they haven't worked together very much. The fact that one is running a private equity firm that has a very specific set of rules, expectations, investors who expect a return, which is a bit different to the way that Todd Bowley would be approaching things. todd and mark valter you know whatever it is 14 years in still own the dodgers still going strong i suspect they would see themselves as very long-term holders of a very valuable sports franchise not a private equity firm that needs to see um in and out in five years well in and out yes i mean in a private equity business you have to get out it's part of the constitution of any private so there is an inherent tension between the motives of the two of them there is listen Success is fine, OK?

10:43Henry:If this club was clearly already well ahead of the plan, well on track to be... Which it's not. Well, exactly, and that's the issue. So the sense I have is that after, let's face it, a very difficult start for this ownership group, very quickly. This is a team that in the three years prior to the takeover, I think was fourth, fourth and third. That's what they were buying. A Champions League qualifying machine, a trophy winning machine and that underpins why someone would go and buy something for£2.5 billion in London and think we can make this worth£10 billion. And lo and behold, their first season at ownership, they finished 12th.

11:25Henry:Sorry,£10 billion. That would be their long-term goal for sure. They're in it to create a hugely valuable business and football club. And the start position was a really successful team in London called Chelsea Football Club. And in their first year, They're 12th. OK, that wasn't in the script. And when private equity investors back a manager, and in this case, backing Tom Bowley to lead their business plan, and it isn't starting well, standard procedure for a private equity executive like a Bali's, I've got to get to London. I've got to get involved. I've got to get. I've got to protect my investors money.

12:02Henry:It's not his money. He is managing money on behalf of some of the world's biggest pension funds and institutional investors. So the problems at Chelsea start from the top. I think the problems that we have today start from a position of a business plan that justified a high-priced acquisition going horribly wrong in the first year of operation. So CP, do you think we should have some sympathy for Liam Rossini? Because he's effectively being asked to coach a team, but not manage the squad in terms of the players that he wants brought in. And in a way, this is the theme of Chelsea Football Club in this current era, the post-Roman Empire, effectively, is that how many grown-ups are there in the club?

12:48How many grown-ups are there in the boardroom giving wise advice? This is a week where we've been mourning the passing of Colin Hutchinson, who Chelsea fans remember just emotionally for what he did to the club, the managing director for 15 years under Ken Bates and Matthew Harding. The players that he bought in, Ruud Hullit, the way he went out and sorted deals and actually helped get, he was like a sporting director, even though he was managing director. He passed away, sadly, at the weekend. and someone like him, there's no one like him, a grown-up in the boardroom. Is there also, we could argue, there are no grown-ups on the pitch in terms of experienced players, not since Thiago Silva's left and obviously Rhys James is unfortunately injured.

13:34And also just coming back to the dugout and Liam Roussinha, in a way, has he got a sort of managerial mentor who can help him? It's almost like a sort of theme running through the club that they actually need a few more older heads giving them advice. But coming back to Liam, he's a good, bright young coach. We've absolutely seen that, the three clubs that he's worked at. But is it an impossible job because of the strictures from on high and the squad that he's been given, which is effectively kids?

14:07Henry:Private Equity 101, strategy, people, finance. Nobody knows that more than Ed Bali. I am really surprised that on the people's side, this club looks underpowered. The first thing I would have done if I had been Egbali and Boley day one would have been to get my management team lined out. Professional chief executive, elite sporting director, elite manager. Which they don't have. And they, Todd basically did the job of the chairman, chief executive, owner and sporting director initially. they ended up hiring win stanley from i think brighton and stewart i think from monaco both competent recruiters but not heavyweight sporting directors you know go and get a cheeky beggar eastine out of man's city you know a real grown-up they chose not to do that so cp we've we've seen this growing divide apparently between these two major characters at the heart of the club But come on, this is your world.

15:06Crunch me the numbers.

15:07Henry:Well, it's always the numbers that leads to these rifts and these divides and the numbers don't look pretty. The club's accounts have just come out for last season, 24-25. They lost about£260 million at Chelsea. Premier League record. A Premier League record. Did you get a plaque from Richard Masters for that to stick up on the wall of the club? I don't think that's a great... It's not a trophy. It's not a trophy, that is for sure. it's not the kind of trophy they want that's for sure but do you know what's really interesting about that Henry is that it drives people like me mad that we when I when I was running football clubs I'm not a hypocrite I suppose I took advantage of it but in the sense there's such a delay between the release of financial results and they relate to a world that's long past so these results this headline grabbing record loss of 260 odd million quid is last year okay and they would say Chelsea would say sitting here with us right now oh no no this year numbers much better we're in the Champions League we won the Club World Cup last summer and so the revenues from those two crucial bits of on field will mean this year's numbers will be much better there's one huge flaw in that what's that well there's not another Club World Cup and they're not going to get back in the Champions League that is true you're getting good at this mate hanging around you and picking up all the fact that exactly so headlines for the audience turnover under 500 million pounds miles off their main their main london rival now is arsenal okay in my time at chelsea arsenal were nowhere near chelsea obviously on the field in terms of trophies in terms of those two acid tests being right at the top of the premier league trying to win it not just scraping to top four and going deep in the Champions League.

17:00Henry:For the whole of the Abramovich era, including my time there, Chelsea were miles. And by the way, Chelsea were ahead on commercial. Chelsea were close on the stadium and obviously way ahead on the TV money. Now I look at the numbers and this is the picture that these two key principles, these two owners are looking at, you know, two, three, four years into the deal. They're doing less than 500 million of turnover when their key rivals are doing 700 million. And in plain English, they're sixth out of six on commercial income in the big six. They're sixth out of six on stadium income because they don't have a big enough stadium, even though they charge quite a lot of money to go to that stadium.

17:39Henry:And they're sixth, obviously, on the television income because that's probably where they're going to finish this year. And yet they're number three on wages and they're number one on transfer spending. That's a really explosive mix of numbers, Henry, which means that they're losing a lot of money. And yes, this current year, let's add that Club World Cup and Champions League revenue back in. Maybe I'm saying, you know, another 80 million or so on the European side. Best case scenario, maybe 60 to 70 of the club, maybe 150 to 160 more revenue this year. So they lost 260. So maybe this year they only lose 100.

18:16Henry:Well, you might not get the plaque for the record loss, but nobody's doing flips because they've still lost. And they've got no more loopholes because they've sold the hotel and they've sold the women's team. Absolutely right. That ship has sailed. And so we're now in a world where it's all about your turnover. And that turnover is going right back down in 26, 27 because the crucial Champions League money, probably 80 million this year, that might be 20. I think it was 19 when they won the Conference League. They went the whole way. Okay. So a huge difference. And there's no Club World Cup, which was an absolute windfall of revenue.

18:53If I'm a Chelsea fan and I'm listening to you, I'm going to go, this means selling players.

18:59Henry:Well, the point being that the wages and the cost of amortising those transfers, that's about a£500 million cost every year for this club. And that needs to be 70 % in Europe of their income or 85 % in the Premier League. And any which way I look at the numbers, Henry, I'm telling you right now, I can't see that happening next year without either a genius discovery of another loophole, and I don't see that. The mood music is definitely turned against that, which means a big profitable player sale as the only way to comply. So just on the back of that, pressure on Liam Rossini to get them back into the Champions League as we stand.

19:41They're four points off fifth, and they are actually closer to 11th place than they are to fifth. So there is a queue of good, ambitious, well-run, better-run clubs behind them, sort of Bournemouths and teams like that, Brentford, who are desperate to overtake them in that race. And then the problems are very clear. Obviously, they are in the FA Cup semi-final, but that doesn't bring too much revenue. But they could finish fifth and win the FA Cup. So that is not a sort of a terrible season. But longer term, we are looking at meltdown.

20:17Henry:We're looking at a business model where the front loading, this enormous investment in trying to build a winning team, that is what they could absolutely agree on. They both agree it's all about winning. They've spent more than any other club in the last four years on acquiring talent to create a winning team. And as we've said, the numbers don't lie. Their Premier League outcomes are way below the average finishing position in the Roman Empire. And they've got to fix that quickly. And the problem is they're doing it under a set of financial regulations that are going to make life really hard for them.

20:56Henry:Because their natural revenues, Henry, when they're not dominating the Premier League and they're not going deep or even qualifying for the Champions League, Their natural revenues are too low to support the costs they have invested in wages and in player amortization. That is the big issue. So just when they need the team to kick on, what I'm saying today in plain English is I see a need to sell more players for big profits. Note profits, not price. If you sell Enzo Fernandez for 100 million and you spent 100 million, that doesn't help your squad cost rule. You need to sell a player who costs nothing for a boatload to generate profit.

21:43Henry:Last summer, let me just tell you this, there was a lot of noise, record player sales. They raised 300 million in the summer of 2025 selling these players. the profit on that 300 million was barely 30 million because those players were in the books at high numbers. So you don't generate the profit. You've been in boardrooms. What would you say if players spoke out effectively against the club and the direction of the club as Kukurea did in a fairly actually quite measured way in his interview with the Athletic and Enzo Fernandes in a slightly more militant way in terms of linking himself again to a move to Madrid.

22:25If you take a step back, obviously they shouldn't speak out publicly, but actually what they are saying, and is clearly a discussion in the dressing room, is that they have concerns about the direction of the club. And will that make it easier for them to leave?

22:42Henry:I think it's such an interesting input because we've talked about this great strategic plan to make Chelsea worth, you know, maybe£10 billion in 10 years' time. And that comes from this idea that if you can buy all the best young players in the world, just never lose out in the race to acquire talent, that if you assemble, you know, the biggest squad of the best young players in the world at 21, 22, by the time they're 25, you're going to have the world champions. you're going to have, you know, the LA Dodgers of football. What those two players are really proving is it doesn't work like that in European football, maybe for three reasons.

23:30Firstly, you and I know that the graveyard is littered

23:36Henry:with expensive 21-year-old signings that didn't quite cut it aged 25. That's the first thing. So the hit rate is much lower in football than any other sport, even buying at that late stage. The second point is, when you get it right, let's say with someone like a Fernandes or a Caicedo. So yes, they've paid huge transfer fees for those players, by the way. So there isn't a lot of profit in that. But the problem is, those players, they demand to be part of a winning team. And they also demand to be paid top dollar. So this, we're going to have lots of young players on more reasonable salaries with more performance-related pay.

24:18Henry:The problem is, if you've bought really well and these players become really elite, they go off to international duty and they find out their teammates are earning twice as much money. So what do they do? They either demand a pay rise, in which case your low-cost model's under pressure, or they demand a move, in which case your team gets worse. And we've just said, throw in the fact that to comply with regulations, you need to generate trading profit. it my basic point is that your these squads are not stable and i think that's what those footballers are pointing to yeah and you look at someone like estavar the brazilian they've got who's who's clearly a talent will he want to hang around if real madrid come calling and he's not in the champions league and he can see chelsea drifting you know the answer that question yeah absolutely it was a rhetorical question but what you also find with a player like estavar and talking to Chelsea fans about this there's a connection between him almost like an emotional connection even though he's just they love the way he plays they love the way he comes over at the end of the game and applauds them gives his shirt to to a kid he's obviously a genuine individual as well as an exceptional potentially world-class talent but this issue of connection is huge and this is one of the huge failings of the two guys at the top is they really don't have much connection with the fans now.

25:41So there's very little patience for them and their so-called project.

25:45Henry:I'm definitely picking up that fans are unhappy. The disconnect, we're seeing it with the protest at the weekend. You're seeing it on a regular match basis. You're seeing it online. You're seeing it, you know, when the supporters trust are talking. Fairly balanced, you know, you'll know them. Fairly balanced Chelsea fans are disaffected with the way their club is being run. Some of them hark back to Roman Abramovich and his ownership. We know all about the sanctions and the issues there. But actually, he was engaged in the club. He was interested in the football. He was... The fans sing his name, and the fans chant his name basically as two fingers to the two men in the boardroom who they feel have lost the connection with the fans.