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The owners of the NBA team the Cleveland Cavaliers have joined forces with one of the four remaining bidders for Chelsea as the auction of last season’s Champions League winners enters its final stages.
Sky News revealed that Rock Entertainment Group (REG), which owns a string of US sports teams, has agreed to participate in the consortium led by the Chicago Cubs-owning Ricketts family and the hedge fund tycoon Ken Griffin.
Sources said on Saturday evening that Rock Entertainment Group had agreed to invest a significant – though undisclosed – sum in the bid.
The emergence of Dan Gilbert, one of the richest people in America with wealth estimated by Forbes magazine at almost $31 billion, as a participant in the auction raises the stakes still further as a quartet of bidders vie to succeed Roman Abramovich as Chelsea’s owner.
As well as the Cleveland Cavaliers, REG owns the Cleveland Monsters ice hockey team, and the NBA G-League team Cleveland Charge. Mr Gilbert is also an investor in the fast-growing e-sports arena, with a big stake in 100 Thieves, which has a significant presence in e-sports in Europe.
In total, Mr Gilbert presides over an empire of more than 100 affiliated companies across the US, employing more than 30,000 people.
He acquired majority ownership of the Cleveland Cavaliers in 2005, since when the team has made the NBA Finals five times, winning the championship in 2016.
Mr Gilbert is said to have privately invested more than $400m into the Rocket Mortgage FieldHouse, the stadium which plays home to the Cavaliers and the Monsters. People close to him said he had also privately invested more than $25m into the Cavaliers’ practice facility.
Ricketts-led bid has faced challenges
The Ricketts-led bid for Chelsea has faced challenges in the last fortnight because of a backlash over historical comments made by a family member who is not involved in the offer.
After meeting supporters’ groups last month, the Cubs chairman Tom Ricketts said the bid team had “listened to all of your feedback – including from the Chelsea Supporters’ Trust – and are grateful that the door is still open for us to demonstrate our commitment to working with fans to protect the club’s heritage.
“It is now up to us to redouble our efforts and clearly lay out a vision for our stewardship of the club with diversity and inclusion at its heart.”
Supporters of their offer have pointed to the family’s successful ownership of the Cubs, having won the World Series for the first time in a century and completed a $1 billion renovation of its home, Wrigley Field – one of the most historic sports arenas in the US.
A bid insider said the Cleveland Cavaliers’ focus on diversity, equity and inclusion programs could help to allay any lingering concerns among Chelsea’s fan-base about the consortium’s suitability as owners of Chelsea.
They also pointed to the philanthropic endeavours of Mr Gilbert and his wife Jennifer, who have pledged $500m towards community revitalisation projects in Detroit.
A person close to them said they had also signed The Giving Pledge in 2012, promising that at least half of their combined wealth would be donated to philanthropic causes at the end of their lives.
On Friday, Sky News revealed that the Ricketts-led bid had strengthened its advisory line-up by adding Jefferies, the US investment bank, to its team.
Jefferies’ appointment, alongside that of Lazard – another adviser to the Ricketts-Griffin bid – underlines how Wall Street banks are jockeying for roles on what could be the most lucrative sale of a sports franchise in history.
People close to the consortium confirmed that it would be an all-equity bid, with no new debt being placed onto Chelsea’s balance sheet.
Final bids are due on 11 April
Final bids for Chelsea are due on April 11, and the Cubs owners will be up against three credible rivals as they vie to succeed Mr Abramovich at Stamford Bridge.
A spokesman for the Ricketts-Griffin bid declined to comment on REG’s involvement.
Sky News revealed this week that the fan-led group co-founded by the former Chelsea captain John Terry was in “positive” talks with two of the shortlisted bidders about acquiring a 10pc stake.
People close to the bidders believe the price could go beyond £2.5 billion as the contenders prepare final bids.
Raine Group, the adviser handling the sale, is aiming to present a preferred bid to the government the following week, paving the way for a sale to take place before the end of the month.
Between them, the final bidders also either control or own stakes in US teams including the Boston Celtics, the Cubs, the LA Dodgers, the Philadelphia 76ers and the Sacramento Kings.
In addition to the consortia led by the Ricketts, Todd Boehly and Sir Martin Broughton, the other contender to buy Chelsea is Stephen Pagliuca, an American private equity billionaire who owns a big stake in Atalanta in Italy’s Serie A.
By the standards of conventional takeover processes, the Chelsea auction has moved at breakneck speed, with executives at other major investment banks suggesting that such a complex sale would typically have taken at least six months.
Bidders have sought clarity on legal implications
Mr Abramovich’s sanctioning by the UK government has added further complications to the transaction, as bidders have sought clarity on the legal implications of buying the club.
Prior to being sanctioned, Mr Abramovich had said he intended to write off a £1.5 billion loan to the club and hand the net proceeds from the sale to a new charity that he would set up to benefit the victims of the war in Ukraine
A rapid sale is seen as essential if Chelsea is to avert the uncertainty that would trigger the break-up of one of the top flight’s most valuable playing squads.
The current FIFA Club World Cup winners have been thrown into disarray by Russia’s war on Ukraine, with Mr Abramovich initially proposing to place the club in the care of its foundation and then formally putting it up for sale.
Mr Abramovich had initially slapped a £3 billion price tag on the Stamford Bridge outfit, with the net proceeds being donated to a charitable foundation set up to benefit the victims of the war in Ukraine.
As well as government consent in the form of a special licence, Chelsea’s new owners will also require the approval of the Premier League under its fit and proper ownership test.
Chelsea sale: Ricketts family commit to diversity amid fan protests
The Ricketts family pledged to put “diversity and inclusion” at the heart of Chelsea as fans protested their bid to buy the club outside Stamford Bridge on Saturday.
Between 50-100 Chelsea supporters gathered ahead of Saturday’s Premier League clash at home to Brentford to demonstrate against the Ricketts family’s bid to buy Chelsea.
The Chelsea Supporters’ Trust said earlier on Saturday its membership “neither supports nor has confidence in” the potential new owners and that 77 per cent of members polled did not support the Ricketts’ family bid.
The family have committed in previous statements to being diverse and inclusive and doubled down on that pledge in a statement on Saturday.
It said: “Over the past fortnight, our bid team has met with several supporter groups to explain our vision for Chelsea Football Club. In those meetings, and by letter to all groups, we have shared a set of specific commitments we will make to fans, if our bid is successful.
“We believe these are far-reaching and certainly include an absolute commitment on the part of the Ricketts Family and the bid team to put diversity and inclusion at the heart of the club.
“We look forward to more meetings – including with the Chelsea Supporters’ Trust – over the coming days and to making a public reiteration of our values and commitments.”