Alexis Ohanian is betting on the ‘unrealised potential’ of Chelsea Women with latest investment

When you cover the sports business beat, you hear a lot of jargon — discounted cash flows, enterprise values, revenue multiple — usually from people trying to convince you that the amount they paid for a team is the result of a mathematical equation.

An alternative translation: stop asking stupid questions, the number is the number, and you just don’t understand.

But now and again, a Toto comes along to pull back the curtain and show us that the wizard is just a bloke with lots of bells and whistles. Ideally, he is a good-hearted and resourceful bloke, but still just a bloke.

American tech investor Alexis Ohanian buying a minority stake in Chelsea Women at a price that would give the eight-time Women’s Super League (WSL) champions a total valuation of £245million ($326m) is one of those moments.

“I’ve bet big on women’s sports before — and I’m doing it again,” Ohanian wrote on his social media accounts. “I’m honored for the chance to help this iconic club become America’s favorite team and much, much more.”

The financial jargon that would try to justify this investment as a mathematical certainty has not been invented yet. However, that does not mean Ohanian, the co-founder of social media platform Reddit and the husband of Serena Williams, is throwing his money away.

Chelsea Women are, by some distance, the most successful women’s football team in England. They went unbeaten in the Women’s Super League (WSL) this season, earning their sixth consecutive league title. They won the League Cup in March and, on Sunday, will play Manchester United in the Women’s FA Cup final. Ohanian, Williams and their two girls will be in the posh seats for the match.

Last July, Chelsea’s U.S.-led ownership group, headed by Clearlake Capital and prominent investor Todd Boehly, sold the women’s team for £200m to a company called Blueco 22 Midco, a U.S. group led by Clearlake Capital and prominent investor Todd Boehly. No, that was not a mistake.

Now, some people will tell you that this was just an accountancy trick to get around the Premier League’s spending rules, as Clearlake and Boehly needed to find a quick, paper profit to cancel out another large and very real annual loss, just as they had a year before when they sold themselves two hotels and a car park they already owned.

But others, including Clearlake and Boehly, will tell you that it was because the real value of their excellent women’s team was not being properly realised and would only become fully appreciated when it was separated from the men’s team.

To prove that, they hired merchant bank BSD & MSD Partners to find investors willing to spend circa £20m on a stake of about 10 per cent, which brings us to Ohanian’s involvement.

“This partnership is both very exciting and timely,” football executive Ebru Koksal tells The Athletic.

A former analyst at Morgan Stanley, Koksal became chief executive of Turkish club Galatasaray two decades ago and was the first woman to be elected to the European Club Association’s board in 2010. She is an investor in Mercury 13, a consortium that wants to build a multi-club group in women’s football.

“Ohanian’s investment is a powerful endorsement of the club’s global brand and the soaring value of women’s football,” she says. “By acquiring an estimated 8-10 per cent stake for £20m, he not only validated Chelsea’s strategic growth but also reinforced the club’s ambition to lead on and off the pitch. His proven commitment to elevating women’s sports, combined with Chelsea’s historic success, signals a new era of opportunity and visibility not only for the club but the Barclays WSL as well.”

Chelsea lifted the Barclays Women’s Super League title trophy for a sixth consecutive year (Tom Dulat/Getty Images)

Mentioning Barclays was no accident. Koksal points out the appeal of women’s football among big-name sponsors, but it is not one she needs to make to Ohanian. He has made a career of backing start-up companies.

In 2019, he became the lead investor in Angel City FC, an expansion franchise in the National Women’s Soccer League (NWSL). This bet attracted a lot of attention at the time as his fellow investors included Hollywood stars Jennifer Garner, Eva Longoria and Natalie Portman, and more than a dozen former U.S. women’s soccer stars.

He has never revealed just how much he put into the team, but last year, Willow Bay and her husband Disney chief executive Bob Iger bought a majority stake in the Los Angeles-based outfit at a valuation of $250m (£190m), making them the most valuable women’s sports team on the planet. Until this week.

Ohanian, however, has not sold his shares in Angel City, as he clearly believes this train has only just left the station and he is not getting off. Very few are picking holes with Angel City’s valuation now, as they are making $30m a year, with record revenues from tickets, merchandise and sponsorships.

Chelsea Women, on the other hand, earned just over £11m last year and made an operating loss of almost £9m. If he has paid £20m for eight per cent of the club, that justifies Chelsea’s declared post-investment valuation of £245m.

But it would also mean he has bought in at a (jargon alert) revenue multiple of over 21 (i.e. the club is valued at more than 21 times Chelsea Women’s revenue last year) For reference, Sir Jim Ratcliffe’s purchase of just over a quarter of Manchester United for £1.3billion valued the whole club at about 10 times their annual revenue, which is what the biggest NFL, NBA and MBA franchises go for.

“Revenue multiples this high are only found when the buyers think there is a lot of unrealised potential, with plenty of growth on the way,” explains Dr Christina Philippou, associate professor in accounting and sport finance at the University of Portsmouth.

“The increasing broadcast revenues for the WSL and NWSL, rises in attendances and commercial deals with new entrants to the football market — period pants, baby products, make-up and so on — are encouraging signs for women’s football. Especially when you remember that other leagues and sports are having a hard time renegotiating their TV deals and face drops in income per match. But not everyone agrees with this rosy picture, as recently seen at Blackburn, Reading and Wolves.”

As Philippou notes, Reading ditched their women’s team as soon as their owner’s financial problems jeopardised the men’s team, while Blackburn Rovers are threatening to do the same to their second-tier women’s team. Wolverhampton Wanderers decided they did not want their women’s team to be promoted to the WSL as it would cost them too much.

Chelsea Women will not likely get relegated anytime soon, but we are talking about a team that was semi-pro until very recently in a league that struggles to fill non-League grounds and is still finding its feet as a paid-for broadcast product. In other words, a start-up. And Ohanian, now 42, has been building and investing in those since he left college.

Having helped to launch Reddit, the “internet’s front page” in 2005, he sold it to Conde Nast a year later. By 2010, he had moved into venture capital, co-founded his own fund while working closely with another. In 2020, he finally left the board of Reddit and started Seven Seven Six, his own venture capital firm that has 83 different tech investments in its portfolio.

Ohanian has already rebranded his X profile to proudly display his stake in the west London team. Since confirming his investment in Chelsea Women with a link to the original article in The Times, he has posted a link to the tickets page of Chelsea’s website, saying “see you all SUNDAY!”, as well as reposting comments about the deal from Chelsea Women’s CEO Aki Mandhar and manager Sonia Bompastor.

Through Ohanian, Chelsea Women now also have a connection with the world’s most successful, in business terms, women’s team (Angel City) and someone synonymous with Serena Williams, if only indirectly.

While she is not specifically mentioned in the press release and the athlete-turned-entrepreneur has not updated her socials with Chelsea shirts or pictures of Stamford Bridge, Williams is one of the greatest athletes of all time. In addition to winning 39 more grand slam tennis titles and four Olympic gold medals more than her husband, her estimated personal fortune of $300m is twice his.

Serena Williams has won 39 grand slam tennis titles across singles, doubles and mixed doubles – 14 of them at Wimbledon (Clive Brunskill/Getty Images)

So far, she has largely focused her business interests in the beauty, fashion, media and retail sectors, but she is part of the Angel City group and even has a small stake in the NFL’s Miami Dolphins with her sister Venus. She was also part of the group led by former British Airways and British American Tobacco boss Sir Martin Broughton that wanted to buy Chelsea (the club, as opposed to the men’s or women’s team) in 2022, but missed out to the Clearlake/Boehly bid.

Even with these caveats, it is not hard to see what someone with her star power could do for a start-up like Chelsea Women. The 43-year-old American has more than 40 million followers across Facebook, Instagram, Pinterest, TikTok and X.

“This is a total game-changer for women’s football in the UK,” veteran sports team match-maker Laurie Pinto of Pinto Capital says. “Alexis is a very well respected, and connected, tech investor and great guy. And then you’ve got Serena Williams, too. This is a wonderful deal for Chelsea.”

Still, others are not quite so sure Chelsea is such a great deal for Ohanian.

“U.S. investors are all over these deals,” says Alexander Jarvis of Blackbridge Sports, a firm that advises owners and prospective owners on football investments. “With so few on the table, even minority stakes are in high demand. That said, this valuation makes little sense to me. I just don’t see a return on investment or easy exit here, even over five to eight years.”

Andrew Umbers of Oakwell Sports Advisory is another who came up with a different valuation. “This investment will be enough to support the Premier League’s fair market value test for Chelsea Women and the implied £200m valuation also sets a precedent for valuing other women’s clubs,” says Jarvis.

“But Oakwell believes this £200m enterprise value will not be topped in the WSL for a few years. Let’s also see whether the £20m is a cash investment or a mix of value-in-kind, sponsorship, cash and so on.”

The reference to the league’s fair market value test relates to the theory mentioned above that the idea to split the women’s team into a separate subsidiary was motivated more by a need to magic away a breach of the Premier League’s profitability and sustainability rules that have caught out Everton and Nottingham Forest in recent seasons, than a genuine belief that Chelsea Women were a rocket ship about to take off.

That theory has clearly taken a knock this week, thanks to Ohanian’s validation of the club’s internal valuation of the women’s team, but The Athletic has heard from at least one industry expert who finds this all a bit too convenient.

“When it comes to women’s sport, Ohanian is almost a philanthropist, hence his investment in Athlos (women-only track and field professional series),” says this expert, who wished to remain anonymous to avoid upsetting potential customers. “I’m very suspicious of this valuation. It looks like he’s doing a favour for a mate.”

USWNT’s Catarina Macario is a key part of Chelsea’s attack (Andrew Redington/Getty Images)

Ohanian is betting on the upside, with Angel City and Chelsea Women vying to become the world’s first $1bn women’s sports franchise within a decade.

That might be possible if Angel City can finally click on the pitch, Chelsea Women can get past their nemesis, Barcelona, and win the Champions League, and the sport continues its steady growth on both sides of the Atlantic.

“This is a landmark day in the history of Chelsea Women and for women’s football in Europe and beyond,” says Chelsea Women’s Mandhar in the press release. “As a club, we are unapologetically ambitious and this investment is proof that the opportunities for growth in the business of women’s football are endless.”

But it’s still a risk.

Ohanian has already enthusiastically tweeted the “unapologetically ambitious” line, and his contribution to the official statement was to say that, having seen Angel City’s growth, he is “confident Chelsea FC Women is the next global women’s sports brand”.

And like all of William’s doubles partners, you have to like his odds.

(Top photo: Mike Coppola/Getty Images)

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