Believe it or not, 2023 went pretty much as I forecasted at the beginning of the year: a March low and then a strong finish into 2024.
My readers were ready for this… especially those who subscribe to my premium newsletter, The Signal.
I was right because I looked at the relevant data… something that most investors do not do.
They follow the loudest stories in the mainstream media, which only confuses them.
2024 will be one of the last years of the current 18.6-year cycle. It’s the “Eleventh Hour” stage, when most assets grow.
And the latest hint about how the rest of the year is going to unfold comes from the world of sports.
A Premier Sign of the Times
Let’s have a look at some more recent news concerning U.S.-based interests in sporting stadiums.
This time, though, from the U.K.
Source: Bloomberg
Chelsea is a U.K.-based football club (or soccer, in the U.S.). Chelsea plays in the English Premier League.
Premier League is the richest and most prestigious club football competition in the world today… and those involved in it aren’t shy about flaunting their money around.
But what Chelsea’s majority owners, U.S.-based Clearlake Capital, have been spending is making the rest of the competition blush.
Sure, close to a billion dollars has been splurged on player transfers during the last 18 months.
However, unless the rules change, you can only ever play with 11 players on the pitch at one time.
So why this headlong rush to take on hundreds of millions of dollars worth of additional debt?
It’s the Land They Play On
From the above article… (the highlight is mine):
Lenders were invited to attend Chelsea’s recent match against Aston Villa FC, according to the people. Deliberations are ongoing and no decisions have been taken on the final amount of any additional borrowing, they said.
Fresh funds would give added financial firepower to Chelsea’s majority owner Clearlake Capital and US investor Todd Boehly, who have already spent hundreds of millions of pounds on new players since taking control in May 2022. They’re also looking to fund a redevelopment of Chelsea’s Stamford Bridge stadium in west London, as well as invest in more football clubs.
Once again, having a little knowledge of the 18.6-year real estate cycle gives you the edge in interpreting what’s going on around you.
We are entering a golden age of unrestrained credit creation and lending.
Ask yourself: what’s the best kind of collateral to put forward when it comes to borrowing a quarter of a billion dollars?
The Land Takes the Gains
It’s the land that the stadium sits on.
Not just any land, either.
Sitting astride Kings Road, this piece of London is one of the most expensive parcels of land anywhere on the planet.
Every previous attempt by Chelsea to expand the stadium before Clearlake Capital arrived as majority owners has been rebuffed by the local council.
There are some powerful interests involved, and they have no desire to share the enormous gains owning such land would give Chelsea’s owners.
Simply achieving the required access to credit doesn’t guarantee any redevelopment will be given the green light.
However, it’s totally possible that the potential gains available for everyone – should the real estate cycle repeat – will reach such incredible heights that all opposition will be quietly and efficiently removed.
In fact, it’s very possible that the redevelopment, should it go ahead, may even signal the absolute top of the real estate cycle in the U.K. once completion is announced.
That’s why I suggest that deals like this are worth following.
It’s because there are only certain small windows of opportunity present in every cycle over the past 200-plus years when such deals are possible.
This is the key to developing your market timing skills. And at the end of the day, it has very little to do with players or sports in general.
It is, in fact, the ultimate real estate play.
The real estate cycle is poised to enter overdrive… and 2024 will be a blockbuster year.
Regards,
Phil Anderson
Editor, Cycles Trading with Phil Anderson
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