Business With Blain: Cards On The Table
Multiple parties are interested in taking over at Everton.
By JohnB
Everton fans globally sighed in collective relief when Everton Football Club announced on June 1st that the Sale and Purchase Agreement between 777 Partners and Farhad Moshiri’s Blue Heaven Holdings, for the sale of the club, had expired.
Having funded the club’s financial needs for almost nine months, 777 Partners failed to close the deal as their business model — weighed down by litigation and bad press — seemed on the brink of collapse, despite the firm somehow investing around £200million into Everton in that time.
The relief enjoyed by Evertonians was short-lived, though, when established football pundit Perry Groves said on a national radio station the next day that, “if you are looking to buy Everton players… you know you are going to get them at ridiculously cheap, knock-down prices because they are so desperate to sell.”
This exposed, in a few sentences, a common, if ill-informed, view of what the collapse of the 777 Partners deal meant.
Peter McPartland, co-founder and presenter on the largest Everton fan-led media channel Toffee TV, reacted on X (formerly Twitter) with a post that exceeded one million views
“This is absolutely f****** awful, you should be embarrassed to produce this nonsense.”
Groves and his colleague Sam Matterface had openly talked on their channel about Everton entering administration, hence the fire-sale comment, despite the football club consistently pushing out a message that liquidation is an extremely unlikely scenario, and Everton Director of Football Kevin Thelwell having already said player sales will occur, but only on the club’s terms, as he and his recruitment team prepare for the summer transfer window.
Moshiri wants to sell his controlling interest in Everton — that is clear — and these remain challenging times for the club off the field, but does anyone want to buy the club and if they do are they prepared to pay what Moshiri wants and take on what is claimed to be an eye-watering amount of debt of more than £1billion?
One might ask how a business with a turnover of less than £200m per annum can have accrued such large debts. From afar, it looks shocking, and leads to pundits assuming the club cannot or will not pay off those debts. Is it fair to assume that the club’s creditors must be seriously worried and concerned about a total loss should administration occur?
In broad brush terms, the often quoted £1bn of debt is mostly with Everton’s significant creditors, shareholder loans from Farhad Moshiri (£450M), Rights and Media Funding (£220m), 777 Partners (£200m), and MSP Sports Capital (£160m).
It is not clear what happens to the junior debt brought about by 777 Partners’ investment, although rumours persist that it may yet convert to equity, like shareholder loans. MSP Sports Capital are secure and despite having an option to take a controlling interest in the club show no appetite to do so, with Rights and Media funding being a long-term provider of funds to Everton and other Premier League clubs.
To some onlookers, this might appear to be a complex web of debt and relationships, but even if the truth is a little less mysterious, it is most certainly a messy scenario, and the debt requires a formal restructuring either before or as part of a sale of control in the club. If one excludes the write-off of Moshiri’s debt the balance at around £600m is significantly less than the cost of the almost completed Everton Stadium.
On a dark day, Everton can be seen as deep in the mire; on a sunny day, it can be seen as a historical football club in need of more quality and experience in the boardroom and a new, well-financed owner who with vision, and the backing of a superb fanbase could very well be seen to have got a bargain.
Friday, June 7th was certainly a day for “sunnier” speculation.
No longer were the terms “administration” or “fire sale” being thrown about quite so freely by the press.
Instead, legacy media and independent media alike were reporting that multiple parties have held talks with Moshiri.
Indeed, the most prominent reports were regarding local businessmen, and Evertonians, Andy Bell and George Downing. They have reportedly secured the support, or at least, the interest, of MSD Capital, the family office of American billionaire Michael Dell — the founder of Dell Technologies.
What is a family office?
A family office handles investment and wealth management for a particularly wealthy family, generally one with at least $50-100m in investable assets.
It has been reported that Bell and Downing are prepared to meet Moshiri’s asking price.
Those reports came after Bloomberg claimed that Everton had received an offer from Advantage Capital Holdings (A-Cap) — one of 777’s major lenders. The New York-based firm has purportedly offered to re-finance the club’s debt, and also take a non-controlling equity stake.
Then there is John Textor, who arguably got the ball rolling back in May. Textor, a shareholder at Crystal Palace, has made his interest known, going as far as to say that “Everyone should want to buy Everton right now”. However, the American also acknowledged he may not be able to sell his stake in the Eagles soon enough to get in ahead of other interested parties.
While it remains to be seen who Moshiri will choose to sell to, it does seem the sale of Everton is a matter of when, not if, and the fans may yet get an enjoyable last season at the Grand Old Lady of Goodison Park.
Great piece guys, I wouldn’t like to speak too soon but I’m feeling rather optimistic.
Good summary of the current state of affairs. Seemingly lots of prospective owners. I'm ambivalent to whether or not the new owners are Evertonians, I'd rather see strong business acumen added to exposure in several business areas. Maybe the tide is beginning to turn in respect of our national media coverage? Could we become one of the lovies? The next few weeks may prove to be as interesting as the last few. COYB!