Everton’s financial future could be in jeopardy unless the proposed takeover by the controversial US investment firm 777 Partners is approved.
Everton’s debt and cashflow problems have increased considerably since the owner, Farhad Moshiri, stopped propping up the club, with a recent loan from 777 Partners taking the total of outstanding loans above £350m. Interest on loans from Rights and Media Funding, MSP Sports Capital and 777 Partners is understood to be costing Everton more than £30m per year.
A loan of about £20m from 777, which has signed an agreement with Moshiri for his entire 94.1% shareholding, recently provided Everton with short-term working capital. That was required despite the club making a profit on player trading this summer and drastically reducing the head count, and wage bill, of Sean Dyche’s squad.
A previous loan of £140m from MSP, that included £40m from the local businessmen Andy Bell and George Downing, went to Everton’s stadium development holding company to help continue work on the club’s new home at Bramley Moore dock. A loan facility with Rights and Media Funding has been extended to £200m.
Further loans are likely to be needed from 777 to fund Everton’s day-to-day running costs and payments to the stadium contractors Laing O’Rourke before the end of the year. The decision on 777’s proposed takeover is due to be made by early December.
The Miami-based company requires approval from the Premier League, Football Association and the Financial Conduct Authority to become Everton’s owner. Should the takeover be rejected, and 777 is the only viable option for Moshiri, Everton’s ability to meet their current financial commitments will be in doubt. The club has posted losses of £417.3m over the past four years and needs a further £200m, approximately, to finish work on the new stadium.
Everton and 777 are confident a deal that would spare the Premier League the problem of having a high-profile financial crisis on its hands will proceed. Everton also deny they are at risk of administration because, even in the event of 777’s takeover falling through, the club would remain in the hands of a billionaire, Moshiri, who would not want his already considerable losses to mount. But Moshiri has stopped bankrolling Everton, having invested about £750m for little reward, and had tried to secure refinancing options before agreeing to sell up.
777 must overcome several difficulties to bring the damaging Moshiri era to a close and complete its biggest acquisition. The details of what are believed to be a performance-related deal have not been disclosed but the company must provide proof of funds for the takeover, stadium, debt and Everton’s running costs. Rights and Media Funding is content with the proposed takeover, having previously objected to MSP buying a 25% stake in the club, but MSP wants its £140m loan repaid in the event of 777 taking control. 777 is to hold talks with MSP in an attempt to keep it on board.
The proposed takeover represents the first major examination of the Premier League’s more stringent owners’ and directors’ test. 777 has faced allegations of fraud and unpaid debts – which the company denies – and is subject to active legal proceedings in the United States. The company’s co-founder Josh Wander pleaded no contest to a 2003 drugs charge but that may be considered spent.
Everton will face an independent commission next month over an alleged breach of the Premier League’s profit and sustainability rules. However, the club denies any wrongdoing.
Supporters of several clubs that 777 owns, including Hertha Berlin, Standard Liège, Vasco da Gama and Red Star FC, have staged protests against the company in the two years since 777 started building its football portfolio. 777 has agreed to meet Everton’s fan advisory board to discuss concerns over its plans for the club and the new stadium.
The metro mayor of the Liverpool city region, Steve Rotheram, is due to meet representatives of 777 on Wednesday after expressing fears for Everton’s future.
