777 Partners loan to in-dire-straits Everton

Article posted by Coliseum, September 25^th, 2023

Image: Everton FC

The Premier League team Everton F.C. (UK) have received a sizable loan from its prospective new owners the American investment firm 777 Partners.

‘The Athletic’ stated that it was announced recently that the American investment firm has an agreement to buy the club from Farhad Moshiri subject to an approvals process. The British-Iranian businessman Moshiri is the owner of the club.

The Everton Football Club is an English professional association football club based in Liverpool (UK) that competes in the Premier League, the top tier of English football.

Apply for membership

The Goodison Park is a football stadium in the Walton area of Liverpool, England (UK), two miles North of the City Centre. It has been the home of the Premier League club Everton F.C. since 1892 and has an all-seated capacity of 39,414. The Goodison Park has hosted more top-flight games than any other stadium in England.

The 52,888-capacity Everton Stadium is a football stadium under construction on Bramley-Moore Dock in Vauxhall, Liverpool, England (UK) that will become the home ground for Everton F.C. during the 2024-2025 seasons replacing the Goodison Park.

The 777 Partners is a Miami (US)-based alternative investment platform that invests across a number of high-growth attractive verticals with a strong focus on financial services. Founded in 2015, the 777 Partners initially applied its expertise in underwriting and financing esoteric assets to diversify across a broad spectrum of financial services businesses, asset originators and financial technology/service providers. In recent years, the firm has broadened its mandate and now invests across six different industries: Insurance, consumer and commercial finance, litigation finance, direct lending, media and entertainment, and aviation.

‘The Athletic’ further stated that details of the financing have not been disclosed but amid Everton’s perilous financial situation – influenced by the mounting construction costs for their Bramley-Moore Dock stadium – it can be revealed that the 777 has already made a payment worth tens of millions.

The Premier League rules prevent the company from investing directly into Everton via an equity injection unless and until the deal it has in place with Moshiri is granted a green light.

London (UK)-based the Premier League is the highest level of the English football league system. Contested by 20 clubs, it operates on a system of promotion and relegation with the English Football League (EFL). Seasons typically run from August to May, with each team playing 38 matches against all other teams, both home and away.

Preston (UK)-based the English Football League (EFL) is a league of professional football clubs from England and Wales. Founded in 1888 as the Football League, the league is the oldest such competition in the world.

The regulatory process to allow the 777 Partners to take over the ownership of Everton is well underway.

Given Everton’s pressing need for immediate funding, the 777 has lent them money on an interim basis to help with short-term working capital requirements and the stadium build.

The US-based vehicle intends to maintain a continuous dialog with Everton while waiting to learn if its acquisition will be allowed to proceed.

This is likely to involve the 777 providing some expertise from its multiclub model to Everton and occupying an observer role on the Board of Directors.

On behalf of 777, the Everton have communicated to their fan advisory board and shareholders association that the prospective new owners will meet and engage with them and the wider fan base.

Go Deeper

Everton’s proposed takeover by the 777 Partners underlines the depth of their desperation.

Josh Wander, a Managing Partner of 777, and his colleagues are said to be satisfied with the work of the Everton Manager Sean Dyche and the Director of Football Kevin Thelwell, especially during the most recent transfer window, and plan to retain them should the takeover go through.

While Moshiri accepted 777’s offer, it must still be assessed by the Premier League, Football Association and Financial Conduct Authority.

London (UK)-based The Football Association (FA) is the governing body of association football in England and the Crown Dependencies of Jersey, Guernsey and the Isle of Man. Formed in 1863, it is the oldest football association in the world and is responsible for overseeing all aspects of the amateur and professional game in its territory.

London (UK)-based the Financial Conduct Authority (FCA) is a financial regulatory body in the United Kingdom which operates independently of the UK Government and is financed by charging fees to members of the financial services industry. The FCA regulates the financial services firms and financial markets in the United Kingdom. It regulates the conduct of nearly 50,000 businesses in the UK to ensure that its financial markets are honest, competitive and fair.

It would see 777 take Moshiri’s full stake which accounts for 94.1 percent of Everton.

The group also has shareholdings in the Genoa Cricket and Football Club (Italy), CR Vasco da Gama (Brazil), Hertha BSC (Germany), Standard de Liège (Belgium), Red Star F.C. (France), Sevilla FC (Spain), and Melbourne Victory FC (Australia).

Everton are 18^th in the English top flight and have not won any of their five league matches so far this season.

Is this Good News for Everton?

Everton fans may disagree but there is something the club needs more than points right now: Cash. So, news that some has arrived should be positive, right?

Well, yes and no.

Despite another transfer window that has seen more money come in than go out – with savings to the wage bill, too – Everton still require cash topups every month.

Since 2016, the source of those topups has usually been the Bank of Farhad Moshiri but the computer has been saying “no” at that establishment for several months now.

And time is money, as in cash that Everton will continue to burn through on everyday football costs as well as the spectacular stadium Moshiri has started paying for but also now hands over to a new benefactor to complete.

So, yes, it is good news that the 777 is willing to take on these twin responsibilities before it has even been confirmed as the new custodian.

But when you are looking at a business that has lost at least £430million ($532m) since 2018 and still has more than £200m to find for its posh new home, you have to ask how long tens of millions is going to last and what happens when it’s gone?

Under Fire

‘Mirror’ stated that Farhad Moshiri’s plans for a swift sale of Everton have come under immediate threat with a backlash from the fans and creditors of the club.

The billionaire businessman met with immediate resistance from the supporter groups from within the Everton Fan Advisory Board, which was set up by the club to allow the Board members to consult directly with the supporters.

Established in 2021 in response to the failed proposals for a European Super League and the findings of the Government’s subsequent fan-led review of football, the Everton’s Fan Advisory Board (FAB) is an independent body for in-depth consultation with the club’s hierarchy, including members of the club’s Board.

In a strongly-worded statement issued as the news of the takeover dropped, the FAB demanded that the Premier League, The FA and crucially the Financial Conduct Authority – who all must give regulatory approval to any deal – to look with forensic detail at the proposed buyout.

The statement read, “We understand that there remain a number of steps before the process of completing the deal can be finalized as part of the formal regulatory review. It is imperative that those given responsibility to scrutinize the detail of this proposed acquisition do so in the most rigorous manner possible, and that such scrutiny is carried out in the interests of Everton’s global fan base, employees and minority shareholders.”

Turbulent Course

‘Mirror’ further stated that as part of the strengthened Premier League regulations, in relation to their ‘Fit and Proper Owners Test’, it gives them the right to block deals on a number of counts, including financial irregularity and any ongoing court cases for offences which include, amongst other things, fraud.

The Financial Conduct Authority was added by the league as a necessary regulatory body this year, and they will examine the funding of the deal and any irregularities. It is understood that the deal could be worth around £500m to Moshiri if the sale goes ahead, but he must seek approval from the club’s creditors, who include another American investment firm MSP Sports Capital, who have loaned more that £100m towards the build of the new stadium at Bramley-Moore Dock.

The Rights and Media Funding, a Cheshire (UK)-based investment firm, have also loaned a significant sum to the club, with their accounts showing they have £300m of ‘current assets’, some of which relate to the Everton Football Club. Both companies have the right to call in their charges against the club if they don’t approve the deal, which would mean 777 would have to pay that back immediately, along with the financing to complete the stadium.

Moshiri in statement stated that the agreement has “secured the complete financing for our new stadium” which suggests the new owners, if the deal does go through, may be looking at a bill of close to £1bn… which will come under close scrutiny from the FCA.”

It is understood that the final sale price is based on a number of adjustable components, including commercial progress in the coming months, Premier League survival and even the outcome of a Premier League referral to an Independent Commission over Profit and Sustainability regulations.

It all suggests the deal will navigate a turbulent course which could take months or longer, with no guarantee approval will be given by the relevant authorities and the stakeholders. Moshiri though in a statement said it was essential, after suggesting earlier in the year that the club was at “material risk” if Everton were relegated.

His statement read, “The nature of ownership and financing of the top football clubs has changed immeasurably since I first invested in Everton over seven years ago. The days of an owner/benefactor are seemingly out of reach for most, and the biggest clubs are now typically owned by the well-resourced private equity (PE) firms, specialist sports investors or State-backed companies and funds.”

Continue to follow Coliseum for latest updates on venues business news. Coliseum is dedicated towards building the best global community of sports and entertainment venue executives and professionals creating better and more profitable venues.

Become a member of the only Global Sports Venue Alliance and connect with stadiums, arenas and experts from around the world. Apply for membership at coliseum-online.com/alliance and make use of the 365Coliseum Business.

Watch 250 member-exclusive videos with valuable tips for your venue