Sport nationEverton FC’s Takeover Saga: A Complex Web of Finance and Debt
The takeover saga at Everton FC has taken another twist, with Dan Friedkin ending exclusive talks with Farhad Moshiri. The AS Roma owner was chosen as Moshiri’s preferred bidder, but the deal has fallen through due to the complexity of the club’s finances.
Everton’s debt burden is around £800m, with multiple parties involved, including 777 Partners, MSP Sports Capital, and Leadenhall. The situation is becoming increasingly nebulous, with Friedkin’s withdrawal raising questions about the future of the club.
To understand the complexity of the situation, TBR spoke exclusively to Liverpool University football finance lecturer and Price of the Football author Kieran Maguire. Maguire explained that Friedkin’s decision to walk away was likely due to the risk involved in dealing with 777 Partners, who are facing financial and legal issues.
“The problem from Friedkin’s perspective is that they wanted 777 to take a haircut,” Maguire said. “Let’s say they’re owed £200m and Friedkin wants them to take a 40% discount, you knock off £80m and Friedkin pays £120m. That might be okay, but it could be that Leadenhall will say that the £80m is part of the money they want paid back.”
Maguire also discussed the possibility of Everton renegotiating their debt, which could reduce the burden on a new investor. However, this is not a foregone conclusion, as the club’s lenders have a “change of control clause” that allows them to demand immediate payment or renegotiate the terms of the loan.
Administration is also a possibility at Everton, which would come with an automatic 10-point penalty in the Premier League. Maguire does not think it is out of the question that a would-be investor might let the club fall into administration to secure a cheaper deal.
“There is at least one interested party who has done their sums and feels that the lowest price they would end up paying for the administrator is worth the automatic points deduction they would get,” Maguire said.
Middle East sovereign wealth funds are also still in the mix for Everton, although Maguire notes that they may be deterred by the complexity of the club’s finances and the cost control regime in the Premier League.
“In terms of sovereign wealth funds, I wouldn’t rule them out,” Maguire said. “At the same time, I wouldn’t necessarily rule them in. There aren’t many of them, but they will have seen how Man City has become the dominant club in Manchester, which I don’t think many could have foreseen.”
Friedkin’s return to the table is unlikely, according to Maguire, who notes that the situation at Everton is far more complex than the one he faced at Roma.
“As far as Friedkin returning to the table is concerned, my sources indicate that is a remote possibility,” Maguire said. “They have already spent a lot of money doing due diligence to date. I can understand people pointing to what happened at Roma, where they walked away and then came back later. But the issues at Roma were negligible compared to the complications at Everton with regards to the legacy created by the spectacular financial mismanagement of Farhad Moshiri.”
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