Everton

Everton, the de-coupling of USM

Usmanov’s relationship with Everton

Much has been written about the informal nature of Usmanov’s relationship with Everton, the various meetings allegedly held on yachts and elsewhere with several managerial candidates, directors of football and his influence over a number of transfers. Furthermore, his involvement in strategic issues with Everton’s owner Farhad Moshiri and Bill Kenwright, Everton’s Chairman. From a governance perspective none of this ideal as I have spoken of in the past, but to be clear his involvement at this level has been informal.

USM Sponsorship

The formal relationship exists through his company USM. USM, is a Russian domiciled holding company, containing his major investments in metals, minings and telecommunications. The shareholders, according to the latest public information are Alisher Usmanov, Vladimir and Varvara Skoch, Farhad Moshiri and Ivan Streshinsky. It is understood that whilst Usmanov owns 100% of the voting stock, he owns 49% of the total stock, Skoch 30%, Farhad Moshiri 8% and Streshinksy 3%. The remaining 10% is owned by a network of off-shore companies domiciled in the Isle of Man, Cyprus and the BVI.

USM entered a 5 year agreement with Everton in January 2017. The agreement included the naming rights to Finch Farm thereafter called USM Finch Farm, marketing rights plus match-day advertising at Goodison Park.

At the time (because of Farhad Moshiri’s shareholding in USM and his major shareholder status at Everton) the sponsorship was considered to be a related party transaction. The sponsorships had the following values: 2016/17 – £6 million; £2017/18 – £6 million; £2018/19 – £12 million. In 2019/20 USM ceased to be a related party and as a result the figure is not recorded separately.

In 2019  the sponsorship expanded including Official Matchday Presenting Partner and the greater use of their portfolio companies including Megafon. Although not in the public domain it is thought that the sponsorship income increased to £18 million per annum.

In addition, in January  2020, Everton announced a naming rights option agreement with USM for the new Bramley-Moore stadium. The option which included the right to be naming rights partner at the stadium provided Everton with a one-off £30 million payment and agreed terms for the future naming rights with USM.

If we assume the 2020/21and 2021/22 sponsorhip arrangements were similar to 2019/20, then since January 2017, and including the naming rights option, Everton have been in receipt of approximately £108 million (assuming 2021/22 has been paid in full) from USM and/or related companies.

EU sanctions notice

On the 28th February 2022, the European Union announced sanctions including “restrictive measures in respect of actions undermining or threatening the territorial integrity, sovereignty and independence of Ukraine”. The link to the document is here 

Within the Council decision, Alisher Usmanov’s name appears among those now subject to sanctions. The sanctions include the freezing of assets and the inability to travel within the EU region.

It is important to note that the sanctions are issued by the EU, not by the UK Government. However there is the expectation that the UK Government will in due course follow suit.

The statement of reason (of inclusion) are as follows:

Alisher Usmanov is pro-Kremlin oligarch with particularly close ties to Russian President Vladimir Putin. He has been referred to as one of Vladimir Putin’s favorite oligarchs. He is considered to be one of Russia’s businessmen-officials, who were entrusted with servicing financial flows, but their positions depend on the will of the President. Mr Usmanov has reportedly fronted for President Putin and solved his business problems. According to FinCEN files he paid $6 million to Vladimir Putin’s influential adviser Valentin Yumashev. Dmitry Medvedev, the Deputy Chairman of the Security Council of Russia and former President and Prime Minister of Russia, benefited from the personal use of luxurious residences controlled by Mr Usmanov.

Therefore he actively supported materially or financially Russian decision-makers responsible for the annexation of Crimea and the destabilisation of Ukraine.

Mr Usmanov has interests in iron ore and steel, media and internet companies. His largest holding is steel giant Metalloinvest. When Mr Usmanov took control of business daily Kommersant, the freedom of the editorial staff was curtailed and the newspaper took a manifestly pro-Kremlin stance. The Kommersant under Mr Usmanov’s ownership published a propagandist anti-Ukrainian article by Dmitry Medvedev, in which the former President of Russia argued that it was meaningless to engage in talks with the current Ukrainian authorities, who in his opinion were under direct foreign control.

Therefore he actively supported the Russian government’s policies of destabilisation of Ukraine.

The UK Government response is as yet, less specific than that of the EU, but will include in coming days and weeks an update on sanctioned individuals, a freeze on assets of the Russian Central Bank and other commercial banks, the removal of most Russian banks from the SWIFT system and the  further freezing the assets of sanctions targets.

Responses elesewhere

Other parts of the UK economy have taken matters into their own hands. The energy sector in particular has been heavily invested in Russian interests for many years. However, in recent days BP have announced the “offload” of its near 20% stake in Rosneft – at a cost of a £25 billion writedown and Shell will see at least £3 billion worth of losses as a result of its exposure to Gazprom and the Nord Stream 2 pipeline.

What is clear is that large public companies  and other bodies are prepared to take the financial losses to cease their association with Russian companies.

Shell’s chief executive, Ben van Beurden, said. “Our decision to exit is one we take with conviction. We cannot – and we will not – stand by.”

“We are shocked by the loss of life in Ukraine which we deplore, resulting from a senseless act of military aggression, which threatens European security,” said van Beurden.

Even FIFA and UEFA with all of its close relationships with Putin, the Kremlin and Gazprom in particular, have ceased their financial partnerships and removed Russia’s rights to participate in international competiton, and the rights to participate in club competitions.

So where does this leave Everton?

Frankly, in my opinion, in an extra-ordinarily difficult position. If huge businesses like BP, Shell or Equinor (the Norwegian state oil company) and hundreds of other businesses are rushing to de-couple from Russian counterparts, where does that leave us?

I understand the situation is difficult, I understand the situation is made more complex by Moshiri’s ownership of Everton and his shareholding and Chairmanship of USM. But in the context of the attrocities in Ukraine (and for the benefit of the doubt I am not including Moshiri in being a cause or supporter of such) and the likelihood that this war will be long and horrifically costly with enormous human loss on both sides, as a club we don’t have any option but to de-couple too.

I don’t think this is a time to make claims about the board, governance and other matters of concern, it’s a time to recognise that through no direct fault of their own, through the actions of Putin and the people closest to him, the club finds itself in an untenable position regarding its association with USM.

It needs the support of everyone around it. Shareholders, the board, the executive, the Premier League and the fans as it works out its response to de-coupling from USM. In the meantime nothing should distract the club and everyone else associated with it from doing everything that is necessary to support Ukraine’s defence, survival and future recovery.

 

Categories: Everton, Opinion

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7 replies »

  1. Thanks Paul. An excellent and compelling argument for Everton to distance itself from Russian financial influence but if, and it is a difficult if, the new stadium project would collapse, would you expect the club to see a way they can wriggle out of their moral obligations?

      • Gosh what a challenging time this is for Everton,with the new stadium being built ( I hope this is not in jeopardy) I hope we as a club emerge from this stronger and better as a club with a clear direction ( upwards! And to retain the classy image we once had

  2. The wider risk to the club is the other stakeholders in the club such as shirt sponsors, kit suppliers, pitchside advertising and broadcast partners may see the links to Russia as toxic and pull their support – what is worth more to the club USMs money or Cazoo’s money? One of the selling points of BMD is the commercial opportunities for hospitality and visitors, who would want to visit something tainted by what is happening now. Football fans will still fill the ground to cheer the blues on but the club won’t be raking in the extra £100+ per head in the posh seats. Difficult times, sad that you have to write articles about this.

  3. Of course if Bill had done full due dilligence prior to selling the club, maybe we wouldn’t be in this position 🤔

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