On Friday 15th September  2023 Everton Football Club announced the following:

777 Partners has signed an agreement with Farhad Moshiri to acquire his full stake in Everton Football Club, which accounts for 94.1 per cent of the Club’s shares………..

Closing of the transaction is expected to occur in the fourth quarter of 2023 and remains subject to regulatory approval, including from the Premier League, the Football Association, and the Financial Conduct Authority.

Out of respect for this process, 777 Partners will not be providing any further comment during this period of regulatory review.

So what has to happen for this transaction to be completed?

777 Partners have to satisfy the terms of their agreement with Farhad Moshiri. My understanding is that little or no cash will change hands initially and that the final price paid for Farhad Moshiri’s shares will be subject to several conditions including the result of the Premier League’s independent commission enquiry and Everton’s performance on the pitch including survival in the Premier League in season 2023/24.

All of this is subject to the conditions within the statement and further conditions not in the public domain.

Regulatory Approval

Clearly regulatory approval is an issue known to all, and has been the subject of much speculation in the media and elsewhere. Despite winning regulatory approval in several European Leagues, will 777 partners, collectively and individually meet the more stringent “fit and proper owners” test applied by the Premier League ? Questions remain as to Josh Wander’s previous (but now spent) conviction and as to the financial resources 777 have to (i) meet their obligations to Farhad Moshiri and (ii) the very significant future capital requirements of Everton Football Club.

Whilst requiring approval from the Football Association and Premier League is self evident  the FCA were added by clubs as a necessary regulatory authority in March of this year.

What other approvals are required?

As was seen just recently, Rights and Media Funding had the authority and right to block MSP’s partial ownership of Everton through rejecting the 25% ownership stake offered to MSP.  For 777 partners acquisition of Everton, they would require the approval of not only Rights and Media Funding but also now, MSP – lenders to the Everton Stadium Development Company. I can say with some certainty that that approval is not a given.

In the event of not getting the approval of both creditors, the deal fails, or the creditors need to be re-paid. That would require 777 partners to find in the region of £350 million to repay Everton’s main creditors. Is that possible? There’s nothing to suggest on top of the price of Moshiri’s equity, 777 partners have access to that level of funding.

Everton’s cash and capital requirements

In addition to the above, Everton still require further working capital to meet their operating costs and future financial commitments to Laing O’Rourke.

Where does that come from in the near term and looking out beyond the next few months?

Despite being in receipt of more than £100 million from MSP in recent months, the funds paid to the Everton Stadium Development Holding Company (ESDHC) are currently exhausted. ESDHC needs further funding, and needs it in the short term. Our obligations to Laing O’Rourke continue. How is that paid in the interim period between now and a succesful conclusion and recapitalisation? Bear in mind I think neither are likely.

Furthermore, Everton Football Club needs additional cash despite the positive cash flow and reduced wage costs arising from the last transfer window. The club continues to have negative cash flow and without additional capital or funding cannot meet its future obligations. How is this achieved in the coming months?

One of the attractions of having MSP as lenders to the stadium and investors in the club, was their ability to draw in successful local business people in the form of Andy Bell and George Downing. The club has lacked for many years the inclusion of successful local business people at board level – this was to be a big positive. It is unlikely in the extreme to be achieved in the questionable event of 777 gaining control.

Conclusions

I can see the potential attractions of the announcement today to both Farhad Moshiri and 777 partners. For Moshiri, if concluded, it would end what has become a nightmare association for all parties, huge losses for him and the near destruction of a proud football club. For 777 partners it promotes the image of a successful multi-club model, still in its acquisition and growth stages.

The reality, in my opinion is far from this. The club clearly needs new ownership both for financial reasons and for leadership, direction and frankly its survival prospects.

The city of Liverpool needs a successful Everton Football Club, it needs the successful completion of the Everton stadium at Bramley-Moore not only for the cash spend during construction but as a catalyst for economic redevelopment and growth in North Liverpool and beyond.

Uncertain future

There is nothing to suggest that 777 partners are the solution to Everton’s ownership or financial difficulties. I don’t believe they will overcome the regulatory and other hurdles to acquire the club. That leaves Everton facing a hugely uncertain future. Without a committed owner (Moshiri has shown his hand to that effect) and without immediate cash injections the existential threat Moshiri spoke of (perhaps his only accurate statement in 7 years) is very real.

We face the most uncertain of futures. We shouldn’t be wasting time thinking 777 partners provide any of the required solutions, nor even that they will achieve their objective of ownership.

They are an unnecessary distraction to our fight for survival. Moshiri, the board, all of us have to recognise that and focus on short term survival and long term solutions including the right owners – otherwise we will become a large footnote in history.