If you recall as a child of perhaps the 60’s or 70’s many an hour would be spent putting together jigsaws. Occasionally pieces from different sets might get mixed up. Sometimes, the box lid with the picture of the completed puzzle would go missing or be damaged making the task of completing the puzzle even more difficult.
So it is with Everton, no one has ever been sure of exactly how many pieces make up the completed puzzle, nor what it might look like, because with Everton, the pieces can change making the final picture different from how perhaps you imagined it when you first started.
Several pieces though have started to drop into place. Whilst 777 seem as far away as ever in gaining approval, other pieces of information are starting to add clarity to the picture.
What is clear is that Moshiri’s disastrous tenure at Everton is about to draw to a close, and is unlikely to be on the terms he might have originally wished for.
The MSP loan
At the end of May 2023, MSP Sports Capital provided Everton with a much needed loan to assist with the payments to Laing O’Rourke for the works on the new stadium at Bramley-Moore Dock. On the 23rd May 2023 a new charge appeared on the Everton Stadium Development Company’s listing at Companies House. This charge was in favour of a company called Blythe Capital. Blythe Capital is owned by life long Evertonian and successful businessman Andy Bell (and his wife). Blythe acted, indeed still acts, as the security agent for a loan made by MSP to Everton Stadium Development Company.
MSP is an investment management company run by two managing partners, Jeff Moorad and Jahm Najafi. It is a private equity investor and invests in a number of different sports related opportunities. They put together a small group of investors (13) as limited partners and raised US$165 million (SEC filing here) Included in the ranks of the limited partners is Andy Bell, George Downing and Farhad Moshiri himself. It is thought Moshiri contributed £20 million via the MSP partnership. The original purpose of the loan, initially reported at £100 million but likely to be more than £140 million was to provide funding for the stadium and in return receive a 25% stake in Everton Football Club.
Subsequently, on 23 August, 2023, The Athletic’s Matt Slater reported that the original deal converting the loan into equity had fallen through as a result of objections by one of Everton’s creditors, Rights and Media Funding.
Nevertheless the loan had been paid, and in fact already been spent – as first reported on this site, here.
As part of MSP’s security arrangements, it has long been known, but not reported upon, that Blythe Capital had a charge not only on the leasehold land containing the Bramley-Moore Stadium , (as seen here on Companies House) but also on the company used by Moshiri to hold his 94.1% shareholding in Everton – the somewhat ironically named Blue Heaven Holdings, an Isle of Man Company. The latter charge, using the jigsaw analogy was considered to be perhaps a rogue piece. The assumption was that the MSP loan, no longer being converted to equity, would be repaid by Moshiri (unlikely) or an incoming new owner of Everton Football Club (most likely).
The Isle of Man company registry does not provide company documents for free, however, for the benefit of readers, the document can be read for free below:
Blythe Capital – Blue Heaven Holdings charge document
The critical section of the document is on page 9, naming the security securing the charge, and the naming of the relevant company on page 1
Page 9:
6.9 Share Capital
The Shares represent not less than 50% plus one Ordinary share of the entire issued share capital of the Company.Page 1:
Company means EVERTON FOOTBALL CLUB COMPANY, LIMITED, a company
incorporated in England and Wales (registered number 00036624), whose registered office
is at Goodison Park, Goodison Road, Liverpool, L4 4EL
The ability to call in the charge is controlled by the loan agreement between Blythe Capital and the Everton Stadium Development Company. Unfortunately this is not a public document, so the terms of the loan agreement (including one assumes the repayment date) are not known. To a degree, the trail runs cold here which is perhaps why this important document has not warranted much attention.
That is, until now. Simon Goodley reported the charge in the Guardian on 29th March 2024.
The Premier League conditions attached to “minded to approve”
More than 6 months after the initial reporting of 777 Partner’s agreement with Farhad Moshiri, the Premier League updated both Everton Football Club and Farhad Moshiri on the requirements for 777 Partner’s to meet their qualified “minded to approve” conditions.
Within those conditions there is a specific reference to the repayment of the MSP Loan , namely:
(iii) Proof of funding to complete the new stadium, and repayment of MSP’s £158 million stadium loan by mid April.
This is the next piece of the jigsaw. It is not unreasonable to infer that the mid April date is not just an arbitrary date but is likely to relate to the unpublished conditions within the loan agreement between MSP and the Everton Stadium Development Company., ie the date by which MSP expect their loan to have been repaid.
If that is the case, what happens next?
If the loan is repaid then Blythe/MSP fall out of the equation. The assumption is that the loan will only be repaid if all of the other conditions imposed by the Premier League on 777 Partners are fulfilled.
However if not (as I anticipate) then not only do 777 Partners fail to meet the Premier League conditions, but Blythe acting as security agents for MSP have the right to acquire a controlling stake in Everton Football Club should they choose to do so.
In those circumstances MSP control Everton Football Club having 67,501 shares out of a total of 135,000 issued shares. Farhad Moshiri’s holding fall from 127,031 to 59,530 shares, ie he no longer controls Everton Football Club.
What happens then?
On the basis that the MSP loan is not repaid by mid-April (specific date unknown), and that MSP exercised their rights through Blythe Capital then they control the future of Everton. Moshiri still retains a significant stake but no longer controls.
The question is would MSP take up the option? Given that the club faces exactly the same challenges, heavily indebted (including 777 Partners now as creditors) would they do so? Part of the answer lies in what the loan agreement between Blythe and Everton Stadium Development Company contains.
If the agreement is that the acquisition of 67,501 shares settles the loans, is that a good deal? It values Everton in its current state at £316 million. That in itself, doesn’t solve Everton’s immediate cashflow problems, nor its medium or long term capital requirements. MSP as majority holders face all the issues Moshiri faces now, and would include 777 Partners as creditors, owed approximately £200 million – the terms of which are unknown.
In addition, MSP would require Premier League approval to acquire their majority stake. One assumes that similar conditions would apply regarding MSP providing proof of the additional funding required for the stadium, working capital and creditors. Unlike 777 Partners, it is fairly safe though to assume MSP would meet those requirements, should they wish to acquire that stake.
Interestingly such a deal would imply that Moshiri’s remaining stake in Everton (44.1%) would have a nominal value of £139 million, significantly more than the terms agreed with 777 Partners.
Uncertainties
It’s not certain that MSP through Blythe would take up their option should their loan not be repaid (for the reasons expressed above). Then we are back into the possibility of administration as I have spoken of before. In administration (and I stress again this is not my preferred option, just an option better than 777 Partners) MSP’s loan is entirely secure – on the basis that Everton come out of administration as a viable professional football club.
So, we are reaching the critical point – within two weeks give a day or two Moshiri may lose control to MSP. 777 supporters say he may lose control willingly to 777 Partners – I think not as I have said on numerous occasions. Administration remains on the table, in which case Moshiri loses control.
The one certainty is Moshiri loses control of Everton in the coming weeks – what the future holds beyond that though is still very much in the air. The jigsaw puzzle and what it finally looks like is still very far from complete.
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Yet again, another Esk article full of unknowns. Very dangerous man, trying to educate fans on something he doesn’t know full information on.
What he does know a lot about is mathematics and how profit & loss and balance sheets work. All of what he says is entirely plausible, it doesn’t history true, just plausible,and most likely closer to the truth than you would think.
Does he really know a lot about it? Been called out numerous times. Half is examples wouldn’t actually happen in real business. Very dangerous man who is just trying to disrupt a football club. Going by what he has written I would be extremely shocked if he’s held a top CFO job at a large company.
Anyone but 777 for me they will sell off all the assets / players to cover their outlay and we will drift into obscurity
I was going to ask the question on Wednesday night FAB zoom meeting regarding MSP and could they step in iff 777 fails in its bid for approval. You have just answered that question thank you Paul utft. 👍💙
Thanks Dave. Now to the football!
Onwards and upwards…..hopefully starts today 👍💙
Great job, Sherlock 👍
Watching this space very closely over the coming weeks.
Thank you Paul, a good summary of a complex situation. Maybe Blyth/MSP have knowingly given 777/Moshiri enough rope..ect!! A strategy by Blyth/MSP planned from the outset 12 months ago. We will see!
Paul, if the MSP loan isn’t repaid by mid-April, and ,as you say, control of the club in effect passes to them, where does that leave Rights & Media? They scuppered the proposed MSP takeover last summer. What would happen now? Would both MSP and R&M be faced with negotiating a deal between to suit both parties, presuming that either or both would prefer administration not to happen?
Excellent summary of our situation.
This is perhaps why most of us need to stick to football Paul.
Having read that article twice, it’s a little bit of Harry Potter financial wizardry going on and it seems to me (as an interested novice), that Moshiri & MSP have found a route around the issues presented initially by RMF and lately by Moshiri’s lack of liquidity to pay the bills for the last few months or so.
It’s been expensive on a number of fronts but perhaps 777 have answered some temporary cash flow problems Moshiri may have had when the original MSP deal fell through and he couldn’t or wouldn’t realise anymore of his own assets.
If this is the outcome – it seems we may get MSP after all and I hope your leaning (my read), on them doing so, sparks a stable and brighter future. 🤞🙏🤞
I hope you’re preparing the next podcast with George and Andy to dedicate it to this topic?
What sad and utterly depressing circumstances we are in, what in your opinion has led us to this, paul? Does the buck stop with Bill kenwright? And if so how has he been allowed to let us sink so low, aren’t there any intelligent people at Everton any more, because for sure there used to be,we need nothing short of a miracle to solve this preferably one that does NOT involve any more shady characters, as we have most definitely had too many of these types of people at Everton for far too long
Thank you for your investigation and analysis Paul, and for making it digestible to us fans. Much appreciated.
If a combination of Moshiri, MSP/ Blythe, RMF, 777, have created this situation through various contracts, whilst I am grateful the PL have not approved 777, they seem to be just trying to make themselves look potent and meaningful in sending in the ‘minded to approve’ letter.
If MSP’s payback was in September the PL would surely still quietly be sitting on their hands. They have appeared to act in the interests of good governance but only when they know the situation has to change mid April and through no act of their own agency. Clowns.
God bless poor Seamus either way!
This feels as though a marginally more positive article than I’ve seen from you over the last few months. MSP getting control would be amazing. Not convinced it will happen though
Regardless of some seeming to deliberately misunderstand the views expressed about Administration v 777 ownership I more than ever now believe that the serious issue here Paul is that the analysis fails to effectively explain the impact of Administration and why many of believe that it will destroy this football club, or at a very minimum leave us in an untenable position lasting many years if not a decade of more. 9 points added to whatever is arriving next week, likely to be 4 points even 6, will guarantee relegation. Relegation is the virtual death of this club. We are not equipped for a fighting immediate return in 13m. Much more likely is a soul destroying spell in the championship or worse another immediate relegation. Your hatred of 777 Paul is serious and clearly thought through from your perspective. But many of us are having a personal nightmare watching what we see as a total under estimation of the dangers of administration and yes that includes ‘versus 777 owndership’. The club will hand over a decade of young supporter growth as we struggle in lower league(s), older supporters will not see us in the elite ever again, or at least I know that’s how many feel. We are hanging by a thread today after a disgusting defeat at Bournemouth leaves us waiting for the Prem points deduct now. But at least we’d still have a desperate chance of staying up thsnks to a definitely preferable run in and a chance of survival. Administration as some kind of tactic or inevitable result of he financial web you describe will kill us off and send us down. Yes the alternative sees us delivered into the hands of 777 but all the negatives associated with that remain as strongly held opinion. You just cannot guarantee it will be as terrible a fate as is suggested. But I believe deliberate administration will factually deliver a nightmare to finish this club for a decade or even longer. That’s my opinion just as yours is the opposite. We respect the right for each of us to hold those different t views but tonight I’m desperate about those two weeks and what it will mean and if it delivers Administration it will truly be the worst thing to happen to this club in its entire existence and right now I cannot say that about 777 regardless of the opinions voices. Take care, all the best, Mark
Appreciate you taking the time to express your opinion Mark. Thank you. I’m under no illusions regarding the difficulties administration would bring. I genuinely want and will do all I can to bring other investors to the table. However I can not stress enough my concerns over 777’s potential ownership. I don’t hate them, I just think for many reasons that I have already expressed they would do more damage to the club. Thanks though mate.
Thanks Paul for a another great article. Your hard work and dedication does not go unnoticed by the fans. 777 are not wanted, you have banged this drum for the past year and have informed us the fans on the reasons why. I fully agree with your articles, they would be the worst thing to happen to the club.
My hope is that there is investors waiting in the wings waiting for the deal with 777 to fail. Moshiri and 777 aren’t wanted.
We all want the same thing a functioning club under the governance of a competent person.
Keep up the great work.
UTFT
If MSP’s loan is not repaid and £158m corresponds to 67,501 shares then Moshiri’s £20m part of that loan corresponds to 8,544 shares. If he adds that to his remaining 59,530 shares that makes his 68,074 shares greater than MSP’s reduced 58,957 shares and therefore he still has control. Unless of course Moshiri doesn’t get access to those shares for his £20m contribution?
No he’s not. Surely if the loan is not repaid and MSP get 67,501 shares for their £158m, Moshiri will get 8,544 of them for his £20m share giving him a new total of 68,074 shares which is more than the reduced 58,957 shares of MSP.
It doesn’t work like that mate, Moshiri would have no control over his share of MSP’s shareholding – that control sits with MSP
Interesting read, The Esk.
As I understand law or here equity, equity steps in where law is strict, as equity follows law. Equity is implied in the jurisdiction or equity whether in express terms or not (equitable trust). This also creates equitable interest in Everton property including land. It doesn’t strictly require express terms as MSP loans to convert to equity, as equity stands in where law is strict. Security such as mortgages or land charges benefit secure creditors banks (or mortgagees), first and other registered land charges later (Land Registration Act later). MSP and 777 have loans attached to Everton. Moshiri has attachment to Everton”s limited company as main share holder/ in addition to assets and property in his own right (personal property/ assets). It wouldn’t surprise if MSP or 777 attach their equitable interests to our new stadium. What other assets do we have besides our club and Stadium worth several hundred millions. Has the stadium been ring fenced to protect it from MSP and 777? Could MSP or 777 claim Bramley Moore for outstanding loans or share Bramley Moore between and rent back to Everton?