If there’s been one constant in Farhad Moshiri’s chaotic, ruinous tenure at Everton since February 2016 it is that parties who have pursued an interest in Everton have inevitably and ultimately put their own needs before that of the club they own, have lent to or indeed serve.
The incredible power vacuum that has existed from the shareholder, to the boardroom and the hapless executive teams, including those in charge of football operations has become a case study of how financial resources alone can not achieve success, a case study of in the absence of leadership, a common cause, other interested parties are allowed to act as parasites, to the extent that eventually they kill their generous host. So it is at Everton.
A lesser form of this behaviour was witnessed in the decades before Moshiri’s arrival, however there were never enough resources on offer to attract sufficient parasites to destroy the club, instead, a form of lower level, not hugely competitive, symbiosis was established which partially enriched a small number but kept the host, Everton, stumbling along, missing the bigger opportunities on offer, but achieving just about enough to maintain an (unsatisfactory) position at the high table.
Contrast
In contrast, Everton’s former peers and the nouveau riche fuelled by oil and State generated money, brought glamour, purpose, leadership, a disrespect for the former old boys’ club of football and a cynicism which has resulted in the game we have today. A game largely disliked by many of its followers, yet seemingly more popular than ever before – the Scudamore paradox?
In all successful entities, be it in commerce, research, academia or professional sport, there is usually a defining mantra that runs through the organisation from top to bottom. Within that is of course, the desire for personal development, but ultimately the common cause is the driver for a collective success. The unity, the single purpose, vision and leadership, the single goal and strategy to succeed, to be the best, to break new ground, to defeat the greatest of competition is what brings the ultimate prize to such organisations.
Everton, specifically
To turn to the specifics regarding Everton. It’s almost impossible to believe that a six nil drubbing at Chelsea, a performance so bereft of character, purpose, objective let alone fight, determination and guts is not at the top of every Evertonians list of concerns about our beloved club. Yet, frankly that is the case.
The news from yesterday, in a sense the anti-news (i.e. news of no progress at all) that 777 Partners and their various advocates seem to specialise in – the art of kicking the battered can down an increasingly rough road bears witness to Everton’s position and that of the disconnected, absent, obtuse owner Farhad Moshiri.
Everton, are no longer a single united entity. They are a loose pack of possible allies if I am being generous, more realistically a group forced into a marriage of convenience, none liking or trusting the other, but none with the means or desire to end the charade, the sham marriage that their relationships have become.
The role of creditors, backers
Wearing a creditors hat, I could easily persuade myself, Evertonians and the football world more generally, that I or my organisation is a positive contributor, a backer, an enabler for Moshiri and Everton to build a stadium, stay in the Premier League, and perhaps return to former glories. That would be so if alongside the cash, there was a unity of purpose, an alignment of interests. But there isn’t. The creditors are like big pharma – provide something that keeps the patient alive but not well enough that they cannot stop buying the medication that big pharma so expensively sells to them (or their health provider). So it is with Everton’s debt providers.
I posted on X that since August 2011, despite the £750 million provided by Moshiri post 2016, there’s only been a narrow window of 27 months when Everton haven’t had to rely on the financial support of a sub-prime, private, back street lenders. The only “respectable” institution to offer financial support in that time was Santander at reasonable rates. ICBC had their own, politically motivated objectives of moving into football, scuppered by a change in policy from the Chinese President, Xi Jinping.
However, today, that policy, the policy adopted by choice by Moshiri despite the high running costs of such debt, can only be seen for what it is – there’s no strategic intent to help Everton, no desire to work with other parties, just a maintenance of their investment return and at worst the return of their capital in a default position. Rights and Media Funding will attempt to manage their exposure to Everton (certainly not increase beyond current levels) whilst receiving a 5% return above the UK bank rate. A lending that has grown facility but been in place now since September 2019.
Similarly MSP Sports Capital. A year ago MSP Sports Capital saw an opportunity in Everton – an opportunity to raise money from investors (limited partners) lend capital for the continued stadium build, secured against the stadium but with the option to convert and become a significant minority investor. As a default position, ultimately they had, and still have the option to acquire control of Everton Football Club. The funding met an immediate and pressing need – Everton were significantly behind the repayment schedule agreed with Laing O’Rourke. It attracted two prominent and respected businessmen in Andy Bell and George Downing. Both would probably have taken board positions had MSP’s loan been converted into a 25% equity stake.
However that proved not to be the case and MSP’s loan continued albeit with a mid April deadline for repayment. The loan is secured by (i) the entirety of the stadium development company and (ii) the option to take 50% plus 1 share of Everton’s issued shares. That deadline has passed and it appears that Blythe Capital (the security agents) have not yet exercised their option. The option continues to exist – it has not expired.
It has to be recognised that MSP Sports Capital have to maintain the interest of their clients, first and foremost – the people who invest and trust MSP to generate investment returns on their behalf. MSP Sports Capital’s interest in Everton per se, is entirely secondary and will always be over-ridden by the interests of their clients. Similarly Bell and Downing, life long Evertonians, and as they would see it, benefactors to the club by virtue of their financial support, they have to maintain the interests of themselves, their families and beneficiaries.
Non-alignment & 777 particularly
The problem arises when the interests of the club and the interest of the backers do not strictly align. A situation which is developing further as Moshiri desperately seeks to accommodate 777 Partners in their objective of acquiring Everton.
777 Partners have had seven months to meet Moshiri’s requirements, the Premier League’s conditions, and the interests of Everton’s creditors. Yesterday represented the first “hard” deadline, something which 777 have managed to overcome without meeting their obligations.
777 Partners inability to meet the conditions, their requirement for extensions has one principal cause. They don’t have the resources to meet the conditions. That is abundantly clear now, even to their biggest advocates. No one asks for more time if they have the resources required available to them. That is a huge red flag, the biggest red flag of many presented by 777 Partners.
As I have stated on many occasions, delay causes Everton’s position to deteriorate.
Time is not on 777’s side either. The macro environment for private equity firms using reinsurer’s balance sheets as funding vehicles is changing rapidly. As outlined in the Washington Post, the potential mis-alignment of private equity investment strategies with the needs of insurance companies is a problem which has come to the public and investors attention as a result of the public nature and investigatory work surrounding 777’s pursuit of Everton Football Club.
777, a small player in a bigger evolving picture
Just as it took a small bank in the UK ( Northern Rock) to highlight the issues facing the banking industry before the financial crash of 2008, so it might be that inadvertently 777 Partners highlight future problems in the insurance industry. If so, the hugely powerful (in political as well as economic terms) lobby of the private equity industry will seek to smooth out the problem at minimal risk to themselves, but perhaps to present 777 as a rogue case – the over reliance of 777 Re.’s balance sheet (and other reinsurers also) in funding 777 Partners activities being unrepresentative of their industry.
We have already seen in the case of Kenneth King and A-Cap, how swiftly insurers can appear to move to protect their own (and their policyholder) interests in divesting. A problem for the industry as a whole but specifically for 777 Partners.
A problem for 777 Partners – the problem being reduced access to capital, reduced access to lending) is a problem for Everton, given the cost attached to their becoming owners.
The extension required by 777 is a tacit admission of their inability to deliver, 7 months after agreeing with Moshiri.
Our interest as Evertonians
Our interest as Evertonians should be our new owners ability to fund and manage the club going forwards. Not only is 777 Partners ability to fund, now beyond anyone (bar Moshiri’s) doubt, but as documented here, in the Financial Times, New York Times, London Times, Washington Post, the Athletic and particularly Josimar among many others their ability to manage businesses across many sectors is also highly questionable. Buying distressed assets is an established investment strategy. Running those businesses badly thereafter less so. In the vast majority of cases ownership by 777 is characterised by poor performance, operating losses, cash flow problems and bar related parties an inability to raise investment and working capital.
This is why in my opinion, 777 Partners remain totally unsuitable potential purchasers of Everton. The evidence is clear and irrefutable. The prospects for 777 in my opinion worsen going forwards, they do not improve. That is not an environment in which Everton should be placed.
So what happens next?
I have suggested administration is a possibility for some time. Perversely, as we come close to the season end the risk reduces in certain respects. There is an argument that in pure survival terms, paying the bills until the end of May sees us through this season and the prospect of an immediate 9 point penalty. It get’s us to the summer transfer window and allows for the disposal of Everton’s major players. Players that would generate cash and profits, thereby meeting the immediate cash flow concerns and also helping reduce the inevitable PSR issues that Everton will face once more.
However a fire sale of playing assets does nothing for Everton’s perilous competitive position, not does it solve the long term capital restructuring desperately needed, nor does it provide the additional capital for Bramley-Moore.
It would hollow out even further the depleted reserves of Everton Football Club. We are a quarry quarrying its last stones, a coal mine with no further seams of coal.
And all of this assumes, retention of our Premier League place! The consequences of relegation shift the nightmare into even greater areas of pain and suffering. All of the above managed by the custodial expertise and track record of 777 Partners. Please no.
The strategy is clearly just to limp across the line. Complete the season, stay out of administration, remain in the Premier League and see where we go from there. That is the extent of our ambition and for our future, under Moshiri, his choice of potential owner, and our other backers and creditors.
Need for true leadership
The need for true leadership, the need for a survival strategy beyond the grim, immediate future described above is immense, essential and existential. Do 777 Partners provide the solution? No – their presence and our continued tolerance of them exacerbates our problems. Can Moshiri? – not on the evidence of the last 8 years. MSP Capital?, seeming less likely. Other investors, including those who have had an interest , even recently? Possibly – but their game now is to wait for the carcass to appear – the carcass of Everton Football Club created by those not skilled enough to keep us alive, or not interested enough to allow us to flourish.
Everton’s performance on the pitch at Chelsea, the personification of what we have become off the pitch.
Desperate? Yes. Recoverable? Still possible.
It is, for the avoidance of doubt, a really tough ask, and there’s a case for saying it isn’t possible. But the only survival chance going forwards requires new management, new players (in every sense) on and off the pitch. It’s required immediately, kicking the can is no longer an option, there can be no more prevarication – no more putting narrow self-interests ahead of the club, if we want Everton to survive.
Categories: Uncategorized
A prayer for Liam Murphy – Does he exist…..Nothing but the best….
Had a bit of fun with this one:)
Rise of the Phoenix: The Liam Murphy Saga at Everton
Chapter 1: New Beginnings
When Liam Murphy first walked into Goodison Park, he did so not as a conqueror but as a collaborator. Known in the business world for turning struggling enterprises into thriving ones, Murphy’s approach was rooted in transparency and community involvement. His initial town hall meeting with fans was a testament to his commitment, where he outlined his vision and answered concerns directly—a stark contrast to the opaque dealings that had alienated supporters in the past.
Chapter 2: The Visionary
Murphy’s charisma and clarity quickly won over both the board and the locker room. His speeches weren’t just motivational but directional, setting clear, achievable goals. He implemented a merit-based system that rewarded innovation and dedication among the staff. Murphy’s leadership style was inclusive, often seen walking through the offices and training grounds, engaging in one-on-one discussions, fostering a sense of belonging and purpose among everyone.
Chapter 3: Strategic Reforms
The financial overhaul began with restructuring the existing debt, negotiating more favorable repayment terms, and transparently laying out the financial state of the club to all stakeholders. Murphy also diversified the club’s revenue streams by enhancing merchandising and improving match-day revenues through better fan experiences. Investments in analytics and scouting paid dividends, allowing Everton to identify undervalued players who could bring both talent and commercial opportunities to the club.
Chapter 4: Building a Team
Murphy’s philosophy for team building was simple: balance and unity. He supported the manager in targeting players who were not only skillful but possessed a strong work ethic and team-first attitude. New signings were introduced in community events, connecting them with fans right from the start. Youth development was prioritized, with increased funding for the academy and a clear pathway to the first team for promising talents.
Chapter 5: The Culture of Success
The new club mantra, “Unity, Resilience, Ambition,” was emblazoned everywhere from the locker room to fan merchandise. Murphy instituted regular community service days, where players and staff engaged in local initiatives, building strong community ties and grounding the players in the club’s cultural and historical importance. On the field, the team’s playing style evolved into one that was aggressive yet disciplined, mirroring Murphy’s business strategies.
Chapter 6: Triumphs and Trials
Everton’s journey under Murphy wasn’t smooth sailing. The first season saw them hovering above the relegation zone, battling not just opponents but also internal doubts. However, Murphy’s steady presence during these trials—his post-match locker room talks, his unwavering support in the press—steadily built a resilient team spirit. Key victories, often against higher-ranked teams, began to turn the tide, instilling belief in the team and the fanbase.
Chapter 7: The Cup Run
The League Cup run was a fairy tale scripted in the dugout and on the pitch. Murphy understood the importance of this competition not just for its silverware but for the morale boost it could provide. Every match was approached with tactical precision. The semi-final against a top-four club was a highlight, where Everton, considered underdogs, triumphed through a combination of tactical brilliance and sheer determination. The city of Liverpool buzzed with excitement as Everton advanced to the finals.
Chapter 8: Staying the Course
With the club riding high from their cup success, Murphy ensured that the focus remained on Premier League survival. He reinforced the squad in the January window, adding depth to key positions. Training intensified, with special focus on fitness and mental toughness. The team’s improved performance saw them not just escaping relegation but securing a respectable mid-table finish, something few had thought possible at the season’s start.
Chapter 9: Legacy of Leadership
Murphy’s tenure at Everton was marked by a return to the club’s core values and a clear vision for the future. He left a legacy of strong infrastructure, both in terms of physical assets and organizational culture. The upcoming move to Bramley-Moore Dock symbolized this new era, promising a modern stadium that would serve as a fortress for the club and a beacon for the community.
Epilogue: Everton’s Future
As Murphy stood overlooking the construction site of the new stadium, he reflected on the journey. The club had not only survived but was set on a path to thrive. Everton was now a model of how leadership, community, and perseverance could turn the tide of fate. The future was bright, and while challenges remained, the club was better equipped than ever to meet them and rise above.
Hi Paul, it seems increasingly more likely that EFC is throwing the dice and awaiting the closed season whilst preying that we remain in the PL. A risky strategy befitting the name of 777.
To be frank, after last night, this season and the previous two seasons, a wholesale change of players is probably needed. To say it may come about by losing Onana, Branthwaite, Pickford and perhaps one or two more, no longer fills me with dread.
By public record if we lose the above plus Gomes, Deli, Harrison, Danjuma (loans), even one or two more we easily save £40m a year in wages and resolve some of the money issues with their sales.
But who will be there to brush up, who has the ability to wipe clean the board and squad in just a few week during the closed season.
Having the right strategy to go into next season with a hungry new squad, possibly another new manager, bought on a shoe string on half of that outlay is a massive challenge. If that challenge is accompanied by a starting 9 point deduction for administration, then it’s an uphill battle already. But I think the fanbase would be up for all of that as long as all of the above happens swiftly.
I still don’t want 777, I’m not sure anybody really does. I am bitterly disappointed that we have reached this stage without a flicker of who might be in the wings or less likely, the re emergence of MSP partnered by Bell & Downing. I fully appreciate they may just not have the financial muscle and if that is the case, I’d rather they say so and we can all move on.
I’ve said many a time that there is still perhaps a little wriggle left before the “A” word becomes an outcome rather than an existential threat but we are certainly cutting it fine when it’s combined with on the on field and PSR issues.
This idea of whoever it may be, waiting to pick over the bones of EFC to isolate BMD as the only viable commodity left is entirely reliant on EFC being in it – isn’t it? That’s hugely distasteful and the fans won’t forget it. After the last three seasons and a decade of financial chaos we need real leaders, with a real plan and some real pedigree.
We are collectively looking at the clock and it’s just chimed past the eleventh hour. Time for somebody to at least breach that wall and stick their head above the parapet and give us some hope. Failure to do that will have just as many consequences for EFC as anything we have witnessed recently.
Like a fool, I’ve just renewed my two season tickets in the knowledge that I have no idea why, other than it would feel like my left arm had been cut off if I didn’t. I’ve been a regular at GP for 45 years and I’ve just retired, it should be something to look forward to – it already feels like a mill stone around my neck, a drug I can’t kick and a nasty rash that won’t go away!!
Regards
Keith.
Have started to think the same way, Keith. Honestly, not sure what to think about new owners – I understand all the negativity but can anyone really be worse than Moshiri..? But, in the meantime: Branthwaite, Onana and Pickford could bring in 150m+. We can lose 30-40m/year off the wage bill. Can then trust academy players and bring in up-and-coming younger players to blend with the older players we can’t get rid of… OK, doesn’t solve everything but puts us in the right direction.
Yes, we might get relegated, but can we really say we’re not on the way down sooner or later at the moment? Would rather go down with a young, hungry team and sensible structure/strategy than with this bunch…
Thank you Paul for your article and your ability to assess Everton with the many hats you wear as a professional and supporter.
Your very accurate analogy of our investors as big pharma is mirrored on the other side by the Premier League. Both milking for all they can with no real care for the health of the cow or herd.
Perhaps Moshiri’s decisions should be challenged by supporters and The 1878s closer to home. His home. I appreciate Moshiri probably has a lot of front doors but protesting a lot closer to Moshirs own front door in Monaco may if nothing else provide a different and unexpected approach.
There must be some blues in Monaco that could stage protests at his residence. If not, supporters are overdue a trip into Europe for an away day. I am NOT advocating criminal or harassing behaviour. Not badly written threats outside the wrong mansion a la Benitez but something persistent, pernicious with some Scouse wit and intelligence. The more humorous the better, no-one likes to be mocked, as a fanbase we can certainly testify to that.
It wouldn’t really matter if he wasn’t there in residence at the time or worst ways the campaign was via print and online media in Monaco. The affect of a campaign highlighting his lack of leadership and continued backing of 777 may create ‘noise’ to a wider, none footballing audience, his society, may embarrass and lead to action due to his ego protection.
Whether you are a blue from Walton or Wellington Moshiri has, through legal means, been able to damage hundreds of thousands, of Everton supporters hopes, hearts, and cause daily anxiety within our homes.
Perhaps, (expressly through legal means) , he needs a taste of his own medicine. Perhaps like the rest of us he may then realise that money isn’t the most important thing after all.
Thanks Ross
Sobering read Paul but sadly the reality of our current situation. The loan had to be repaid to MSP but the payment date has just been pushed back hence nothing has changed so logically approval by the PL will not be given for 777 to take ownership until this debt has been settled.
The process you so ably describe is a deliberate one and everyone eating at the trough will continue to maximise the benefits for themselves only. A process begun in those twilight years undertaken by one Bill Kenwright. Moshiri recognised the ‘plan’ and thus was able to jump onboard.
The problem now is the totally unrealistic expectations of the majority of dumbed down ‘fans’, after years of ‘mind control’ who can see nothing other than the next game, the next chance of redemption, with all the hallmarks of a ‘cult’ which can do nothing except wait for the next ‘saviour’ to free them. It is indeed pitiful.
I remember folk like Colin Fitzpatrick (was it) who was ridiculed and yourself, who has taken severe flak for your source based, rational opinion, and in a sense ‘driven out’ by the majority of non-thinking, non-understanding and totally emotionally void supporters, too many to mention here, who stood up and recounted the REAL issues.
I do not care anymore about EFC or football or any sport played out in today’s technocratic world, full of non-human interventions, poor language and ‘considered’ what is best for you bullshit. If anyone has bought next year’s season ticket, well fool for them, they are idiots of the highest order with no sympathy from me. The time is coming when folk have to be REAL and frankly, I do not think many are up to the task
What have we become?
ps – you might enjoy this –
Paul,
I’m assuming this recent Washington Post article did nothing to help 777/777re/their lender’s,etc.
https://www.washingtonpost.com/opinions/2024/04/12/us-retirement-nest-eggs-reinsurance-bermuda/
This article has already resulted in Red Flag’s for many Insurance companies and their regulators, especially at State level.
They (777 Et Al),need to be cut loose,,there must be a better solution,cooler head’s must prevail.
Truth is,,Everton cannot afford to be owned by 777,not vice versa.
This article is so wide reaching and will forefront huge changes in the years ahead 👍
From the other side of the pond, the WP article has caused myself and others to suggest an investigation by Congress on the use of insurers balance sheets to fund speculative investments by related parties. That it reportedly took a ratings agency’s downgrade to motivate the BMA into action does not foster confidence. Whether 777 Partners using 777 Re et al as cash cows is an outlier or just the way business is done nowadays, I don’t know. But, if the latter, I can foresee a lot of misery being foisted on retirees’ pensions should related party “loans” go belly up due to failed investments. Good night and good luck to us all.
Ref. The Washington Post article
Who would have thought that “ little old Everton in Blighty” could be the spark that explodes the questionable dealings of some Pension Insurers in America – beggars belief !
Maybe the Premier League will return some points for the wonderful, Everton’s Care in the Community programme, stretching to International recipients I.e. American Pensioners.
What an exceptionally well-written article, Paul ! Should be posted in a national media outlet so all football fans can glean the sort of sordid underbellies that no doubt ALL of today’s global football “powers” possess in one fashion or another (forgive me, but the quotation marks are necessary in EFC’s case, as it is questionable they still belong in the “powers” group)
Its too bad there is nobody in a position of authority@ EFC with the ability to run a football club with even half the level of skill at which you written this article laying bare their inability to do so (I am not sure who’s Paradox that is ?)
Thank you Paul for yout very kind comments