Back in September 2023 just after Farhad Moshiri had announced the proposed sale of his 94.1% holding in Everton Football Club to 777 Partners, Simon Goodley of the Guardian wrote a comprehensive piece of analysis regarding the financial relationships between Farhad Moshiri and Alisher Usmanov – one of a number of Usmanov related reports and articles produced over many years. The article in question can be found here.

In the article, Simon Goodley reports that Moshiri received more than £270 million from the sale of shares in USM companies between 2018 and 2022.  The selling of  Moshiri’s shares in USM companies, taking Moshiri’s USM holding below his initial 10% is confirmed in Everton’s audited accounts of 2021/22 when USM’s sponsorship agreements with Everton cease to be considered related party transactions. Moshiri’s lawyers have confirmed that as of 2022 Moshiri continued to hold a 5% stake in USM. (It should be pointed out that whilst Usmanov was subject to economic sanctions in the US, EU and UK, USM Holding has since appeared on the UK sanctions list since 12 April 2023)

In addition, further papers suggest that Moshiri borrowed £70 million from an Usmanov owned company, Windfel Properties, between 2020 and March 2022. To add to that, a further loan of £75 million was received from another (but unspecified) Usmanov owned company before the Russian invasion of Ukraine.

When considering the evidence, it seems beyond reasonable doubt that Moshiri through the legitimate sale of shares and the acquisition of loans was in receipt of more than £415 million in the period 2018-2022.

It is also worth considering the circumstances behind Moshiri’s initial purchase of 49.9% of Everton for a sum believed to be £87.5 million in February 2016. Prior to the Everton acquisition,  Moshiri was a 50% shareholder (Usmanov owned the other 50%) in a holding company, Red & White Holdings which held 30.04% of Arsenal Football Club. In order to satisfy Premier League ownership rules, Farhad Moshiri had to dispose of his Red & White Holdings shares to buy his initial stake in Everton. This he duly did, selling his shares to Usmanov for a reported £200 million (this is prior to the reported 2018-22 transactions above).

Moshiri’s funding of Everton has been documented many times on this website. Chronologically, it is as follows:

2015/16 – £0

2016/17 – £105 million

2017/18 – £45 million

2018/19 – £150 million

2019/20 – £50 million

2020/21 – £100 million

2021/22 – £229.3 million

2022/23 – £70 million (£22.5 million of which is partially secured and interest bearing)

Total £750 million

The shareholder loans were provided by an Isle of Man Company, Bluesky Capital limited.

Moshiri’s 94.1% equity holding which comprises of his initial purchase of 49.9%, conversion of £200 million of shareholder loans to equity and one capital raise of £100 million of new shares, are held by Blue Heaven Holdings, another Isle of Man company.

Three interesting points to make regarding the above arrangements (i) successive Everton audited accounts state Blue Heaven Holdings (the holder of Everton shares) is wholly owned by Farhad Moshiri – i.e. that Moshiri is the sole beneficial owner. (ii) Bluesky Capital is described as “controlled by” Farhad Moshiri, not wholly owned – a potentially important distinction and (iii) when the £200 million of shareholder loans were converted to equity, the recipient of the shares was Blue Heaven Holdings, not the loan originator, Bluesky Capital.

Useful background

All of the above is useful background for Evertonians, for those interested in football finance and of course, any potential buyer of Everton who must from a due diligence perspective at least, establish the source of Everton’s funding by its major shareholder. It is something, no doubt that 777’s lawyers would have checked and signed off before their ultimately unsuccessful bid for Everton.

It will, of course, form part of any new buyer’s due diligence as will the source and status of the 777 Partners’ loans which are close to £200 million.

Moshiri’s position

As was made clear in September 2023, Moshiri wishes to dispose of his Everton shareholding, selling it to a new owner/investor. It is widely recognised and assumed that Moshiri will make considerable losses on his share purchases and his shareholder loans to the club. Most observers and indeed, interested parties assume a minimal payment for the equity and a complete write down of the remaining £450 million of shareholder loans.

777, by virtue of the information provided by the Premier League’s conditions published in March 2024 had agreed an initial purchase price of £64 million for Moshiri’s equity with the potential for this to rise to £130 million based on unspecified performance criteria.

As above, the shareholder loans were to be written off. (Interestingly from a tax perspective the write off might create a tax liability for Everton) – a conversion of the loans to equity for zero or minimal consideration might be more appropriate – but does the Bluesky Capital/Blue Heaven Holdings distinction become an issue in that scenario? – I don’t know, I am putting the question out there.

All of the above signals very significant losses for Farhad Moshiri. There is however another consideration too. Referring back to Simon Goodley’s article  the following is of relevance:

A spokesperson for Usmanov declined to discuss precise details of the funding but said: “Mr Moshiri and his companies are indeed indebted to Mr Usmanov and entities affiliated with him. We hope that the debt will be repaid after Mr Moshiri closes the sale of the Everton club, which is now being actively announced in the press.”

It is difficult to reconcile Moshiri’s position with the statement above for two reasons – (i) the sums received by Moshiri may likely be less than his indebtedness and (ii) Usmanov’s status as a sanctioned individual.

To conclude with a theme often discussed on these pages, it is increasingly difficult, in my opinion, to reconcile Moshiri’s decisions and judgements as remaining aligned with the best interests of Everton Football Club. The insistence that 777 Partners were the best option for our club was, in my opinion, driven by self-interest alone. There is no doubt he is in a difficult position but a duty of care, as a shareholder and director, still exists to Everton Football Club, his fellow shareholders, the stakeholders of Everton Football Club, the city of Liverpool and particularly the fans.

Legitimacy?

In a book written by Lord Sumption in 2019, called “Trials of the State” Sumption talks about legitimacy being a “vital but elusive” concept, lesser than the law but more than opinion. It is based on the belief that “we are all in it together” . Any claim that  Moshiri may have to legitimacy as custodian of our club is wafer thin, what transpires with potential new owners – a must for Everton’s survival and recovery, and something that must happen quickly – will confirm whether it has any validity at all.

As stated in my previous article, others are better qualified to manage the sale and running of the club in this critical period.