By the extraordinary, chaotic standards of the Moshiri-owned Everton era, particularly the last eighteen months or so, relative peace, normality and even thoughts of optimism have characterised the short period since it was announced that the Friedkin Group had been given exclusivity over purchasing Farhad Moshiri’s 94.1% holding in Everton Football Club. That rarest of sightings, an incoming transfer and sensible outgoing transfers in June, have added to the sense of optimism. Long may it continue, and when due diligence is completed may the Friedkin purchase herald much happier times ahead for all Evertonians.

Nevertheless (a reduced version of a but) two unrelated news items appeared in recent days which may impact  Everton’s immediate future, (i) the ease by which the Friedkin Group can acquire Everton, and (ii), the future governance and degree of control the so-called bigger clubs have on the Premier  League – as per the comments made by Sir Jim Ratcliffe of Ineos, the minority but seemingly now controlling shareholders in Manchester United. One is a potential issue, the other an enormous opportunity.

Let’s deal with something that may be relevant to the Friedkin’s due diligence and ultimate purchase of Everton. I say may, as without the documents being in the public domain, it is impossible to comment definitively. The potential issue relates to the loans provided by 777 Partners, now effectively controlled by A-Cap, the US insurer, owned and managed currently by Kenneth King.

What is known is that the ad-hoc loans provided by 777 Partners were administered through the existing arrangements in place for the credit facility provided by Rights and Media Funding; ie whilst junior in ranking to the original Rights and Media Funding facility, the 777 loans had a subordinated security under the Rights and Media “umbrella”. The loans provided to the club originating from within the 777 Partner group were administered by, and executed through Rights and Media Funding.

That, in itself should not present any difficulties – the repayment of the loans by the incoming new owners should be no different to any other change of ownership/change of lender transaction and would follow the terms and procedures laid out in the relevant loan agreements.

In recent days, in Australia, administrators in the voluntary administration of Bonza Airlines (Bonza Aviation PTY) produced their first “Report to Creditors”

That document can be found here: Bonza Aviation PTY Report to Creditors.

The purpose of the report is to provide creditors with sufficient information to determine the future of the company in question. As a result significant detail is provided as to how the company was run, how it performed and how it was funded. The how it was funded element is particularly interesting and elements of the funding are very consistent with how 777 Partners funded Everton’s working capital requirements from mid-September 2023 until their proposed purchase collapsed at the end of May 2024.  Both Bonza and Everton were provided intermittent funding on a “needs” basis (although ultimately Bonza’s needs were greater than 777’s ability to fund them, hence the voluntary administration).

Section 8.1 of the Report to Creditors relates to the loans provided by 777 Partners (and associated parties). It appears that these loans total AU$77,865,264. Remarkably, the administrators state that “we have been advised that there is no document pertaining to the loan provided / funds advanced by 777 Partners.” For completeness, it should be stated that the above is subject to further investigation.

The report itself flags many additional concerns regarding the running of Bonza and the management/ownership by 777 Partners. Although no further evidence is needed, it brings into acute focus, the absurd claims made by Moshiri as to 777’s suitability.

More relevantly, it does beg the question particularly in relation to the changing status of 777 Partners, A-Cap, their civil cases in the US, and how the Bonza related finances were administered, how difficult or not the task of doing thorough due diligence is? Is it possible that a similar lack of paperwork, a similar lack of executed documents apply to 777’s funding of Everton? Time will tell, and if nothing else add even greater interest to the ultimate publication of Everton’s audited accounts for 2023/24 when published later this year.

Sir Jim Ratcliffe

There has been considerable interest and comment on Sir Jim Ratcliffe’s interview on Bloomberg TV with Francine Lacqua. In a wide ranging interview, of particular relevance to many football clubs and fans are his comments regarding the so-called “big six” and his advocating for greater control over the domestic game, namely the Premier League

The full interview can be watched below

I think the interview provides a fascinating insight into the thinking of someone who is the dominant player in his field. Whether we, as Evertonians, like it or not, this is a candid exposure of how the biggest clubs are thinking and it sets out the competitive environment for the future.

There’s no point in denying that the biggest clubs will do everything they can to further advantage themselves against their peers, against other members of the Premier League, and perhaps even more relevantly, competition in Europe. The likes of Ratcliffe become so successful, so dominant because they destroy their competition. If the game of football wants to attract the capital of such minded people, it has to accept the conditions that apply to that capital. It is naive in the extreme to believe that the strategies deployed in their business empires elsewhere won’t be deployed in football.

However, what Ratcliffe has to understand is that football, the Premier League in particular, can only be a success in the future, if there is an element, at least, of a level playing field. The Premier League is the gateway for English clubs to the treasure troves of the Champions League, global sponsorship deals, global merchandising, the future FIFA World Club competition and the ability to acquire global footballing talent and trade players for profit. The growth in revenues, the ability to attract capital and future revenues, the ability to grow the balance sheet (the ultimate deliverer of valuation growth in football from an investor’s perspective) is dependent upon the competitive balances and integrity of the Premier League. The largest clubs can only exploit all other markets and capital/revenue sources if the Premier League itself succeeds.

It is often said that the pyramid structure of football in England is dependent upon the Premier League. This is undeniably true. However what is even more true, and more relevant to the biggest clubs, those with truly global ambitions, is that they can’t achieve their objectives without nurturing and further developing the strength of the Premier League. Having a league that concentrates greater rewards or influences to a smaller number of participants reduces the attraction of the league and will have a greater detrimental effect on those seeking continued European and global domination. Ratcliffe is entirely wrong in saying that that the Premier League’s success is down to the largest clubs. The largest clubs’ ability to market themselves globally is because of the collective strength of the Premier League, not despite it.

This must be the message from all clubs, but particularly from our new owners entering the challenge to make Everton once more one of the biggest, if not ultimately the biggest, of English league clubs.

I actually admire Sir Jim Ratcliffe’s naked ambition. He’s setting his stall out to dominate. Nothing wrong in that, as long as the strategy is correct and doesn’t destroy the actual source of their current fortuitous position. At Everton, we have, from a much lower base, and once stability is provided, to demonstrate the same desire to succeed – the same desire to dominate, albeit not at the expense of everyone else. Not at the expense of the League which provides the platform for much greater success.

We cannot rely upon the Premier League itself, we can only be responsible for our own future success by what we achieve ourselves. However, we can influence and lead other Premier League clubs to challenge the Ratcliffe-style dominant thinking – not only for the benefit of ourselves but for the greater good of all participants in the Premier League.

Opportunity?

The clubs outside the “biggest six” require leadership and direction. In our current condition we can’t be one of the biggest clubs because of the errors of previous owners and directors. We can, however, provide leadership (under the proposed new ownership) that secures the competitive balance of the Premier League. In doing so, it will probably help Ratcliffe achieve his greater, global ambitions, but not at the expense of the other participants but because of.

The agenda is being set. It is far from too late to really influence the future of the game. Although the Friedkin  Group will have much to do internally at Everton, surely Everton’s role (given our historic relevance) should provide them with a platform to shape the competitive environment to the benefit of us and indeed, all.

Not since the days of Sir Philip Carter have we had the opportunity to be central to English football’s structure and development. Is it too much to ask of a new ownership group? Afterall, Ratcliffe is looking to change Manchester United whilst resetting the competitive environment. Why cannot the Friedkins do the same with Everton?