Arsenal
Aston Villa
Chelsea
Crystal Palace
Everton
Fulham
Liverpool
Manchester City
Manchester United
Newcastle United
Nottingham Forest
Southampton
Tottenham Hotspur
West Ham United
Wolverhampton Wanderers
News
Middle East takeover of Everton is possible amid £400m twist
Will the Everton takeover saga ever end? That was the question on fans’ lips after it emerged that Dan Friedkin had ended exclusive talks with Farhad Moshiri.
The AS Roma owner was chosen by Moshiri⭕ as his preferred bidder, with tꦆhe hope that he could assume responsibility for the club’s debts and give him at least some cash for his shares.
The British-Iranian investor is believed to want £50m in total for his 94 per cen🍌tꦕ stake in Everton, although that hꦺas raised eyebrows given that the club’s debts burden iꦅs around £800m.
With a number of third parties – now including Friedkin himself after he took over a £200m loan from MSP Sports Capital – involved in the club, the situation is becoming increasingly 🦄nebulous.
To help navigate the complexity, TBR spoke exclusively to Liverpool University football finance lecturer and Price of the Footbal🥀l author Kieran Maguire.
Why did Friedkin walk away from Everton?
Friedkin is not the first investor to pull the plug on an Everton tak💃eover after having signed heads of terms with Moshiri
The Miami-based investment firm 777 Partners were also in exclusive talks for almost nine months but were unable to secure Premier League🍷 ratification.
The group are facing a litany of financial and legal issues at present which, given that they are among the club’s lenders, has caused problems🦂 for Everton.
Maguire explains why Friedkin ma🥂y have decided that the situation was simply too risky.
“Initially, 777 borrowed the money from a company called A-CAP,” he said.
“They are now alleging that 777 have also borrowed from Leadenhall and have claimed security on the same asset a number of times.
“It is a bit like you or I getting a mortgage from Lloyds, Nationwide, NatWest and HSBC all on the same house.
“If that is the case, that would be a potential criminal act and it could be that 777 have proceedings brought against them.
“There is then an element of contagion. The problem from Friedkin’s perspective is that they wanted 777 to take a haircut.
“Let’s say they’re owed £200m and Friedkin wants them to take a 40 per cent discount, you knock off £80m and Friedkin pays £120m.
“That might be okay, but it could be that Leadenhall will say that the £80m is part of the money they want paid back.
“Leadenhall could therefore end up going after Friedkin or A-Cap and it all starts to get very complicated, very expensive and very uncertain.
“So, from Friedkin’s perspective, you can understand why the lawyers advised them not to proceed given that litigation could go on for many years.“
- READ MORE EVERTON NEWS: Player compared to Jack Grea♐lish having medical with Everton after £20m deal agreed
Can Everton renegotiate the debt?
Some have speculated that, should 777 sell their debt as an asset in the event that they go into liquidation, that Everton could renegotiate the debt⛎ at a more favourable rate.
That iಌn turn would reduce the burden on a new investor in the club.
This is a possibility, according to Maguire, but not a foregoneಞ conclusion.
“Under the vast majority of corporate lending arrangements, there is something called a ‘change of control clause’.
“That means if a company is sold to new owners, lenders have the right to demand immediate payment because it could be that the new owners are higher risk than the previous ones.
“Or, they can say they will continue to lend but they want to renegotiate the rate of interest, among other things.
“It looks as though A-Cap lent to 777 at around 18 per cent, so you hate to think what 777 has been charging.
“It could also mean changes in terms of repayment dates.
“But it has to be remembered that 777 have a junior debt, which means they are last in the queue with regards to repayment at Everton.
“Is there scope for renegotiation? There is always a deal to be done but it has to be for the benefit of all parties.“
Is administration a possibility at Everton? Could a new owner actively encourage it?
The elephant in the room in the background of all the takeover talk at Everton is administra꧟tion, which would come when they are simply not able to service their debt.
Administration would come with aꦍn automatic 10-point penalty in the Premier Leaꦰgue.
Maguire, however, does not think t𒐪hat it 𝔉is out of the question that a would-be investor might let the club fall into administration in order to secure a cheaper deal.
“I don’t think dealing with 777 or A-Cap is the problem necessarily.
“Instead, it is the fact that those companies may be subject to legal action and therefore anybody who has got into bed with them with that knowledge could themselves be subject to a legal claim.
“That is why we saw the decision from Friedkin to walk away.
“Having said that, I can assure you there are still interested parties. They might try to protect their position through a variety of means.
“And while I think this is a remote possibility, one of those means is that Everton go into administration.
“You could then buy the assets of Everton from the administrator, then all the issues regarding the loans are the responsibility of the administrator.
“There is at least one interested party who has done their sums and feel that the lowest price they would end up paying for the administrator is worth the automatic points deduction they would get.
“At the same time, there are other potential owners who don’t share that viewpoint.”
Are Middle East sovereign wealth funds still in the mix for Everton?
As well as US private equi﷽ty and financial institutions, Middle East sovereign wealth f♉unds are never too far away when it comes to the modern day Premier League takeover saga.
A Qatari group was among those contacted with regards to💖 an Everton takeover earlier this year, but t🥃here has been no update since then.
This might be the dream scenario for Everton as𝓀 a sovereign wealth fund would have no issue paying off the debts and would not nec🦄essarily expect a return on their investment.
“In terms of sovereign wealth funds, I wouldn’t rule them out,” said Maguire
“At the same time, I wouldn’t necessarily rule them in.
“There aren’t many of them, but they will have seen how Man City has become the dominant club in Manchester, which I don’t think many could have foreseen.
“Could the same be achieved in the city of Liverpool? It would certainly be a very good narrative story.
“There is certainly wealth in the Middle East and there is interest in football as well.
“I think the concern from a sovereign wealth fund would be is that Sheikh Mansour had first-mover advantage and was operating a pre-FFP environment where it was easy to spend money to achieve success.
“That cannot be done at present given the cost control regime in which we operate.
“So it would become more complicated for a sovereign wealth fund to take over, but that is not the same as impossible.“
Could Friedkin return to Everton?
Friedkin has previous when it comes to backing out of takeover only to return at a later date – he did exactly that befo𝕴re he bought Roma in 2020.
However, the situation is far more complex at Everton. And Maguire says he is being told 🃏that it looks as though this really is the end of the road for the American billionaire.
“As far as Friedkin returning to the table is concerned, my sources indicate that is a remote possibility.
“They have already spent a lot of money doing due diligence to date.
“I can understand people pointing to what happened at Roma, where they walked away and then came back later.
“But the issues at Roma were negligible compared to the complications at Everton with regards to the legacy created by the spectacular financial mismanagement of Farhad Moshiri.”