Everton’s financial future could be in jeopardy as the proposed takeover by the controversial US investment firm 777 Partners awaits approval, according to the Guardian.
The club’s mounting debt and cashflow struggles have reached a critical juncture since owner Farhad Moshiri ceased his financial support.
A recent loan from 777 pushed the club’s outstanding loans past the £350 million mark.
The hefty interest payments on loans from Rights and Media Funding, MSP Sports Capital, and 777 are reportedly draining more than £30m from Everton’s coffers annually.
The recent £20m loan from 777, accompanied by an agreement to acquire Moshiri’s entire 94.1% shareholding, provided Everton with essential short-term working capital.
This financial lifeline became necessary despite the club’s profitable player trading over the summer and significant cost-cutting measures, including downsizing the squad and reducing the wage bill.
Notably, a previous £140m loan from MSP, with contributions from local businessmen Andy Bell and George Downing, was directed toward Everton’s stadium development holding company to support ongoing construction at Bramley Moore Dock.
Furthermore, a loan facility with Rights and Media Funding has risen to £200m.
The situation appears poised for more loans from 777 to cover Everton’s day-to-day operational expenses and payments to stadium contractors Laing O’Rourke before year-end.
The fate of 777’s takeover bid rests on decisions expected by early December from key entities such as the Premier League, Football Association, and the Financial Conduct Authority.
If the takeover proposal falters, and if 777 remains the only viable option for Moshiri, Everton’s ability to meet their existing financial commitments would be in doubt.
The club has endured losses totalling £417.3m over the past four years and requires an additional £200m to complete the new stadium project.
Everton and 777 have expressed confidence in a deal that would avert a high-profile financial crisis for the Premier League club.
Everton deny the threat of administration as billionaire owner Moshiri would not want his substantial losses to escalate.
Nevertheless, Moshiri’s financial backing has ceased, with his investment of approximately £750m yielding limited returns, prompting his decision to sell the club.
777 faces significant hurdles in closing this chapter of the Moshiri era and finalising its most substantial acquisition.
The details of their performance-related deal remain undisclosed, but the company must demonstrate adequate funds for the takeover, stadium development, debt management, and Everton’s operational costs.
While Rights and Media Funding seems amenable to the takeover, MSP is pushing for the repayment of its £140m loan if 777 assumes control.
This proposed takeover is also a litmus test for the Premier League’s rigorous owners’ and directors’ assessment process.
777 has been hit with allegations of fraud and unpaid debts, which the company vehemently denies.
Additionally, co-founder Josh Wander’s past legal troubles have garnered attention.
Adding to Everton’s challenges, the club faces an independent commission inquiry next month over alleged breaches of the Premier League’s profit and sustainability regulations, a claim the club refutes.
Protests have erupted from supporters of several clubs owned by 777, including Hertha Berlin, Standard Liège, Vasco da Gama and Red Star FC, over the past two years.
As the firm expands its football portfolio, 777 has committed to engaging with Everton’s fan advisory board to address concerns regarding the club’s future and the new stadium’s plans.
Liverpool city region’s metro mayor, Steve Rotheram, is scheduled to meet with representatives of 777 to discuss his apprehensions regarding Everton’s future, underscoring the gravity of the situation.
