The group aiming to take a significant stake in Everton is already providing them with funding for their new stadium and is “on track” to take two positions on the Premier League club’s board.
MSP Sports Capital has been in exclusive talks with Everton’s majority owner, Farhad Moshiri, for the past two weeks about investment into Everton Stadium Development Company, the business Moshiri set up in 2017 to oversee the construction of the club’s new home at Bramley-Moore Dock.
The proposed deal would see a limited partnership led by New York-based MSP effectively give Moshiri £100million to £150million ($124m to $187m) in loans that can be converted to equity in the Merseyside club.
The British-Iranian billionaire has poured at least £750m of his fortune into Everton since taking control of the club in 2016, with £400m of that sum going into the new stadium alone.
Farhad Moshiri (Photo: Michael Regan/Getty Images)
But there is still at least £360m needed to finish the stadium, as the project’s initial budget of £500m has grown to £760m. Moshiri had hoped to fund this in much the same way Tottenham Hotspur financed their new home, via cheap, long-term debt sourced by the two global banks he appointed in 2020, JPMorgan and MUFG.
Unfortunately, several factors have combined to make investors more reluctant to invest in Everton’s ambitious building project than Tottenham’s.
Firstly, the club’s financial performance over the past five years has been shocking, with losses of more than £400m since 2018. Secondly, the club have only narrowly avoided relegation these past two seasons. And, finally, Moshiri’s funding plan also included a large contribution for the stadium’s naming rights from companies connected to his long-term business partner and friend Alisher Usmanov.
That source of funds was shut off — along with several lucrative sponsorships for the team — when the UK government sanctioned Usmanov for his links to the Russian state in the weeks following the full-scale invasion of Ukraine last year. And to compound Moshiri’s difficulties, his own bank accounts in Russia were frozen because of his British citizenship, leaving him unable to fill the funding gap.
Everton’s ownership: Moshiri, 777, MSP Sports Capital and what we are hearing
Faced with these circumstances, he has been forced to consider options that could see his stake in Everton reduce from its current 94 per cent to more like 60 per cent.
MSP’s proposal would see it provide £100m in loans with warrants — a type of security that enables lenders to buy shares at a low, fixed price — that would give the firm a 25 per cent stake in Everton. However, MSP could end up with an even bigger stake as Everton need more like £150m to cover the funding gap at Bramley-Moore Dock and the club’s day-to-day needs.
And MSP would not just get shares: it would also be entitled to two seats on the club’s board.
Everton fans have been calling for changes there for months, with particular anger focused on long-standing chairman Bill Kenwright and club chief executive Denise Barrett-Baxendale. Their departures seem almost certain but it is not clear who MSP would appoint as its representatives.
The firm’s co-founders, former sports agent Jeff Moorad and Iranian-American businessman Jahm Najafi are the proposed general partners of the group investing in Everton and one, if not both, would normally be expected to take a seat on the board.
But there are also at least two highly qualified Everton supporters among the group and either or both of them could join the board. They are Andy Bell, the founder of online stockbroker AJ Bell, and property developer George Downing.
Bell, in particular, would appear to be ideal as he stood down from running AJ Bell last year and has spent his time since looking like a man on the hunt for a challenge. Everton are certainly that, but he might not be able to take a seat on the board as he has already invested in the club, which could be interpreted as a conflict of interest.
Bell (right) at the Tour of Britain in 2021 (Photo: Alex Livesey/Getty Images)
His investment is effectively interim funding for the stadium while Moshiri and MSP hammer out the finer points of the larger deal, and it has been secured via two charges registered at Companies House late last month, against the stadium company. The money, believed to be in the region of £40m, has come from Blythe Capital, a firm owned by Bell and his wife.
If Moshiri and MSP can complete their deal — and sources on both sides of the negotiations, who do not wish to be named as they have signed non-disclosure agreements, say they are “on track” — in the next four to five weeks, Moshiri is confident he can borrow the rest of the money needed to complete the stadium. If all goes to plan, it would come in the form of a five-year construction loan arranged by JPMorgan and MUFG, as their clients should be more comfortable with the amount of risk attached.
Once the stadium is built and hopefully adds £40m to £60m to Everton’s turnover, the club’s owners would then try to refinance all of Everton’s borrowings with a large, long-term corporate bond. Assuming global interest rates go the way most economists are predicting, this could happen within three years. Any early repayment penalty on the construction loan would be cancelled out by the lower cost of borrowing.
There are, of course, several hurdles to clear before Moshiri, or anyone else, could secure that outcome, not least the small matter of Everton maintaining their 70-year stay in English football’s top flight. That obstacle could become harder to get over if an independent commission rules they breached the Premier League’s spending rules during the 2021-22 season when it makes its assessment later this year.
It should also be noted that if Everton do borrow £360m to finish the stadium, it would take the total amount of interest-bearing debt they are carrying past £500m, as they already have significant loans from Metro Bank and Cheshire-based private lender Rights and Media Funding.
On the other hand, Everton are still England’s eighth-most successful team in terms of silverware, with a large and loyal fanbase, and their new stadium should give them a better chance of competing financially with the league’s biggest clubs. The construction work is also ahead of schedule, so Everton could move in at the start of the 2024-25 season.
Everton’s new stadium (Photo: Michael Regan/Getty Images)
Neither Bell, Everton nor Moshiri wished to comment on the state of the talks and Downing and MSP did not respond to a request for comment.
Based in Lancashire, Bell has recently invested in a local gym franchise and a healthy meal delivery service. He also owns a Michelin-starred restaurant and a racehorse training yard in the county.
Downing is based in Switzerland but made his fortune in property development in Liverpool. His company owns the Port of Liverpool Building, one of the “Three Graces” that make up the city’s iconic waterfront.
MSP owns stakes in German side Augsburg, Portuguese side Estoril Praia and Alcorcon in Spain, as well as shares in Formula 1’s McLaren Racing and the NBA’s Phoenix Suns.
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(Top photo: Naomi Baker/Getty Images)