After two years of uncertainty, the Everton takeover saga may finally be reaching a conclusion.
On Monday, a statement confirmed The Friedkin Group (TFG) had reached an agreement with Farhad Moshiri’s Blue Heaven Holdings to purchase a majority stake in the Premier League club.
The deal remains subject to regulatory approval, including the Premier League’s Owners and Directors Test (OADT).
“We are pleased to have reached an agreement to become custodians of this iconic club,” a spokesperson for TFG said. “We are focused on securing the necessary approvals to complete the transaction.
“We look forward to providing stability to the club and sharing our vision for its future, including the completion of the new Everton stadium at Bramley-Moore Dock.”
The news comes as the latest twist in a long-running Everton takeover process. As recently as July, the Houston-based TFG pulled out of exclusive talks with Moshiri, citing concerns over some of the club’s debt.
So what has changed? What chance does this deal have of success? And what does it mean for Everton’s short- and long-term future?
What does this mean for Everton — now and in the long term?
Nothing, yet. Nobody will be getting ahead of themselves after so many false dawns.
The club has been in a holding pattern for the best part of two years and needs capital to compete, so this will be seen as a welcome development. The promise of a reduction in the debt and long-term financing will be met with positivity.
The aim in the interim will be to plough on until the takeover is completed, with an immediate focus on improving the league position.
Off the field, there are still bills to pay. Having provided a £200m ($267m) loan this summer, TFG has extended its debt arrangement with Everton to help the club complete the internal fit-out of the new stadium and ease any short-term cash flow concerns. That solves one key issue.
The promise of long-term funding and a chance to compete again financially will be most enticing of all though.
Patrick Boyland
Why are TFG back so quickly?
Have you never changed your mind?! The Friedkins have. Their purchase of Roma in August 2020 followed nine months of indecision, but they never fully walked away in the Eternal City and that is what happened on Merseyside, too.
Having quickly appeared on the scene at Everton following the end of the 777 takeover, TFG initially pulled out of talks to buy the Premier League club after just a month of talks.
That would normally suggest a falling-out of some sort, but that was not the case here: TFG quite liked what they saw and heard about Everton, and vice-versa. The problem was the mess 777 left behind.
In the interest of brevity, we will not dwell too much on the specifics, but when the Miami-based investment firm ran out of money, the asset that is the £200million it lent to Everton last season was taken up by its main backer, A-Cap, an American insurance company.
Unfortunately, A-Cap is not the only company owed massive amounts of money by 777, with London-based investment firm Leadenhall claiming it is owed almost £500million.
That claim is the subject of legal action in New York and Leadenhall has been granted an injunction that stops A-Cap from selling any of 777’s assets or doing a deal with any of its creditors without court approval.
That was one headache too many for TFG in July but now… well, it has changed its mind. The obvious assumption here, which nobody is admitting or denying, is that TFG and A-Cap have come to an agreement that they think Leadenhall will accept.
One early suggestion was that A-Cap would convert the loan into shares and become a minority partner of TFG’s. That would have been great for the Friedkins, as it would have effectively wiped out the debt in return for jam tomorrow.
The only problem was that A-Cap badly needed cash to settle 777’s debts, Leadenhall wanted its money back, and A-Cap’s owners would have been opening themselves up to the risk of legal action if/when its creditors found out that it took shares in something as risky as a football club when it could have insisted on money.
So, the deal that appears to have been struck in a flurry of activity over the weekend is that TFG is going to pay off a good chunk of that £200million now, with the rest being converted to payment-in-kind notes — a type of debt that will give TFG more flexibility about when it fully settles up in return for a higher rate of interest — and warrants, which is a form of security for the lender as it gives them the right to buy shares at a fixed price.
This offer will have to be presented to the court in New York, but TFG clearly believes Leadenhall will go for it.
And while that is sorted out, Everton and TFG can crack on with getting the approval of the FA, the Financial Conduct Authority and the Premier League. Of those three regulatory checks, the first two are pretty straightforward, as they are effectively box-ticking exercises about TFG’s suitability to operate in the UK, with the league’s checks taking the longest.
But even here, TFG should not have any difficulties, as it owns clubs in France and Italy and is a very successful company in the United States. TFG’s chairman and CEO is Dan Friedkin and the family company he runs has annual revenues of over $11billion, with his personal wealth estimated at $6.2billion by U.S. business outlet Forbes. They’ve got the readies.
With a fair wind, diligent lawyers and the nod from the court in New York, this could be wrapped up by the end of November and should be done by mid-December.
Matt Slater
How likely is this to go ahead given what has gone before?
The million-dollar question, but unfortunately there can be no certainties, even if the overall picture looks far more positive this time.
Everton and Moshiri have been here before many times. The KAM Group, MSP Sports Capital, 777 Partners and, more recently, TFG have all tried and failed to complete a deal. John Textor also entered into talks with Moshiri over a takeover.
MSP was among the most plausible of the suitors, but its minority deal was vetoed by one of the existing creditors, Rights and Media Funding (RMF). Others were unable to stump up the necessary funding or, like Friedkin, had concerns over some of Everton’s debt.
It is not easy, given the amount of stakeholders involved, to even get to this stage with Moshiri. Stakeholders need to be satisfied, accommodations have to be found on 777’s debt position, now assumed by A-Cap, and new funding will need to be sourced.
In most cases, those agreements have been reached. A resolution with A-Cap will be left up to the courts, with some of the parties involved having taken legal advice in an attempt to find a workaround.
Then there is the regulatory side, which admittedly is unlikely to be much of an issue for Friedkin given he sits on numerous UEFA and European Club Association boards.
The most significant hurdle, one 777 struggled to clear, is the Premier League’s beefed up Owners and Directors Test, which assesses proof of funding and a potential new incumbent’s plans.
It would be a surprise if this presented much of an issue for Friedkin given his time in business and at Roma. It is hoped the takeover will be completed by Christmas.
Patrick Boyland
How are TFG funding this?
Well, we have indicated that these guys have some serious disposable income, so a lot of the initial outlay, which will mostly go on paying off Everton’s existing secured creditors and settling the bill for the club’s new stadium, will come from their pockets.
But billionaires do not become or stay billionaires by spending their own money. For a start, most of it tends to be busy earning them more money, so it is not just scattered about the place in big piles.
TFG has effectively made a down payment on Everton by lending the club £200million this summer. That was to clear another earlier debt of £158million to another of Moshiri’s former suitors, MSP Sports Capital, and help the club with those stadium construction costs.
What TFG decides to do with that debt is one of the big unanswered questions, but our guess is that it borrows even more money — perhaps as much as £350million — secured against the new stadium to pay off both A-Cap and the other big creditor, Rights and Media Funding. There would be no shortage of well-known lenders willing to offer TFG that kind of long-term, low-interest deal.
Once the club’s more expensive debt has been replaced by a combination of Friedkin cash and new, cheaper borrowings, Everton should be a more sustainable business, particularly once they move to a larger, more modern home.
But they will need to significantly increase their commercial income and do a much better job with player development and recruitment than Everton have managed under Moshiri. TFG’s most lucrative business is selling and assembling Toyotas in the U.S. — The Athletic would be amazed if Toyota was not added to Everton’s portfolio of sponsors in the near future.
Matt Slater
How will it impact Sean Dyche and the football side?
Dyche and others at the club will almost certainly be breathing a sigh of relief after Textor’s very public comments on his future.
That interview with Sky Sports, in which he questioned whether the Everton manager would be able to work with Brazilian players, was a red flag given he had not even agreed a deal with Moshiri. Tellingly, the club later released a statement distancing themselves from Textor’s comments.
Any new incumbent would be met with a sizeable in-tray at Goodison. Dyche and director of football Kevin Thelwell are into the final year of their deals and there are plenty of other gaps to plug.
The belief at Everton is that this two-year period of stasis has impacted the team’s ability to remain competitive. They are the only Premier League side to have a positive transfer balance over the last five years as they have looked to cut costs, recoup funds and meet profit and sustainability rules and working capital requirements.
Staff have often had to prepare for a number of eventualities before each transfer window, including a potential sale, only to end up with their hands tied in the market.
That lack of investment across the club has taken its toll. After three successive relegation battles, Dyche has yet to win in his five Premier League games this season.
In that context, recent developments with Friedkin will be welcomed internally.
Constructive talks were held during TFG’s previous period of exclusivity and there was disappointment when the deal collapsed. On just about every side of the deal, there has been a sense that TFG remained the most suitable option for Everton.
There is still a way to go, but a takeover would at least give them a fighting chance again.
Patrick Boyland
What does this mean for Roma?
The Everton takeover comes at the lowest ebb of The Friedkin Group’s ownership of Roma. On Sunday, the Stadio Olimpico failed to sell out for the first time in a long time. The Curva Sud was empty for the first half hour of the game against Udinese in protest at the sacking of a “son of Rome”, club legend Daniele De Rossi as head coach. The only presence behind the goal was a banner that read: “You don’t respect our values and our talismen. From now on we’re going back to our old ways.” Hostile and naughty.
The Friedkins, a regular Sphinx-like presence in the Monte Mario stand in the first non-Covid years of their custodianship, were not in town to see it. They had flown out for their own good after communicating their decision to De Rossi. The atmosphere has become so threatening that CEO Lina Souloukou quit on the day of the game. De Rossi’s replacement, Ivan Juric, only found out about it on TV.
A first win of the season against the league leaders did little to placate those in attendance, who continued to whistle the players even after a 3-0 triumph.
How has it come to this? It was not long ago that the Friedkins were Italy’s most popular owners. They have invested nearly a billion in the club. Hiring Jose Mourinho served as proof of their ambition. The club won a trophy, the Conference League, for the first time in 14 years. Another big name, Paulo Dybala, was then unveiled in front of 10,000 fans outside the Square Colosseum and Roma reached back-to-back European finals, taking a step up to the Europa League final, which they lost on penalties to Sevilla.
All of this covered up for repeatedly failing to qualify for the Champions League and the imposition, by UEFA, of a strict Financial Fair Play settlement agreement. UEFA fined Roma €2m in their most recent review of their accounts. Adding Romelu Lukaku, another former Serie A MVP, on loan last season was supposed to be the difference. It wasn’t. Mourinho got the sack at the turn of the year. Unconditionally popular, the only way to keep the fans on side was to hire the inexperienced De Rossi, who initially did so well the Friedkins rushed into handing him a three-year contract. His sacking barely two months after the announcement of that deal has arguably lost the fans forever.
The city’s radio stations have spent the week talking about how soulless the club has become. Longstanding employees have left and playing contracts have been allowed to expire without replacements being found. The front-of-shirt sponsor, Riyadh Season, came at a time when Rome was going up against the Saudi Arabian capital to host the Expo. The partnership and signing of a no-name right-back from the Saudi Pro League has led to speculation about the club trying to make itself attractive to a buyer from the region.
The Friedkins, however, have always postured that they are in it for the long term and unveiled plans for a new stadium in Pietralata only in July. Taking over Everton will only make their life more difficult in Rome, as any money spent on helping the Premier League outfit avoid relegation will look like the Friedkins are prioritising their new toy at the expense of the other.
James Horncastle
What does this mean for John Textor and Crystal Palace
This summer alone, he has tried to add Everton to his multi-club group Eagle Football, then made one last attempt to buy out his partners at Crystal Palace, then tried to buy QPR with shares in Eagle Football, only to circle back to Everton, but this time with him and a couple of rich friends buying the club, not Eagle.
In the meantime, his long goodbye from Selhurst Park continues.
Fourteen months after informally putting his 45 per cent stake in the club up for sale via an interview with The Athletic, and four months after doing so formally, Textor still owns those shares.
That formal process is being run by Raine Group, the American bank that helped the British government solve its Roman Abramovich problem at Chelsea and the Glazers link up with Sir Jim Ratcliffe, and Textor says it is ongoing.
A week-and-a-half ago, in between telling Everton fans he was more than 90 per cent sure he would be buying their club, he said the contest for his Palace stake was almost over, with two strong bidders through to the final. That appears to be where we remain.
Until he sells those shares, he is stuck. He might be tantalisingly close to a majority at Palace, but the shareholder agreement he has with the three other main players there — David Blitzer, Josh Harris and Steve Parish — means he only has 25 per cent of the votes. And with Parish, the undisputed boss, unwilling to have anything to do with Eagle’s multi-club experiment, that 45 per cent stake is not much good to Textor.
This is a huge problem for the 58-year-old American because he wants to float Eagle on the New York Stock Exchange by the end of the year. To get the valuation he needs to give his investors the returns he promised, he really needs an English club in the portfolio.
Having looked at Newcastle United, Brentford and Watford, before settling on Palace, he has since been forced to go elsewhere. He had hoped a deal could be done to swap south London for Merseyside; instead, as he feared, he has been “gazumped” by a man with less baggage and deeper pockets.
(Top photo: Getty Images; design: Eamonn Dalton)
