To the Ledge and Back | What next for Everton after the 777 fiasco

As the clock ticked past the deadline on Friday May 31st for the exclusivity period to end for the attempted takeover of Everton by 777 Partners, there was an exhalation of relief and a potential silver lining on the horizon.

Unfortunately, it had taken almost nine months to finally move on from the American investment firm. The story of the takeover has been long and painful for Evertonians, but the flawed reign of Farhad Moshiri will continue until a long term solution is found.

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Moshiri had first invested in Everton in 2016 when he took a 49.9% stake in the club which eventually increased to 94%. The initial years were highlighted by immense spending but the purchases did not have the expected improvements in the team's performances on the field. Managers were hired and fired including Carlo Ancelotti who came with years of success under his belt, but could not turn the fortunes around.

The Iranian British businessman had significant financial support from Alisher Usmanov in the early days but when Russia invaded Ukraine, the Russian oligarch had his assets frozen by western countries. This forced an end to several streams of investment for the club including training shirt sponsorships, sponsorship of Finch Farm and naming rights for the new stadium to name but three.

Photo by Tony McArdle/Everton FC via Getty Images

The added financial pressure of the Usmanov loss along with the new stadium costs and the impact of Covid created a perfect storm that Moshiri was unable to fund on his own. The financial crisis over the last three years and the recent points deductions connected to breaches of the profit and sustainability rules can be tracked back to this perfect storm.

This perfect storm investors who were looking for ‘faltering’ companies who could be bought for a low price and turned around in a short timeline and sold on for a profit. Gone are the days when a wealthy local investor bought a club for ‘personal reasons’ that usually meant they were a lifelong fan. For Everton, the offers were from American investment firms MSP Capital and 777 Partners.

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Eventually, MSP Capital withdrew their interest after providing some financial support to the club. One of the frustrating parts of the saga was Moshiri’s single mindedness when it came to the 777 Partners sale. Once MSP had withdrawn their interest in purchasing the club, Moshiri was left with only one option and it quickly became clear that the option was fraught with issues.

Everton were a far bigger prize than the other teams 777 had snapped up. They had stakes in a number of teams through its 777 Football Group. The firm completed a majority stake takeover of Hertha Berlin last year. Its other clubs include Sevilla, Genoa, Vasco da Gama, Standard Liege, Red Star FC and Australian team Melbourne Victory. During the takeover process there have been several protests by supporters at these clubs and the red flags continued to grow.

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This step up was a bridge to far and it was obvious that the added scrutiny that 777 was put under created issues for them. Lawsuits were piling up, airlines were put into administration and there were allegations of fraud. Eventually, 777 called in restructuring and bankruptcy experts which brought greater ire from Evertonians around the world. The most damning comment came from one of 777’s creditors who said that Everton were just “the latest shiny object of Wander’s fraudulent scheme” [Financial Times].

Even with all of these red flags popping up at a ridiculous frequency, Moshiri still only saw 777 as the way forward. With the Everton Fan Advisory Board expressing their discontent, Moshiri extended the exclusivity agreement on May 14th to allow 777 to get things sorted by the end of the month. Even the Everton Shareholders objected to the decision and said that the “powers-that-be are being disrespectful” and “must pull the plug”.

When the deadline passed, the club released the following statement:

“Everton Football Club would like to provide the following update to all stakeholders, and particularly its supporters. The agreement between 777 Partners and Blue Heaven Holdings Limited for the sale and purchase of the majority shareholding in the club expired today.

The club’s board of directors recognises the considerable level of financial support 777 Partners has provided the club over recent months and would like to take this opportunity to thank them for this. The club will continue to operate as usual, while it works with Blue Heaven Holdings to assess all options for the club’s future ownership. The board of directors would like to thank everyone connected to Everton for their patience over recent months and reiterate its commitment to providing further updates when it is appropriate to do so through the club’s official communication channels.”

One of the leading voices who have consistently opposed the sale of the club to 777 Partners was football finance analyst Kieran Maguire who took a celebratory tone after the deadline passed and the exclusivity period was over.

“I think this is actually good news rather than bad. There are an awful lot of people interested in the club who want what is best for the club, anyone connected to 777’s business wouldn’t have necessarily been able to say the same. I think they are actually in a better position than they were in yesterday, in the sense that 777 would have been a disaster as far as ownership is concerned.” [Talksport]

As the deadline approached and Moshiri knew that there would not be a deal, he informed Evertonians that he was now looking at other options and when the agreement ended he would reveal more. During the period of exclusivity, 777 Partners had provided more than 200 million pounds in loans to cover operating costs and building costs for the stadium.

In the last couple of days, there has been some backlash from supporters regarding the statement that was made by Moshiri. His comment regarding a continued negotiation with 777 partners is not an attempt to keep the deal alive.

Rather, it is to ensure that the money that had been lent to the club by 777 partners is paid back at an appropriate time. If there is a default on the payment, this would be catastrophic and the chances of the club going into administration would increase which no future investor would like to happen.

While Everton will still have a relationship with 777 Partners due to the aforementioned loans, the club is now pursuing other potential buyers. The possibility of an oil rich country taking over the club seems to be pie in the sky but there is definitely lots of interest.

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One such investor is American businessman John Textor, who currently owns several football teams around the globe including Crystal Palace and Olympic Lyon.

He has recently made some public comments regarding investment in Everton and there is no doubt that his interest is growing:

“Yes. I’ve had conversations around buying Everton, with the existing constituents – different groups, different lenders, different equity holders,” [The Athletic]

Textor believes that his investment in Crystal Palace does not line up with his company’s profile and is interested in the potential of Everton. The fly in the ointment is the need for Textor to sell his 45% stake in Palace as one person cannot invest in two different Premier League teams.

The timeline for that sale is unclear which creates a problem for Moshiri as he appears to have no interest in providing more funding in the short term. There is now the potential that MSP Capital could be the bridge between Moshiri and Textor.

MSP Capital is back in the conversation as it has a stake based on the loans that they had given the club in the past year. It has been speculated that as Textor attempts to sell his stake in Crystal Palace, MSP could take control of the club in the short term as a tie over until Textor is able to fully fund his purchase of the club.

Yesterday, journalist Alan Nixon has reported that Textor had made contact with the Premier League to outline his plans and requested an extension of time to sell his stake v in Palace. Textor is now the leading candidate to save Everton. [Nixon]

As an Evertonian, I was pleased that Moshiri arrived and was willing to put his money into the club. The building of the stadium will be his legacy but aside from that his tenure has been awful. It ended up being like taking the money to the casino; lots of potential but in the end you lose your shirt. The writing was on the wall once Alisher Usmanov was taken out of the equation.

What I was not pleased about was Moshiri’s lack of interest in the club. To call him an absentee landlord would be understatement. In his 7 years at the club he has only been present at a handful of matches. This is not the Everton Way. Full blooded passion and commitment are the lifeblood of the club and getting Evertonians on side can happen quickly when that passion is shown.

This is the exact opposite to John Textor who is a very hands on owner who connects with the clubs that he owns. He is also improving teams. Crystal Palace have changed their philosophy this year and the team is now filled with young, exciting players. Olympique Lyon had been a shell of their former selves and this year made it to the French Cup final. He connects with the fan base and that is crucial.

However, it should be noted that when Textor took control of Lyon, one of the controversial decisions he made was to raise capital by “paring off non-core assets to focus on football”, believing Lyon to be “way too heavy on physical assets”. He is attempting to sell the Lyon women’s team and the LDLC Arena. My worry would be losing control of the Everton Stadium as a way to ‘raise funds’ for his other ventures.

There is still a great deal of work to be done and the uncertainty surrounding the sale of the club continues, but what must be agreed is that the end of the agreement with 777 partners is a positive development for the club’s long-term health. Will John Textor be there to pick up the pieces? That is still to be determined. The future of the club is brighter but the light is still a distance away.