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777 Partners press on with Everton takeover after £16m package lands on day of chaos
777 Partners remain committed to completing a takeover of Everton but questions over its ability to do so intensified further amid a day of chaotic developments.
What started as a tale of airline passengers stranded across Australia quickly reverberated around the world, leading to new concerns over whether the group would be able to finalise its deal for control of the Blues.
Questions extended beyond the implications of 777 Partners' move to place its airline into voluntary administration as further financial issues emerged. Those developments, along with claims Everton had sought specialist financial advice over the club’s debts, threw into doubt a takeover that has so far failed to achieve regulatory approval. The Blues, however, are understood to have received their latest funding package on behalf of 777 Partners on Tuesday.
COMMENT: Everton takeover: 777 Partners need to show some respect - or ship out
Majority shareholder Farhad Moshiri reached an agreement with 777 Partners for his 94.1% stake in Everton in September of last year. The announcement of the deal followed a search for outside investment that had started more than a year earlier and which had seen the club move through two failed negotiations with other US consortiums. Those involved hoped the deal would receive approval from the Premier League, Football Association and Financial Conduct Authority by the end of 2023. Five months into 2024, 777 Partners is yet to convince the Premier League of its suitability and appears to be struggling to meet conditions of approval set by the league’s board.
While that process has been ongoing, 777 Partners has been sending tranches of money to help the Blues meet their operating costs and cover payments for the club's new waterfront stadium development. Those support packages have now reached a total of £200m and one of the conditions laid down by the Premier League was that, should the deal go ahead, that debt would be converted into equity. Concern included claims the latest instalment had not arrived as expected, though that payment is now understood to have been completed on Tuesday.
Against the backdrop of the takeover saga, and the consequences of years of financial mismanagement that have led to the deduction of eight points this season, manager Sean Dyche and his players faced an uphill battle to protect Everton from relegation to the Championship - a fate that would have a catastrophic financial impact on the club. That threat has now gone after a remarkable week in which three wins - including the morale-boosting landmark Merseyside derby success at Goodison Park - helped the Blues achieve what the club had previously been unable to do across the past two seasons and secure survival with weeks of the season to spare.
In theory, this provided Dyche and director of football Kevin Thelwell with a headstart as they prepare for a crucial summer in which there is expected to be a significant turnover of players as the club attempts to build on the progress made on the pitch this season. However, Dyche made clear last week that such opportunity was limited due to the uncertainty at the top of a club run by an interim board since last June - describing efforts to deal with contract talks and transfer plans as akin to “juggling with sand”.
As those at Finch Farm celebrated win after win and the ability to ditch a Championship contingency plan drawn up for the summer, last week efforts were directed towards finding a Plan B off the pitch as Everton sought to broaden their options from an ownership perspective. Financial consultants Deloitte were tasked with finding backers who could either help 777 Partners get over the line or perhaps offer an alternative vision for the future of the club - a move representatives for 777 Partners claimed was standard practice and which the group had been made aware of.
However, as a club embroiled in crisis for much of the past three years appeared set for a much-needed respite from controversy following the win over Brentford that guaranteed survival, the storm clouds quickly returned. What started on Tuesday as news that Bonza, the low-cost Australian airline owned by 777 Partners, had fallen into voluntary administration quickly snowballed into a far bigger issue with implications for the Everton takeover project. Bonza’s aircraft were seized by AIP Capital, an investment company that forms part of the portfolio of one of 777 Partners’ main lenders, A-CAP, in an effort to recoup money owed to investors, according to the Sydney Morning Herald.
As the move sparked a scramble for information over the impact it could have on other parts of 777 Partners’ portfolio further issues over the finances of the group emerged, including allegations of a failure to pay the agency tasked with managing its reputation as it attempted to pull off the Everton takeover.
Missed payments are not a new phenomenon within the 777 Partners bubble of interest. The Miami-based group moved into football club ownership several years ago and has targeted distressed institutions desperate for a lifeline as part of an expansion that has seen its tentacles stretch from Brazil to Belgium. During that effort, the group has been dogged by controversy surrounding its wider business exploits, including several high-profile legal battles, and fan protest movements at its clubs, including Rio de Janeiro-based Vasco de Gama, Belgian giants Standard Liege, and Parisien side Red Star. While some of those clubs have made progress on the pitch, others - Liege in particular - have struggled.
Meanwhile, several have been hit with administrative issues. At Liege, there were late payments to staff across the opening months of this year. That club, as well as Vasco, has been hit with transfer bans due to issues over payments while the Italian side controlled by 777 Partners, Genoa, was last season handed a one point deduction while under the group’s stewardship. 777 Partners chiefs have dismissed those issues as overhangs from the trouble it inherited at each outfit, emphasising that moves towards sustainability take time and are often not straightforward.
The issues faced by 777 Partners, along with those raised by the scrutiny that followed its attempt to venture into the Premier League, have long left supporters of Everton concerned about who might replace Moshiri at the top of the club. Groups including the Fan Advisory Board have sought answers from the organisation over its plans for the club and how it hopes to finance them but have seen those approaches rebuffed on the premise that transparency would potentially prejudice the regulatory process. In reality, the lack of clarity has only increased concern and suspicion even with representatives from 777 Partners, including co-founder Josh Wander, regularly attending Blues matches in the directors box.
Everton face a difficult summer in which a further argument with the Premier League over profit and sustainability regulations is to be heard and in which the club may have to sell a key player in the opening weeks of the transfer window in order to comply with those rules. Both situations carry the threat of a points deduction that would be carried into next season should the club miscalculate its strategy. Meanwhile, the expiring contracts of several players need to be addressed and new targets identified if Dyche is to build on this campaign. His threadbare, Frankenstein squad that consists of the remnants of the failed ambitions of the Moshiri era must be overhauled but wholesale changes will be tough while uncertainty remains over budgets and long-term plans.
What Dyche and Thelwell certainly did not need is the positivity inspired by a remarkable week of results being undermined just days later. A report from The Guardian on Tuesday that the club had sought advice from debt restructuring and insolvency experts sent a wave of concern through the fanbase. When asked by the ECHO, a spokesperson for Moshiri did not deny the report as they instead declined to comment on the matter.
Further claims Everton had missed a payment to stadium contractors Laing O’Rourke and had to dig into cash reserves to pay players in the wake of a missed support payment by 777 Partners heightened concern around the stability of the club. In response, sources indicated club wages had been paid on time this month and insisted that work continued on the stadium development. Neither the Blues, Moshiri nor Laing O’Rourke would comment.
Perhaps the biggest immediate concern for many was the short-term consequences should the money from 777 Partners stop arriving. What would happen in that event is not expected to be tested imminently after the latest support payment, of around $20m (£16m), was understood to have arrived with the club on Tuesday, a claim repeated by multiple sources. There appeared to be an acknowledgement that payment arrived later in the month than had been typical but it was suggested that communication between 777 Partners and Everton over the timing of the latest instalment had remained consistent - and sources added 777 Partners remain committed to taking over Everton and confident of its ability to do so.
The biggest stumbling block to completion appears to be the Premier League demand that 777 Partners repay a £158m loan to MSP Sports Capital, the New York-based investment firm that had provided capital to the Blues last year. Earlier this month, MSP agreed to an extension to the deadline for that payment to be made, extra time understood to be weeks, not months.
In the background to 777 Partners’ struggle to add Everton to its portfolio, other interested parties are understood by the ECHO to be making enquiries over the club. What is not clear is whether they are willing to present themselves as a rival bidder, or whether they may be lining up to take advantage should the worst happen and the club fall into administration. Any group that sought to challenge 777 Partners, on whatever basis, would need to pass the same ownership tests that 777 Partners are yet to complete while also being willing to take on hundreds of millions of pounds of debts owed to creditors including Rights and Media Funding, Metro Bank, MSP, and the 777 Partners loans.
They would need to negotiate with Moshiri over the huge sums he has pumped into the club as interest-free loans, while Moshiri would likely face penalties should he seek to break from the contract with 777 Partners. Other groups are understood to have approached Moshiri since the deal with 777 Partners was signed but, even while others have doubted them, he has remained convinced they represent the best move.
However the next developments in the takeover saga unfold, what the latest loan from 777 Partners will do is take Everton closer to the opening of the transfer window on June 14, at which point they can seek to generate additional income through player sales. Those close to the takeover attempt do not expect it to be concluded, should it ultimately receive approval, before the end of the season on May 19.
