Everton takeover: MSP Sports Capital consider return with 777 Partners on brink

Centre of picture, Pete Taylor, Jeff Moorad and Jahm Najafi of MSP Sports Capital -Credit:Getty Images
Centre of picture, Pete Taylor, Jeff Moorad and Jahm Najafi of MSP Sports Capital -Credit:Getty Images

MSP Sports Capital could yet come back to the table with a takeover play for Everton as a deal with 777 Partners teeters on the brink of collapse.

The American investment firm, as first reported by Bloomberg, is understood to be considering whether a takeover of the Toffees is viable after the planned acquisition of the club by 777 Partners has run into serious trouble.

Everton owner Farhad Moshiri met with 777 Partners co-founder Josh Wander in London earlier this week in a bid to gain some clarity on the Miami-based group’s ability to proceed with an agreed purchase of the club after allegations of fraud were made in civil court filings in New York.

Those allegations, the latest in a string of claims over unpaid debts by the firm and its subsidiaries, were on this occasion brought by London-based Leadenhall Capital in relation to financing provided by the firm to 777 where it was claimed they used collateral that either “did not exist” or was not owned by Wander’s entities.

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That, which arrived in the same week as it emerged that players of Belgian side Standard Liege, a club part of 777’s football portfolio, were alleged not to have been paid this month, led Moshiri to seek talks with 777, confirmed by sources, with the wantaway Everton majority shareholder on the brink of calling off the deal that was agreed back in September but was held up through a lack of approval from the Premier League.

In March, the Premier League granted conditional approval to 777 to take over, provided that four caveats were met. Those were: that 777 loans to the club, now totalling more than £200m in junior debt, have to be converted into equity; funds are required in an escrow account to meet financial obligations for the remainder of the season; proof of funding for the new stadium completion; and a £158m loan to be repaid to MSP, the New York firm that had loaned Everton money last year for the stadium build.

The loan from MSP had a maturity date of April 15, with 777 having had to scramble to persuade MSP to extend the loan repayment, something that the firm reluctantly agreed to, although that extension was said to be ‘weeks not months’.

MSP, a firm led by billionaire Jahm Najafi and former sports super agent Jeff Moorad, came on the scene in early 2023 after they were in talks to take a 25% stake in the club through convertible debt. However, that deal was rejected by one of Everton’s largest creditors, Rights and Media Funding Limited, who objected on the grounds that the deal could dilute their own security.

MSP’s loan was secured against Moshiri’s Blue Heaven Holdings Limited, the company that owns Everton, with the New York-based firm having had the option to take a controlling interest in the event of a default of the loan repayment.

That did not happen, but MSP is now assessing whether acquiring the club may now be the best course of action given the increasing likelihood of the 777 deal collapsing imminently.

MSP were due to have an element of operational control at board level had the initial 25% deal gone through last year, which ended up just being a straight loan to the club, and with so much capital tied up in the club it that may now see it as the best course of action in order to protect their investment and gain a greater return.

It is in the interest of all to see the stadium development at Bramley Moore Dock come to fruition given the value it has as an asset, and if someone like MSP can come in, clean up the club and its balance sheet, protect its value and then sell it on to a new owner in 18 months or so, that may now be compelling given the expectation that the 777 deal won’t pass muster with the Premier League.

There is a precedent for this kind of play in Europe.

A similar situation occurred in Italy in 2022 when former AC Milan owner Li Yonghong could no longer fund the club and defaulted on loan repayments to American hedge fund Elliott Management.

Elliott, a firm run by Wall Street veteran Paul Singer, had no prior history in owning a sports team, nor did it plan to, but it cleaned up Milan as an asset before selling it to RedBird Capital Partners for $1.2bn.