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Report: Everton suffer financial blow as MSP Sports Capital ends investment talks

US private equity firm had planned to invest up to UK£150m in Premier League club.

24 August 2023 Ed Dixon

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  • Everton had faced pushback from existing lender
  • MSP proceeding with UK£100m loan for club’s new stadium
  • Toffees have been referred to independent commission over alleged Premier League FFP breach

MSP Sports Capital has withdrawn from talks about taking a minority stake in English top-flight soccer outfit Everton, according to The Athletic.

The New York-based firm and Premier League club entered an exclusivity agreement in May, with MSP planning to invest up to UK£150 million (US$191 million) in convertible debt that would become a stake of approximately 25 per cent in Everton.

Broken down, UK£100 million (US$127 million) of the investment was reportedly earmarked for Everton Stadium Development Company, the subsidiary club owner Farhad Moshiri set up in 2017 to oversee the construction of the Toffees’ new ground at Bramley-Moore Dock. The rest of the funds would have gone to the club.

However, after months of negotiations, the deal is now said to be dead. According to The Athletic, the stumbling block was opposition from one of Everton’s existing lenders, Rights and Media Funding Limited.

The club has a loan facility with the Cheshire-based firm that it extended to UK£200 million (US$254 million) this year. That debt is secured via four charges on club assets and it has negative pledge clauses, which prevent a borrower, in this case Everton, from pledging any assets if doing so would jeopardise the lender’s security. Rights and Media Funding Limited can demand repayment of its debt before Everton takes on any further borrowing.

The firm was reportedly reluctant to give up its protection against possible default, making the proposed MSP deal unworkable.

Rights and Media Funding Limited was also believed to be concerned that MSP was not putting enough money into the club in return for its equity, with Everton urgently seeking more cash.

While MSP’s original plans are off the table, The Athletic adds that the group is proceeding with the UK£100 million loan to the stadium company, although this will now be a straightforward loan and not convertible debt.

The loan should enable Moshiri to repay the UK£40 million (US$50.8 million) he borrowed from Andy Bell via the English businessman’s Blythe Capital firm in May, which was intended to act as a bridging loan prior to the MSP investment.

While securing the MSP loan for their new stadium will offer some relief for Everton, it is unclear where the rest of the funding for their new home will come from.

The Athletic notes the original plan was that the remaining UK£260 million (US$330 million) would come via a five-year construction loan sourced by JPMorgan Chase and MUFG. However, that proposal was based on MSP taking an equity stake in the business.

SportsPro says…

On and off the pitch, all is not well at Everton. Having flirted with relegation in the last few years, the Premier League ever presents are bottom of the top flight and are yet to muster a goal this season.

The Toffees have also posted three-year losses of UK£371.8 million (US$472.5 million) under Moshiri’s ownership. It saw the club referred to an independent commission in March over an alleged breach of the Premier League’s profitability and sustainability rules. Everton have denied wrongdoing and intend to ‘robustly defend’ their position.

Things were meant to be so different. Moshiri had big ambitions when he took control of the club seven years ago, spending around UK£700 million (US$890 million) on players with very little to show for it. Severing commercial ties with Russian companies USM, MegaFon and Yota following Russia’s invasion of Ukraine also hit Everton’s coffers. The half-built stadium at Bromley-Moore Dock, which is unlikely to be ready for the start of the 2024/25 campaign, is another financial burden.

With MSP now out of the picture, Moshiri is reportedly seeking other investment partners and could resume talks with 777 Partners, which was linked with a deal in February. Though the British-Iranian businessman has spent big, the consequences have come to bear.

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