Back in March 2016, buoyed after a Lukaku double had disposed of Chelsea in a rousing 6th Round FA Cup game at Goodison, Farhad Moshiri, talking of his new club, Everton, uttered the following words:

“For me I bought into a new family and that’s what is special for me. I give them whatever I have.”

No one, least of all Moshiri, ever expected those words to be a literal description of what was to occur over the following seven years. Yet, almost inconceivably, they appear to have come true.

Moshiri has invested  £750 million into Everton since acquiring his initial 49.9% stake in February 2016. Massive under-performance on the pitch, failed commercial expansion off the pitch, failure to address the obvious shortcomings of Everton’s board, horrific player and manager recruitment, Covid, the illegal invasion of Ukraine by Putin’s Russia, the loss of USM as principal sponsor, and the deterioration of macro-economic conditions have all played their part.

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Moshiri’s investment in Everton through shareholder loans, conversion of loans into equity & new share issue to February 2023 in £millions

The failure to control costs, the failure to grow revenues, the delay in agreeing a design and budget for the new stadium, the reduced, below-budget income as a result of failure on the pitch – remember the “project” as it was referred to in the early Koeman days: competing for a Champions League place within 3 years? – have all added to the amount of funding required by Everton.

Worse, the lack of performance by the board, the apparent poor governance of the club, the failure of Moshiri to address the above, closed off funding from mainstream banks, investors and lenders. Although the club lost the support of the world’s largest commercial bank, ICBC, through no fault of their own (ICBC withdrew from UK corporate lending following losses with the House of Fraser), we failed to replace them with a comparable lender, instead relying on the less than prime lender, the mysterious Rights and Media Funding – described internally as “a friend of the club” – yet the provider of debt at higher than standard lending costs from mainstream lenders. Significantly, the club failed to convince other lenders, particularly relating to the stadium, to part with their cash, increasing the financial burden on the majority shareholder, Farhad Moshiri.

Farhad Moshiri

By most standards, an incredibly successful and wealthy man.  His family fled Iran in February 1979, just before the Iranian Revolution, settling in London. Moshiri studied accounting at the University of London, then worked at Ernst & Young and Pannell Kerr Forster before joining Deloitte & Touche. A mutual friend, Masoud Alikhani,  introduced Moshiri to a prominent Russian businessman, Alisher Usmanov when visiting London as part of a “high-level delegation” seeking ways of setting up a political-risk insurance company to encourage foreign investment in the Soviet Union.

They became friends and, in 1993, a UK-registered company, Middlesex Holdings, an investment company in which Usmanov was a significant investor, hired Moshiri. Gaining Usmanov’s confidence, Moshiri became a director. The company was, at the time, unique in being London listed but with Russian shareholders. It acquired a significant number of Russian assets including steel mills (the precursor to Metalloinvest). Middlesex was eventually sold, but the Moshiri–Usmanov relationship continued in a company called Gallagher (one-time significant shareholder in UK’s Corus Steel).

Moshiri also represented Usmanov’s interests in many other companies, including names familiar to Evertonians such as Megafon.

Their love of football resulted in Red & White Holdings, a company owned by Usmanov and Moshiri, which although eventually acquiring 30.04% of Arsenal failed to win total control, Stan Kroenke becoming the majority (and ultimately outright owner). Red & White Holdings was chaired by former Arsenal Vice Chairman, David Dein, who – having had his own falling out with the Arsenal board – sought to expand Usmanov’s influence and ultimately failed. Dein was a great friend of Bill Kenwright and played an important part in convincing Moshiri to pursue his own footballing ambitions in acquiring a major stake in Everton.

Away from football, Moshiri carried a 10% stake (described as being part of an executive reward programme) in Usmanov’s holding companies, resulting in Moshiri becoming chairman and a 10% shareholder in USM, the BVI registered holding company for most of Usmanov’s portfolio companies.  It is from this shareholding that most of his net worth is derived. However, it should be noted that Moshiri sold his Red & White Holdings stake for £200 million and held other investments beyond his USM stake.

Investing in Everton

Moshiri paid existing Everton shareholders, Kenwright, Woods, Earl and Abercrombie a total sum of £87.5 million to acquire 49.9% of Everton in February 2016. Subsequent purchases, including the shares of Lord Grantchester, took his total expenditure on acquiring existing Everton shares to approximately £130 million.

When he bought into Everton, the club had a net debt position of approximately £54 million, including the long-term Bear Stearns/Prudential loan signed in 2002 – a loan of £30 million repayable over 25 years at a shade over 7%.

In his first 3 years, Moshiri provided loans of £300 million, paying off the existing debt and providing working capital for player purchases and an enormous increase in player wages. As a result of poor recruitment, a failure to build on a single year of European qualification in year 2, Moshiri’s funding after the first 3 years had a new focus – covering losses. Aside from profitable player sales (Stones, Lukaku, and Barkley for example) the business was significantly cash-flow negative and required his continued funding. We also had third-party debt provision, firstly through ICBC and Santander, then Rights and Media Funding.

In addition, USM had become a major contributor, making sponsorship payments which rose to £20 million a year, and of course the single option payment of £30 million for the naming rights on Everton’s future stadium at Bramley-Moore Dock.

Bramley-Moore Dock

Bramley-Moore Dock became a reality, from the original St Luke’s church presentations by US architect Dan Meis, through an extensive consultation process and finally a successful planning application. Everton acquired a 200-year lease from Peel Holdings and set about the process of converting a 19th-Century dock into a modern football stadium, all at an estimated cost of £500 million.

The startling issue with the new stadium is that, despite literally rising from the docks, the whole stadium project has never been fully funded. Initially, there was great excitement over the possibility of a local council-engineered loan providing competitively priced funding and an interest margin that would provide the council with additional income of circa £7m a year. Political, practical and legal difficulties put paid to this scheme, and we were left with an initial plan of raising funding from the private placement market (as Tottenham Hotspur had), a capital contribution from the naming rights partner, USM, and the remaining costs to be under-written by Farhad Moshiri.

However, raising money from the capital markets has proved elusive and has done so since 2018 – a combination of a poor financial performance and, one assumes, a lack of faith in the Everton board and business plan, plus other factors outside Everton’s control, namely Covid, a changing economic picture and then the invasion of Ukraine made this funding impossible. However, I would stress that there should have been few reasons for backers not to fund the development in the very early years other than concerns over the management of Everton. It’s not with hindsight that we should consider it a missed opportunity to not find funding before the larger macro events added to our difficulties.

The illegal invasion of Ukraine

The invasion of Ukraine in February 2022 compounded matters hugely for Farhad Moshiri. Prior to the invasion, it is believed Moshiri reduced his stake in USM to 4% (from 8%), increasing his liquidity. The invasion made Russia-related individuals, oligarchs and their companies immediately toxic, even before the imposition of sanctions by the UK, EU and US Governments. Everton rightly, before Usmanov (49% shareholder) was sanctioned, suspended their commercial relationships with USM. Furthermore, Moshiri resigned as Chairman of USM and cut links with his benefactor and friend. One of the three legs of the Bramley-Moore funding stool had disappeared for good and seriously damaged the two remaining options.

At the same time, in the absence of a naming rights partner, a stadium specific funder, faced with continued losses within the football club, Moshiri had to fund Everton’s working capital requirements and the mounting bills for the stadium – all against a background of a football club failing on the pitch and facing potential relegation.

Where we are now

In the period from June 2021 to February 2022, Moshiri provided another £300 million of funding, bringing his total funding to £750 million.

In addition, Everton sold two players in Richarlison and Gordon for approximately £100 million – the January 2023 sale of Gordon and no subsequent spending is particularly telling. Additionally, third-party funding has increased significantly. Rights and Media Funding increased their facility to £150 million at the time of the accounts being signed off in February 2023. I have it on very good authority that the facility has been extended further and now sits at £200 million.

The total cost of the Bramley-Moore development is put at £760 million – a figure provided by Farhad Moshiri himself. Based on the last available accounts and the funds provided by Moshiri and Rights and Media Funding, it’s reasonable to assume that up to £300 million is yet to be found to complete the stadium development.

In summary, we have a majority investor who has provided £750 million of funding (far in excess of his original estimates). We have £225 million of external debt (including the Covid facility from Metro Bank). We have to find perhaps £300 million to complete the stadium. In the absence of player sales, we are still running at a loss (albeit that is improving over time).

It seems that Moshiri has been true to his word – he has given the club whatever he had, hence the need to sell. By selling, he crystalises an enormous loss, as no new owner will pay much given its condition, but he relieves himself of the still future funding requirements of the business, a requirement which perhaps he cannot or wishes not to meet himself.

The new owners, be they 777 Partners or others, will pick up a club in desperate need of re-capitalisation, a reduction in debt, and new working capital for future expenditure. Above all else, it will need to provide management and expertise to enable recovery, take us from the brink, get us moving forwards not backwards, and perhaps eventually make us competitive once more.

The Moshiri years have been an abject lesson in corporate failure by owner and board alike, not helped by external global affairs, but that doesn’t alter the fact that Moshiri has brought this upon himself, and unfortunately upon the club we all love and only wish the best for.

The campaign to remove the owner and board will succeed in the very near future, largely driven by the events described above. We must make sure that a future owner can never put us in this position again.

Reader Comments (23)

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Colin Glassar
1 Posted 13/05/2023 at 22:56:24
I’ll read this after the Eurovision Song Contest finishes. Just want Moshiri gone.
Chris Leyland
2 Posted 13/05/2023 at 23:00:18
Colin, hopefully you’ve just smashed your telly after that dirge they’ve just played. They infest everything.
Colin Glassar
3 Posted 13/05/2023 at 23:03:58
Chris, it follows you around everywhere like a bad smell.
Brent Stephens
4 Posted 13/05/2023 at 23:08:49
A depressing read, with not a note of optimism in sight.
Mark Murphy
5 Posted 13/05/2023 at 23:35:52
My wife just went loopy cos I muted the sound and threw the batteries out the remote.
Barry Rathbone
6 Posted 14/05/2023 at 00:50:18
Surely no one has really contemplated Moshiri staying!!

Whether it's puppet master Usmanov slithering further into the shadows or Moshiri simply not wanting to throw any more dough down the shute the money required has dried up. Add in the the financial albatross of the new build and we're dead in the water (see what I did there?).

If he doesn't sell to some real money we are well on the way to Leeds under Ridsdale territory. Can't believe him NOT selling has been considered by anyone.

Lee Paige
7 Posted 14/05/2023 at 03:30:49
I want Kenwright gone that’s more important to me, if Morshiri goes and Kenwright stays nothing will change.
Alan J Thompson
8 Posted 14/05/2023 at 06:38:57
"Headlockgate" and the Board absenting themselves from matches established within the club an ever widening crack and if Kenwright thinks he has some sort of hold over Moshiri due to his past links with Usmanov then he might want to consider that some of those same links may be made to him. Whoever departs and for what reason, there cannot be any further place for this Board. However, very few will be involved in bringing in any new regime and it will most likely be a case of a buyers market.
Tony Everan
9 Posted 14/05/2023 at 08:13:42
Thanks Paul. Are there No Evertonian sugar daddies out there with a spare 2 billion ? No, thought not. So whoever takes us over is going to add to the debt and in theory, do it in the most efficient way, probably over a very long time. The stadium will be remortgaged to the maximum, future tv rights money etc will be further loaned upon.

Above all we will have to learn to live within our means.

Paul, a question, will the revenues from the new stadium in all its streams, outweigh the servicing of the inevitable long term, never ending, debt? To such an extent that it allows the club to be stronger financially to allow us to compete with the top eight of the Premier League?

As this is the ballpark needed to be realistic about qualification for European football, or winning a trophy, or even avoiding relegation scraps.

Please say yes.

Peter Carpenter
10 Posted 14/05/2023 at 08:28:43
Given that Moshiri was making such a massive and risky financial commitment, why has he put up with such an amateurish, incompetent and clearly not fit for purpose board for so long? Presumably, he is an intelligent man.
It's grim reading. Hopefully, there is some relief on the way this afternoon.
Mike Hayes
11 Posted 14/05/2023 at 09:06:55
Fingers crossed this all works out - we stay up - sell up and get shut if the board and hopefully the Phoenix that should have rose 7 years ago can be revived. Not looking forward to leaving the old lady; a little anxious about BMD but hopefully Kenshite never sets foot in either stadiums and goes back to haunt Mordor and take them down instead 🤷💙
John Charles
12 Posted 14/05/2023 at 13:32:41
Nicely written article but nothing new.
Steve Hogan
13 Posted 14/05/2023 at 13:53:23
Probably the most frustrating part of all this, is that it could have been so so different. A billionaire racks up and expresses a wish to invest heavily in one of Europe's oldest clubs, re-igniting the flames again for one of the most loyal fanbases in the world.

What could possibly go wrong. Instead, we have witnessed a catalogue of financial disaster's, putting the club to the brink of some very dark times, instead of providing the financial bedrock for many years to come.

The blame lies firmly with the Chairman, his BOD, and the owner, who placed his trust in a regime, that had already failed spectacularly over a long period of time.

Someday, an academic will write a book about it.

Jacques Sandtonian
14 Posted 14/05/2023 at 13:55:54
In order to buy out Moshiri and consolidate all the third party debt I imagine 777 or any other "professional" sports investment firm will have to put the equivalent or more further debt onto the club. You just have to hope they can get better financing than Moshiri.

It means we'll be under the yoke of debt repayment for a long time, Manchester United style, and the club will be run frugally, albeit most likely with a much higher degree of professionalism.

It's better than oblivion but I think we can all say that the Moshiri era has definitively destroyed our chances of top honours within most of our lifetimes.

Kevin Molloy
15 Posted 14/05/2023 at 14:12:34
this is n't. a dream that 'went wrong'. It was bullshit from the beginning. We were bought by people looking to park money in strategic areas and hoping to make money by polishing it up and selling it on. they just hadn't banked upon their own sheer incompetence. It will be a blissful day when we get rid of him, but I fear there may still be a sting in the tail. And a Coventry style tethering of the club to a big rent long lease to a ground we no longer own.
Mike Gaynes
16 Posted 14/05/2023 at 15:47:02
I clicked into this article hoping for news of potential buyers.

This is just a rehash, and I consider the final paragraph to be, frankly, a flirtation with sheer delusion.

"The campaign to remove the owner and board" will have absolutely nothing to do with the club changing hands -- it will be entirely driven by the buyer, whoever that may be, and the degree of Moshiri's financial desperation.

And there is nothing the fan base can do to "make sure that a future owner" won't make the same mistakes Moshiri did. We can hope that we get bought by somebody who knows what the hell they're doing. And that's ALL we can do. Nobody will be running the purchase past us for our approval.

Hate to be harsh with the article -- like all here I greatly value The Eck's contributions -- but this one is nowhere near the usual standard.

Micky Norman
17 Posted 14/05/2023 at 16:55:05
I'm with Kevin Molloy on this. When I heard about Moshiri's links with Usmanov, it scared me rigid. And to think that so many on here were hoping that Usmanov might actually take a bigger part in the club.

What did he actually get for that Finch Farm deal? It stank. Greed, corruption and money laundering is only a step away from the oligarchs. Fortunately, we didn't go the full Goodisongrad that some wanted.

Dane Munro
18 Posted 14/05/2023 at 21:38:57
When I was a kid (born 1961), the saying commonly used was, "It's in a worse state than Russia" whenever anything witnessed (on BBC 1, 2 or ITV) was particularly chaotic, either a person or a country was suffering badly – even worse than the UK is right now.

What this Esk piece suggests is Everton Football Club is in a worse state than Russia, and thus much worse than I thought it was. Much brighter and more savvy than myself, my 25-year-old lad had raised the above issues on a number of occasions whilst we occupied our Upper Gwladys Street seats, even to the point of questioning the likelihood of the new stadium at Bramley-Moore Dock being finished, and the debt-led noose it would and was creating for the football club I love and grew up next to, and played footy against and under.

My Son is smarter than me for a very good reason: he is not easily led and suffers fools clearly much less gladly than I do.

Before I had 12 major bowel ops for Crohn's from 1987, I was lucky enough to follow Howard & Colin's side all over the old 1st Division, to Rotterdam, and revel in witnessing the beating of Bayern Munich at The Old Lady, and I can honestly say that it seems highly unlikely my son will ever enjoy the same experiences

The only thing that could sadden me more than such upsetting thoughts is the loss of my son. What a sad state of affairs it is to be an Evertonian in 2023.

Don Alexander
19 Posted 15/05/2023 at 01:24:21
Just a few on here choose to consistently decry the Esk's point of view, full as it always is with stated fact.

I don't.

When Kenwright won Moshiri over I allowed myself a modicum of optimism that this "just-about" billionaire from afar would have some acumen when it came to football business. As we've long since all realised, we were wrong. Moshiri is to football know-how what Trump is to integrity and accountability.

And for decades we've been "led" by Moshiri's chosen one, a man whose football record makes the likes of eternal, full of bullshit, losers like Bob Lord, Peter Swales, Peter Ridsdale, Randy Lerner, Hicks/Gillett seem plausible.

Hell, he's also acquired massive personal wealth whist killing our club.

Everton that.

Do any of us still "get" the Everton that he represents?

Tony Abrahams
20 Posted 15/05/2023 at 19:41:45
Thinking about what you have just written, Don, then it's easy to understand why the Esk finished his article the way he did.

Mike is correct, I doubt there are many sets of fans who are genuinely happy with their owners, all for different reasons, but us Evertonians are not far from breaking point and it's now become very easy o see why.

We have had the charlatan for around 24 years and his incredibly inept accountant billionaire pushover running concurrently for 7 years now.

“The Charlatan changed the narrative whilst the accountant has taken us to the brink financially but he was played accordingly by the actor and let his inflated ego deflate his bank balance whilst obviously forgetting his trade”.

Just give us sensible, professional people with a plan, which come to think of it, sounds like Bill Kenwright, the man who now actually owns his own theatre. (What a swell party, hey Bill!)

No wonder he spoke of good times, maybe these were actually the truest words he's ever spoken? But he's drained the life out of thousands whilst his lies have finally caught up with him and, instead of breaking a leg, the charlatan finally destroyed his own legacy.🤮

Joe McMahon
21 Posted 15/05/2023 at 19:57:07
Don @19, very well put, and says it all.

He (Kenwright) has all but killed this club. The man is just vile.

Duncan McDine
22 Posted 16/05/2023 at 08:57:57
Just read about an Iranian businessman with close links to oligarchs being done for money laundering.

Thankfully it isn’t our very own illusive Iranian, but the headline certainly made me wonder what would happen to Everton if Moshiri was found to be involved in this special type of laundrette.

Jim Lloyd
23 Posted 17/05/2023 at 16:18:32
Well said, Mike (16).

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