Of course this question depends on what you consider to be the “end” of the saga. For the purposes of this article, I’ll define “the end” as the final removal of Farhad Moshiri from the club in any official capacity (he’s already mentally checked out).
As of the writing of this, the club has just taken on yet another loan, this time from 777 Partners, the same group “confirmed” to be acquiring the club from Moshiri. As has been reported, this loan is intended to finance operations at the club, meaning to cover the day-to-day costs.
We know already that cashflow is a problem at the club since the revelation of the scale of our debt servicing commitments (£30-odd million per year, as it stands) but the need for this loan reveals an even tighter cash crunch that is hindering the ability for the club to run day-to-day operations without defaulting on interest payments, payments to Lang O’Rourke (the construction company building the stadium) or any other financial commitments the club has outside of wages and overheads.
This latest loan from 777 Partners is likely to be convertible to equity in the event that their acquisition of the club goes through. It could also be treated as a bridging loan to our next tranche of broadcasting money due in April. As always, the details are shrouded in opacity from the club.
In light of this cash crunch and the need for urgent financing, such that we would tap up our prospective buyers for a short-term loan, as we did with MSP Sports Capital, who ended up being blocked from buying into the club, the foremost question is: What happens if the 777 deal doesn’t go through?
Like Paul the Esk, who wrote in the wake of the 777 Partners acquisition being announced by the club, I am highly pessimistic of the deal happening. For one, I don’t believe they have the capital to pull off the capitalisation of the club plus the funding of the stadium (let alone any sale price that has been agreed with Moshiri).
For another, I think there is too much stink around these guys for them to pass muster with the Premier League or the other decision-makers in this process, not least our other creditors in the form of Rights and Media Funding and (ironically enough) MSP Sports Capital.
If the deal doesn’t go through, then – well, for want of a better word – we are fucked. Barring a white knight coming forward, with deep pockets, who is willing to buy the club (and they surely would’ve come forward already if they were out there), then our cash crisis will resurface very quickly.
And it will be worsened by the fact that we would now have an additional creditor to pay interest to, in the form of 777 Partners. This situation would almost certainly be terminal for us as a Premier League club and potentially (although I doubt it) as a viable football and commercial entity in any form, as the club would be thrust into administration in short order.
If you want “good news”, it’s that administration would effectively end Moshiri’s tenure at the club. The bad news is that it would draw the sort of punishment from the Premier League that would almost guarantee our relegation. The administrators would need to negotiate long-term restructuring of the outstanding loan commitments in order to make the club an attractive prospect for a buyer. This is no easy feat, especially with the club staring down the barrel of relegation.
There is no question that players would need to be sold ASAP, namely Onana and Branthwaite, plus anyone else whose sale would be profitable. Whatever fixed assets the club has, which are few and basically include Goodison Park and some surrounding property, would need to be part of whatever attempt is made to make the creditors whole. This could mean the selling and renting back to the club of Goodison Park, though this seems very untidy given the situation with the new stadium at Bramley-Moore Dock.
Personally, and tragically, in light of my pessimism over the 777 deal actually happening, I see administration now as a foregone conclusion. I therefore would like to see it happen while we are still a Premier League club. Even if we don’t go into administration, we will need to sell important players in January to make ends meet and we’re likely facing relegation anyway. I’d sooner take a punishment from the Premier League, sell the club out of administration as a Premier League club, and avoid further punishment in the Championship that might see us down to League One quickly.
Here’s where I’m less pessimistic. With Moshiri out of the way and therefore no longer trying to claw back any of his investment, a prospective buyer out of administration would only really need to tackle the club’s debt, capitalise the operations and finance the stadium. Of course that’s still a tall order but the reason I have optimism is simple:
We’re still Everton. Of all the clubs that have been in dire straits over the years, we are the biggest by far with a rich history and committed fanbase. It’s also not for nothing that we have a halfway-completed state-of-the-art stadium that would immediately improve the commercial fortunes of the club.
I believe that, if the club were financially stable and it was only Moshiri’s asking price on the table, there would be more credible bidders. In the same vein, I believe that, if Moshiri is forced to sell for next-to (if not) nothing, and the only cost is the debt and stadium, there would be more credible bidders.
As it stands, the only way we get rid of Moshiri is under such circumstances. But if I’m correct and the 777 deal is a busted flush, then we’re going to have to accept that not only is administration inevitable but is beneficial to the long-term survival of the club. The longer Moshiri piles on debt after debt, the harder it becomes to sell the club.
And if administration is to be the way, then we’re better off going into it sooner rather than later. If we get docked 9 points by the Premier League but the financial situation is stabilised before starting a season in the Championship, that is far preferable to being relegated (possibly without being docked points) and then being punished further by The Football League because we’re in administration. That could lead to us dropping like a stone into League One or worse.
This is what it’s come to. The perfect storm brought every chicken back to roost at once. The pandemic followed by the Russian invasion of Ukraine kicked the weakened legs out from under the shoddily assembled Everton table. Financial mismanagement compounded by the sanctioning of Usmanov, and followed by the ensuing financial challenge of climbing interest rates, are about to bring the table crashing down.
However this plays out from here, we are now and will forever be the great cautionary tale for Premier League clubs and the poster child for football mismanagement. We supporters will carry the burden of humiliation, possibly for generations, before ever seeing this club back at its true station in the game.