What Friedkin Group will bring to Everton is clear as silence speaks volumes in takeover twist
The Friedkin Group have agreed a deal with Farhad Moshiri to acquire Everton. Attention now turns to what happens next.
After Bloomberg first broke the story on Monday morning, sources the ECHO spoke to confirmed that The Friedkin Group were advancing talks with Toffees owner Moshiri over getting a deal done, just two months on from stepping away from discussions over concerns relating to the £200m-plus debt the club has with 777 Partners, the investment firm who failed in long-running bid to buy the club back in May.
At 2pm on Monday afternoon the confirmation came that a deal had been agreed between The Friedkin Group and Moshiri's Blue Heaven Holdings Limited.
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Last week marked one year since Moshiri and 777 Partners agreed on a deal for the Miami-based company to acquire Everton.
The months that followed saw 777 struggle to gain the relevant approval from the Premier League through its Owners' and Directors' Test, even if Financial Conduct Authority approval was achieved relatively quickly.
Concerns over how the deal would be funded started to snowball, and as 777 Partners became the subject of a number of legal proceedings in the US, and question marks were raised about their suitability as owners of some of the other football clubs they already had stewardship of, a final Moshiri ultimatum of ‘show me the money’ came and went without anything forthcoming, and the deal was dead.
A number of suitors then arrived on the scene and flirted with interest before AS Roma owner and US billionaire Dan Friedkin and his Friedkin Group company emerged from the pack to become the front-runners, entering into a period of exclusivity in order to work towards getting a deal done.
But the Friedkin Group were uncomfortable with the 777 Partners debt that existed on the balance sheet. During the months that 777 Partners had attempted to complete a takeover of Everton, the firm had been loaning money to the club for working capital purposes to allow for such things as the new stadium construction at Bramley-Moore Dock to continue unaffected, while payroll needs were also a requirement, with Moshiri having been unwilling to continue to fund a club he had expected to be selling.
The 777 deal may have collapsed but the club remained entwined with the company due to the debt. 777 had gained access to much of the Everton capital expenditure funding through a relationship that they had with another Miami firm, A-CAP.
Early in the year, London-based Leadenhall Capital Partners filed a suit against 777 Partners in a New York civil court, alleging that the company had engaged in ‘fraudulent’ activity in pledging some $350m in collateral that either did not exist, or that was not owned by entities under the control of co-founders Josh Wander and Steven Pasko, to obtain funding.
777 Partners deny the allegations and the case continues and the firm have filed a suit of their own against Leadenhall through a Florida court.
It is a legal case that shows no signs yet of reaching a conclusion, but despite that, and despite the reservations that The Friedkin Group had over the case and the debt initially, it is one that now doesn’t appear to be a significant barrier to a takeover being completed.
Of course, during intervening weeks between The Friedkin Group having stepped away and coming back to the table, Moshiri had been in talks with another US billionaire, John Textor, the owner of Olympique Lyonnais, Botofogo, and Molenbeek, and a 45% shareholder in Everton’s Premier League rivals Crystal Palace.
Now, while the Friedkin bid had been tight-lipped since the start, Textor had been on something of a charm offensive, speaking publicly about his plans for the Blues should a takeover bid be completed, and the opportunity that he felt the club provided in terms of an investment.
While his candour and public-facing persona may have appealed to some, the ECHO understands from sources close to Moshiri’s camp that it wasn’t something that was warmly welcomed by the Everton owner, who had seen the 777 debacle play out very publicly.
Textor had the backing of US firm Aliya Capital Partners in his bid to purchase the Blues, but still holding a significant stake in Palace meant that nothing could progress until such time he divested his interest in the club.
Reports around him being able to sell his shares to fellow Palace shareholders David Blitzer and Josh Harris did the rounds, as did the potential interest in other for acquiring his stake. But with the valuations of clubs like the Eagles, who are hamstrung by a lack of a new stadium, not rising in the way they have for ‘big six’ clubs in recent years, getting a good return looked a challenge.
It also presented a problem in terms of timing for Everton. Moshiri wants to go, that is clear, and while the club currently has no short-term cash flow issues there are big bills to come in and another tranche of construction costs to be found.
With the Blues also struggling on the pitch at present, and with there being significant pressure on them to preserve lucrative top-flight status so that they can begin a new chapter in their new 52,888-seater stadium as a Premier League club, there is a sense of urgency to get things done.
So, what might the Friedkin Group offer?
Well, first and foremost they have the ability to deliver immediately in terms of funding to complete, and a legitimate operation that will have no problems passing the tests of the Premier League, the FA, and the FCA.
While there may be some anger from fans of AS Roma, the Serie A club that The Friedkin Group owns, around the sacking of popular head coach Daniele De Rossi recently, the relevant bodies will not be concerned about that; what they will be focusing on is can they be responsible custodians of the club as a business, and do they have the money to make it work.
What The Friedkin Group’s approach to the football side will be remains an unknown, although Dan Friedkin’s son Ryan is understood to likely have a significant board role.
It isn’t even known what the grand plan is for the long term. But Everton need operational expertise to navigate through some choppy waters and to ensure they have the longest time possible to maximise the opportunity of a new stadium, and to ensure that they continue to be members of the Premier League.
The Friedkin Group’s biggest asset right now is deliverability and having the financial muscle to complete, and invest.
They have been silent so far on the journey, and that should be instructive. Evertonians have heard too much about what happens away from the pitch, they need owners who can own well, and make the focus about the football again. The hope will be that this can bring about a new dawn of some positivity.