Everton sale stalls amid questions over buyer’s finances

Plans to sell Premier League soccer team Everton FC to a Miami-based holding company have stalled because the company, 777 Partners, failed to provide audited financial statements to a British government regulator who must approve the agreement.

The regulator, the Financial Conduct Authority, handed over its application to 777 Partners this month, according to several people with direct knowledge of the approval process, who spoke on condition of anonymity because they were not authorized to discuss it. discuss publicly. If the company does not provide the requested financial data or an acceptable explanation, its proposed takeover of Everton – a deal involving hundreds of millions of dollars in debt and a coveted place in the world’s richest football league – could fail.

The missing documents are the most significant complication yet in 777 Partners’ efforts to add Everton to the collection of high-profile but financially troubled teams. he acquired over the last two years.

The failure of the deal could have serious consequences for the financial viability of Everton, founding members of the Premier League, struggling with the ongoing costs of a half-built new stadium, more than $500 million in debt and a projected annual loss of approximately $100 million. Everton’s finances are so dire that the club requires monthly injections of millions of dollars, most recently a multi-million dollar loan from 777 Partners, to continue operating.

“Out of respect for the process, 777 Partners will not comment on the ongoing regulatory approval process for its proposed acquisition of Everton FC,” the company said in a statement.

Current Everton owner Farhad Moshiri on Monday dismissed concerns about any hold-up or the suitability of 777 Partners as Everton’s custodian. “They are very professional and deliver exactly when they say they will, and I look forward to them getting all their regulatory approvals and moving forward within the timelines we have set.” he told Sky Sports News.

When it announced in September that it had agreed a deal for a majority stake in Everton, 777 Partners said it hoped to complete its takeover by the end of the year. This timetable now seems questionable.

For the sale to be approved, 777 Partners must satisfy not only the Financial Conduct Authority, but also the Premier League and the English Football Association, that it would be what they consider a “fit and proper” steward. of the 145 year old club.

But according to several people familiar with the process and a review of related documents, these organizations are not satisfied with the financial statements that have been provided. They are particularly concerned about 777 Partners’ inability to provide up-to-date audited financial documents for a holding company whose subsidiaries include not only well-known soccer teams in Belgium, Brazil, Germany and France, but also investments in structured financing. , insurance, media and aircraft rental.

Audited records are not the only obstacle to an Everton sale being approved. Authorities are also asking the company led by its owners, Josh Wander and Steve Pasko, to provide details on the origin of the funds behind the acquisition.

The questions reflect concerns that Belgian football authorities raised last year as they considered licensing another of the company’s teams, Standard Liège. During these discussions, 777 Partners told the Belgian football federation’s licensing committee that it could not provide the company’s latest audited accounts – a common requirement in any assessment of the adequacy and robustness of companies financing the country’s premier league teams.

Ultimately, the commission deemed the prospect of excluding one of Belgian football’s biggest teams from the league unacceptable and a compromise was reached. Today, 777 Partners finds itself in the same situation and time is running out again.

As 777 Partners focuses on completing the Everton purchase, current and former employees are questioning its own viability. The company, which has grown rapidly since its founding in 2015, continues to miss routine payments to businesses, suppliers and partners, including brokers who acted on some of the soccer deals, four people familiar with the operations said of 777.

One person said the company, which Mr. Wander recently claimed had 3,000 employees, missed his pay on at least two occasions. Current and former employees also reported that bonuses, a major component of some executives’ compensation, were not being paid.

777 Partners said Tuesday that “all contractually guaranteed bonuses have been paid,” but acknowledged a different incident this year in which the company failed to pay its headquarters’ electricity bill, an oversight that ‘a spokesperson attributed it to a communications problem.

If 777 Partners provided a fuller picture of its finances to UK regulators, they would most likely discover that most of 777’s football adventures have been financed by a single company, A-Cap. A longtime lender to 777 Partners, A-Cap holds the largest exposure to many of 777’s businesses, including soccer investments.

An A-Cap unit, for example, financed the majority of a loan of at least $25 million to Everton after the deal to buy the team was announced, two said people close to the case. At 777 Partners, the reliance on money from A-Cap – loans now totaling at least $1 billion – has become so great that 777 Partners is required to regularly brief A-Cap executives -Cap of current business plans, according to people with direct knowledge of the sector. situation.

The relationship between the two companies is so complex that last year 777 Partners gave A-Cap a $9 million loan to acquire a beachfront apartment in one of Miami’s wealthiest neighborhoods. Officials at 777 Partners declined to comment on the deal. A-Cap did not respond to an email requesting details about its relationship with 777 Partners.

Questions about 777 Partners’ finances and its footballing ambitions do not appear to affect its figurehead, Mr Wander. He was recently elected to the board of directors of the European Club Association, an influential grouping of Europe’s top soccer teams.

This board seat was highlighted in a prospectus produced by 777 Partners to raise even more capital for its football business. The group hopes to raise around $250 million by the end of the year to finance its takeover of Everton, which, without a new owner or new capital, risks bankruptcy.