Farhad Moshiri's reign as owner of Everton could end in the coming months.
The 2021/22 season proved to be one of tumult and mostly misery for Toffees fans as the club's off-field financial issues, where their cumulative losses over three years reached more than £370m and impacted their ability to sign players due to the Premier League's profit and sustainability rules, bled into the performance on the field.
The hiring of former Liverpool manager Rafa Benitez was largely unpopular from the start and the poor form that led to his dismissal only served to create the tone for a campaign where they skated dangerously close to relegation - before Frank Lampard's side managed to do enough in the final weeks to maintain their status.
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What happened in the final weeks of last season will likely alter the course of history considerably for Everton.
Moshiri, who is in to Everton for more than £700m when all is said and done, is now mulling over whether he sells up, something which he would almost certainly have to do at a considerable loss. Initial valuations for the club and how much he would be seeking were put at around the £700m mark, but with the Bramley Moore Dock stadium development in the background needing a some £400m of capital to see it to completion, maybe more in the current economic climate, the Blues owner would be looking for a capital expenditure commitment from any new owner to see that project through to completion. That means the actual deal could end up being worth around the £1bn mark.
American investment is circling. The consortium being led by former Manchester United and Chelsea CEO Peter Kenyon which includes US real estate boss MG Kaminski and John Thornton, billionaire executive chairman of global mining giant Barrick Gold, is the group that has been reported to be keen on acquiring Everton, although it is understood that others from the US also see the club as a potential acquisition.
Sport, not just football, has seen an investment boom over the past two years despite the impact of the pandemic.
Team sales have occurred in the NFL, the Indian Premier League and in football leagues across the world. In Europe the likes of Chelsea and AC Milan have come under new ownership, with both being American. The push from US entrepreneurs and private equity groups isn't born from a vain attempt to get in on the act when it comes to team ownership, it is because there has been a seismic change in the way that the US consumes football over the past decade and teams in Europe are, compared to the US, seen as being hugely undervalued.
Much of that value in the US comes from the fact that relegation does not exist and more cost certainty means higher valuations. But even with the risk of relegation in European football it is seen by American investors as a market that has yet to reach its full potential, despite having achieved a £10bn TV deal over the next cycle and reaching billions of eyeballs globally each week.
Everton, according to one prominent US investor who has team ownership already in Europe, are a club that were placed among the group of Premier League sides that investors thought were 'relegation proof'. Last season's close call will have shaken some confidence among US private equity that may have been looking at a takeover, but the view from the European football investor that the ECHO spoke to was that "that was the closest they have been to relegation, that was their bad season and they are still there."
As soon as Premier League status was assured it would have kicked the Kenyon-led move into gear, and other potential bidders. A side in the Championship with such debt and sustained loss making, allied with a capital expenditure of £400m-plus to finish a stadium that would be hosting football in the second tier, not to mention enormous wage liabilities, would have made Everton an altogether more unappealing investment opportunity.
The Premier League is where it is at, and with a growing market in the US and a World Cup coming down the tracks in 2026 the lure was enough to see NBC pay £2bn to secure the next rights cycle to show games across their linear TV and flagship streaming platform Peacock.
"The maturation of the US football market has been steady over the past 25 years," Scott Rosner, Professor of Sports Management at Columbia University in New York, told the ECHO.
"The genesis of it was hosting the World Cup in '94, the launching of our own domestic league, the MLS in '96, and it staying around past the first 10 years which some people questioned as it has established itself among the US sports firmament. With that has come increased investment in broadcasting from a number of different providers; Fox, ESPN and NBC Sports.
"For NBC it has been the basis of them launching their subscription streaming service Peacock and driving subscribers towards that. My sense is that couldn't have pleased the powers that be in the Premier League.
"You come to the US and on the final day you can watch all of the games simultaneously on different channels. It is a wonderful viewing experience for the American football fan, but a number of those matches are on Peacock. (The final) Sunday, which they billed as 'Championship Sunday', had a lot at stake. There was relegation at stake, European football and the EPL title. What that allows them to do is spread the content across the entirety of their Comcast channels. The key matches were on cable TV. The Manchester City game was shown on NBC while the Liverpool game was shown on the USA Network.
"As a sports fan and a big Premier League fan who does not subscribe to Peacock there are some very high level matches that I would want to watch as a non-Peacock subscriber. What does that mean? It means I have to go to Peacock or Peacock plus and become a paid subscriber. That's fine, they are actually being thoughtful in that. For the powers that be in the Premier League that could not have been very satisfying. Fast forward and there is a lot of placating that can be done with the rights that they have now agreed to.
"For NBC, having something that drives subscribers to a new platform is important. Also for NBC you want what is going to give you instant programming and viewership at a time of day across channels, given the magnitude of the games, is considerably higher than what you would get here in the US on a Saturday morning or Sunday morning."
Access to those opportunities and the potential to introduce a more Americanised approach to wage structure and the overall business is something that has drawn interest from US funds. There is a scarcity value for top clubs in the Premier League with history, a global fan base and an established brand. Add to that the legalisation of betting in America's key markets and it presents another potential revenue stream for would-be owners to tap into. Team values, compared to the US, also provide a relatively low cost of entry.
New Chelsea owner Todd Boehly, speaking at the Super Return International private equity conference in Berlin last week, stressed how he felt teams were heavily undervalued and that clubs "don’t realise how big their opportunity is" to grow and deliver even greater revenues.
It is unlikely a price tag of £500m or £600m would put off US investors in Everton, especially with a new stadium that has the green light and just needs the funding for completion. Stadia in the US is something that ownership groups place great importance in, and having state of the art facilities that can host other things aside from just football and can generate revenue all year round is key to a business plan. Everton present a unique opportunity, although the commitment for another £400m plus will mean that Moshiri likely won't escape his time at Goodison Park without a major financial loss. He will, however, at least protect the one thing that has been a positive of his tenure, the legacy of a stadium that could bring about a successful Everton future.
Despite the big losses and the lack of success on the field, a stadium project where a lot of the red tape and legwork has been done is extremely appealing. Whoever comes in, if Moshiri does indeed end up selling the club, as appears to be the indication, they will have to focus on the bottom line and streamlining the club as a business, shaping a new recruitment policy. But in getting back to basics, and with 2024 on the horizon, there should be at least some hope for Evertonians that it is a situation that can come good in the end.
But in order for a positive outcome you need the right investors and the right motives. With more than one interested US party, according to reports, that means that the right call must be made by the current custodians of the club to determine who has the finance, the knowledge and the desire to deliver a financial and cultural change to the club on the field, as well as investing in its long-term future. The short-termism of trying to close the gap by Moshiri when he took over, while understandable with a new stadium planned for 2024, was what played a big part in creating the difficulties that the club currently experience.
