It is a saga that has been rumbling on for some months but it finally looks as if Everton are close to securing the finance needed to rubber stamp the club’s move to its new home on the banks of the River Mersey.
Farhad Moshiri and his representatives have been in advanced negotiations with interested parties in recent weeks, with American firms MSP Sports Capital and 777 Partners the two most prominent.
It is the former that is in the box seat to provide investment for the stadium, with New York-based MSP having signed an exclusivity agreement with Moshiri on Monday, a move that allows them to now continue negotiations without the fear of Moshiri being able to speak to other potential investors.
The exclusivity agreement, which can last for periods of 30 to 60 days before needing to be extended, allows for investors to prepare paperwork, conduct deeper due diligence and to continue discussions with the protection of no other deals with anyone else being allowed to be struck during the period. It is, however, not a binding agreement that an investment is made after an exclusivity agreement is made.
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MSP Sports Capital’s co-founders Jahm Najafi and Jeff Moorad, along with the company’s vice president Peter Taylor, were in attendance at Goodison Park back in January for the defeat by Southampton, the group also taking in the build of the 52,888-seater stadium at Bramley-Moore Dock, where the club will take residence during the 2024/25 season.
The stadium build is costing some £505m, with Moshiri having carried the financial burden for its construction thus far. And while the Everton owner had previously claimed he had the ability to meet all costs if needs be, the Toffees owner has been speaking to potential investors for some time, entering into an exclusive agreement with the Peter Kenyon/Maciek Kaminski consortium last year before talks, which progressed to interest over a full takeover, broke off.
Finding the final tranche of funding for the stadium has been a key priority, with the search dating back some two years and the engagement of US investment banks MUFG and JP Morgan Chase to conduct the search.
Now it appears that a deal is in sight, although the breakdown isn't as simple as MSP taking a slice of equity in the club and part ownership.
According to multiple reports, and what financial sources in the US have corroborated to the ECHO, the deal with MSP sports capital relates to around a 20 to 25 per cent stake with a preferential share structure, with those preferential shares potentially being turned into equity in the business further down the line.
Football finance expert, University of Liverpool lecturer and author of the Price of Football, Kieran Maguire, told the ECHO: “MSP are in a much stronger negotiating position right now.
“They’ve gone down this particular route of investment through preferential shares, which is essentially debt that will pay a fixed return to MSP. They won’t have voting rights like they would if they held equity but it is a deal that makes a lot of sense if you think about it from their perspective given some of the uncertainty at present.
“We are hearing that it is a 20 to 25 per cent stake they are looking at and I believe that they have been impressed by what they have seen at Bramley-Moore Dock with the new stadium and can see the value that it could bring eventually.
“But with this move they are protecting their position and not exposing themselves too much, while at the same time giving Moshiri the investment that he has been seeking. They can turn those preferential shares into equity at a later date if they so wished and take part ownership of the club.”
People familiar with the matter have told the ECHO that while preferential shares mean that there will be no voting rights afforded, the investment deal, if it is reached, will see some element of operational control at board level, with potentially two board members arriving as a result to aid the effort moving forward. That is understood to open the door to some potential exits at board level.
What the MSP deal would provide Moshiri is the capital he needs to complete the stadium but also a potential exit route in the future. It also allows him to reduce some of the burden of risk and bring in fresh expertise to help grow the club in the future, with MSP seeing the value proposition in the club and its potential if the right strategy is implemented.
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