Funding model explained
According to the Liverpool Echo, Liverpool City Council is setting up a company, called a Special Purpose Vehicle, that will sit in between Everton and its lender.
The SPV will get an annual payment from the club, a year in advance. Most of that will go back to the funder to pay off the stadium costs and more than £4m a year will go to the council.
It will be the lender, rather than Everton FC, that buys the Bramley Moore dock land on a 200-year head-lease. The funder will then lease the stadium to the council's SPV for 40 years. And the SPV will then lease it to Everton for 40 years, less one day.
Everton will then pay an annual rent to the SPV so that company can pay off the funder and get an annual “fixed security fee” — that's the £4m-plus that will go to the council.
And at the end of those 40 years, Everton will have the option to buy the lease for Bramley-Moore Dock from the funder.
» Read the full article at Liverpool Echo
Reader Comments (18)
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1 Posted 23/03/2017 at 19:36:18
2 Posted 23/03/2017 at 19:43:10
3 Posted 23/03/2017 at 20:46:15
4 Posted 23/03/2017 at 21:12:11
And is it in the interests of a future generation in having to buy it out right in 40 years time?
5 Posted 23/03/2017 at 21:33:47
Spunk the kids inheritance and sod them. I'll be dead by then.
6 Posted 23/03/2017 at 23:39:06
I haven't got a clue!
What about the stadium, will we own that?
7 Posted 23/03/2017 at 23:54:07
Local government is the same. The reason is that there is a secure return. Large investors balance their portfolios between different levels of risk.
Given that, I suspect that the arrangement will enable EFC to borrow at a significantly lower rate then it could do so commercially. The payment to the council, it looks like 1.5% on £300m, is either the difference or part of the difference.
If it equals the difference then it can be seen as facilitating a loan. If is less then the extra makes the deal cheaper for EFC.
The Finch Farm deal did this.
8 Posted 24/03/2017 at 09:30:35
9 Posted 24/03/2017 at 09:44:19
10 Posted 24/03/2017 at 09:55:18
This reminds me of a certain 'enabling' scheme.
Great if we get a shiny new stadium out of it, but I'm a little sceptical. Forgive me.
11 Posted 26/03/2017 at 14:15:52
This obviously has an impact on the club's ability to invest in the playing squad over the next 40 plus years until the stadium is paid for. We would, of course hope that additional match day revenue from the new stadium more than covers this. However, until the stadium is built and we start to generate revenue for it, there may well be a decrease in investment into the playing squad.
13 Posted 27/03/2017 at 06:44:24
Increased equity wouldn't be the way to do this as it would potentially dilute the value of all shares, and would need to be underwritten. In any event, football clubs are not typical businesses when it comes to valuations.
Whilst not sure of Moshiri's exact wealth, I believe he is worth more than £1bn, but not much more than that. It's unlikely that he has that much liquidity (you don't get rich by sitting on money) therefore he's not going to benefit from directly paying for the stadium, unless he plans to sell the club on, based on increased value when the stadium is built but why do that when the business that you have a controlling interest in can fund the purchase?
14 Posted 27/03/2017 at 06:47:46
Re player investment. Under current FFP, investment in the playing side is linked to total turnover. Infrastructure investment is treated as "allowable expenses" therefore as long as Everton manage the process and bearing in mind secondary revenue has been the first thing to be impacted post-Moshiri they should be fine.
And in 3-4 years the new stadium should of course enable Everton to increase turnover sadly to just keep up with the hyper-inflation within footballers' and agents' salaries and fees...
15 Posted 27/03/2017 at 16:38:19
'Down in the Boondocks' by Billy Joe Royal, so to speak .
16 Posted 28/03/2017 at 15:12:54
In addition to that, the council has played a big part in enabling Everton the chance to buy the land itself. The council will also weigh in with travel infrastructure etc.
17 Posted 28/03/2017 at 19:46:48
18 Posted 28/03/2017 at 20:02:30
This would avoid a repeat of the Kings Dock where Everton couldn't find finance in the 23rd hour, providing more certainty that the project could be completed. As noted, the council might have access to cheaper funding than Everton, but time will tell.
I have one concern that Everton will be paying a fair sum over 40 years, and not own it, and will still have to find the money to buy. This sounded a bit like the Kings Dock and something that haunts Coventry City FC.
I can only assume Moshiri is doing this as he's funding all of the project but with only holding 49.9% of the shares why should the other 50.1% benefit from his finance?
If that is the case, I could imagine the structure changes if he was to buy 100%. The Coventry City scenario could also fall away in any case if he finds a big name to sponsor the ground, and the increase in revenue from increased gate/corporate/and other uses for the venue boxing, gigs etc.
Optimistic, I think I just hope the money stays in the club/on the pitch.
19 Posted 28/03/2017 at 20:07:37
We (Everton Football Club) get a boss new pad.
Hope that helps.
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