Another cash injection as Everton issued a tranche of new shares

Trying to get my head around this, but it seems that TFG have injected an awful lot of money into Everton FC, despite what some of our readers have claimed.

It seems to run a little counter to the narrative that TFG are only in it for the money.

Although I understand that such transactions improve the bottom line financials and therefore increase any valuation of the club in the case that TFG are indeed ">looking for new investors, or even looking to flip the club for around £1B.

In this case, you could argue that the potential short-term return on investment could be substantial if TFG are able to find a new owner, or do it step by step with incremental new investors coming on board.

Wow.

I cannot get the full table displayed on an iphone. Relieved for the injection and overall health of the club. I think we deserved a bit of overreaction after that window, but yes, if they ride it out and make good that is best.

Nearly £28M added in July and August for transfers doesn't sound too bad.

I wish TFG were better communicators and actually came to Bramley-Moore Dock to watch a game! It would put them in better light with the fans... after all, they did purchase the club and it's shiny new Stadium! 💙😉⚽

The latest chunk came in after the window shut so I can't see it being related to transfer deals, especially as we has a net profit of around £15-20M (maybe a bit more) in the window.

We surely don't have a cashflow problem? Hasn't a large chunk of Sky money already been paid out already? It would be later in the season you might get short on cashflow.

It might be to cover losses to date. Just because you hit the SCR number doesn't mean you make money. Or it could be allocated to the Burnley possible payment.

But none of those seem likely to be true. Doesn't really make entire sense to me...

As a privately-held company, TFG has no obligation to publicly-reveal its funding plans -- and obviously no intention of doing so -- but the fact that this tranche coincides with the news that TFG is looking for new minority investors drives the impression that ownership is building the club's financial strength for the long term rather than preparing for a quick sale and a fast profit.

It doesn't seem likely TFG would be going through these machinations if their intention was to sell up.

Michael, in another thread you stated that TFG had sold some shares to an investment fund manager, Sarofim (?).

Any info on how many shares and for how much?

Eric,

Christopher Sarofim is a Houston-based investment billionaire who bought into Everton's corporate owner Roundhouse Capital last year, but not into the club itself.

His deal came at about the same time as the personal investment of retired NBA star Jason Kidd, who did buy directly into the club.

Neither transaction is statistically significant, as Roundhouse Capital still owns 99.5% of Everton.

Don't know much about finance.

But I would think this means we are desperate for cash.

A lot of the club's income will come from cashflow at the end of the season.

Merit payments and TV facility fees are calculated at the end of the season, so clubs will be running negative cashflow through large parts of the season, even if they can report overall profit and cash generation.

I would imagine that the club had significant cash to pay in Year 2 of the spend from last year. That was partially covered by sales this year, but with the above, will need more cash from somewhere. I am surprised it wasn't an overdraft, but there you go.

The club will have paid the Burnley case. TFG have put in capital to cover that, and I believe that'll reduce their deferred consideration payment to Moshiri if that ruling sticks. So for TFG, no overall change on what they would have spent overall.

Presumably TFG are fed up of funding Everton, and can see a path to maintaining an investment stake and getting the cash back via a second investor.

From what is being said, they made several bids and missed out on a lot of players. Now whether those bids had enough substance to be taken seriously or if this is just guff is anyone's guess.

The bottom line is the club was set up to get deals done, and failed. The ramifications of another missed opportunity follows last season in that they could've achieved Europe and relegated a rival. Instead, neither was achieved.

Mike (@ 8),

Paul Quinn estimates Christopher Sarofim's input as more than 9.9% into Roundhouse Capital and since Roundhouse own about 99.7% of Everton FC shares, that is a fair chunk.

No exact figures though.

Without any form of communication, it is difficult to judge the financial manoeuvres. The modest nature of the recent sums (in football terms) make them look like short-term working capital adjustments.

As Ian B said, why this is being done through share equity rather than short term banking arrangements is anybody's guess.

The late window offers suggest there was money available. Though making an offer for say Munoz, then reducing it subsequently lacks credibility. And the apparent desperation to sell Ndiaye (at reduced value) and the left-field considered sale of Armstrong smells of a real need for cash.

We clearly had to sell before buying, and we got the timing horribly wrong with that. We are all second-guessing. The Friedkins are silent. Kinnear has gone to ground. Moyes is toeing the party line.

One thing that needs to be recognised is that there are a number of American investors have identified sports assets for long term investment.

The Premier League has upward scale potential in terms of valuations as the world's populations increase their disposable income and seek entertainment and experiential leisure. The Premier League is a global market asset.

So you could say that Everton FC with a shinny new stadium in itself worth circa £700M+ it could be now worth say £1B. The American sports investor community would believe that this valuation could grow to £5-10B over the next 5 to 10 years.

TFG have a large portfolio of companies and assets 20+ companies turning over circa $18B. They are historically a portfolio builder, not a flipper.

I know their group strategy Director and they have bid and failed with other US sports franchises as the valuations have sky rocketed. Any additional minority investors help with overall capital liquidity so they can bid for other sports assets.

That's my read on the situation, others also valid.

Ian @12,

There is a lot of money in American family offices and large long term investment funds all looking for places as to where to put their money. There is more money than investment opportunities at the moment.

TFG are a portfolio of companies and assets. In that sense, they are diversified and seen as low risk. They can access loans, capital from these funds at much lower interest than a single company in their portfolio. Hence they don't want to burden EFC with higher interest facilities and they want to leverage their financial clout.

That is why it is capital injection. It is a very simple leverage approach. Overall, TFG are not looking for profit but asset valuation build.

To be honest, I have lost all faith in TFG. They have made numerous visits to Roma yet haven't ever spoken to Moyes.

I don't agree with Simon Jordan very often but, as he said yesterday, TFG have bought the club and they will do whatever they think will make them a profit, so getting investors in and being one of the lowest spenders in the Premier League for me outlines their plan.

Anybody who thinks they have a plan to get Everton back competing for honours is deluded; they have bought a stadium with a football club attached. They no doubt see the vast potential in non footballing activity they will get having a new stadium.

I was far happier and a lot more optimistic when we had the Russian oligarch pouring money in but the Ukraine War put a stop to that. He had the vision to build a new stadium and he would have bankrolled the manager for as much as the rules would allow.

Not like our present owners, who have little or no interest in the fans or the club.

Brian @ 15

That is another non-fact that Media and people have taken out of context, a question asked of the Moyesiah in the pre-match presser.

He was asked in the context of the transfer window and the question was "Since the window closed, there is obviously talk that the owners are looking for investment; have you had any conversations with them on this or other matters?"

He simply said, "No, I've not spoken to them and that is not in my jurisdiction."

Previously, he has said he goes to the CEO and Rishi, who is the son-in-law and on point to manage this asset for TFG.

TFG put people in place to manage their assets and Everton are no different.

When a company issues more new shares doesn't that reduce the value of each existing share?

Tough on private shareholders who have no real say in the matter. I suppose that's part of the risk of buying shares.

Steve @16 and therein lies the problem. We are merely an asset. They have no interest in the footballing side of things.

They're only interest lies in how much they can make from their asset.

We had an owner in Moshiri who couldn't keep his nose out and nearly bankrupted us.

Now we have an owner who doesn't care and won't spend a penny.

If they had sacked Kinnear and whoever else was involved in our terrible transfer fiasco, I'd have more faith in their long term plans.

The fact no heads have rolled suggests to me, they are content at present. Only time will tell but I sure am worried about what they are up to.

I take your point, Steve, re interest payments, profit etc, although squad cost and revenue have superseded profit, and cash as ever remains pivotal.

I also get that sports and football clubs are potentially currently seen as a good investment. Some more than others.

Where is Everton's current valuation? If Liverpool are £5B plus then Everton must be approaching £1B, at least. Where do analysts put the TFG cost of acquiring Everton? £350-400M. Not a bad return thus far.

It is difficult to see their strategy beyond mere asset building. As many have said, if you don't improve the team, then you limit that asset building; no European football, limited prize money, limited player resale.

There are noticeably more empty seats this season as tickets are not sold on, particularly hospitality. Everton's fanbase has a ceiling. Without success on the pitch, then improved asset value is simply dependent on the global reach of Premier League football and Everton staying in the Premier League and getting a piece of that pie. That's about where we currently sit.

Fans at least want some ambition for success. It all feels a bit hamster on treadmill, going nowhere any time soon.

Raymond, existing shareholders who bought privately probably paid anywhere between £2.5k to £4k per share. The dilution of their shareholding by continually increasing number of shares has taken nominal value down to about £160/ share.

Of course their value is worth what someone will pay, and these shares are not usually held for growth or profit. That said, it would have been professional and courteous for a Friedkin representative to speak to minority shareholders. Again, too much to ask.

A dividend of circa £20 per share was paid last year.

Ever watched the coverage of American Football?

Owners are there for every game. TV often show them celebrating when their team scores.

Superbowl. Who is presented with the trophy? Coach? The Captains (they have more than one)? No, the owner.

Not very American are the Friedkins.

People posting on ToffeeWeb are deluded -- if you can't see Everton are moving forward at a good rate, then you need to wake up.

Since TFG took us over, we're a proper football club on and off the pitch. On the pitch, for the first time, we have a squad of players who can all influence a football match -- basically all really good players.

I believe two more transfer windows and all you will see is Everton up that table pretty much for a very long time, and I believe younger Evertonians will finally see our famous club challenging for honours.

The Hill Dickinson stadium is a sight to behold and the naming couldn't have been better. What you should do is enjoy the ride because, once a couple of the older players are forced out of the team, we will have probally the youngest squad of really good players -- just like the '80s... I am truly starting to believe that.

If we can possibly sign two really good players in January -- and I hope we may even break our transfer record as we still have not paid £50M yet -- we could be smiling a lot more.

So no more moaning and talking about finances, just enjoy what TFG are doing. No more bad days -- we've seen too many of them.

The Friedkins might be Russian sleeper agents... like Trump.

Steve #16

The BBC are reporting that Moyes was asked had he met or spoken to the Friedkins since his return to the club.

He answered "No"

I was hopeful that someone might be able to understand what's going on (I certainly don't!) but it doesn't appear to be very clear.

Unless TFG plan to sell Everton soon, its not in their interest to make our team good enough to ever qualify for the Champions League (which explains the transfer window) - their favourite child, Roma, get priority. MCO rules mean that we can't be in the same competition as them and let's be honest, its cheaper and easier to build an Italian club capable of getting there.

Mark @23. Do you really believe that ?

Mark#23 We have 19 senior players in our current squad, sold our 2nd striker, and reserve left back. We now have one striker, one left back, one right back, and just hope we don't get any serious injuries between now and January? If that's Everton moving forward at a good rate I think it's you who's deluded!

Probably not the correct place to put this, but, it would have been Gary Speed's 57th birthday today. R.I.P. Gary, sorely missed.

Christy, you are such a negative person — I am starting to believe maybe you’re from the other side but let’s see if I can help you.

Firstly, we have senior players who can cover for Mykolenko if needed. At this moment, I don't think Mykolenko is letting Everton down.

Secondly, a player failing a medical can happen and this is the case of only having 1 striker.

Thirdly, Beto’s sale was the right move. £15M when, if we had kept him for two more days, we get nothing — good buisness!

Fourthly, you Christy supported the worst right-back in the Premier League for the last 3 seasons … Coleman!!! .

Deluded? Rich coming from you!!

Les @27, Time will tell but I only see good in Everton going forward with or without Moyes who I'm not a lover of. Surely Les you can see this team coming together.

It's hard to criticise anyone that has put £850 million in to our club even if it's worth £1bn. I don't blame the Friedkins for us not getting a striker - they left it to the staff at Everton to sort that!

The money was clearly there too. I think the stick they get is over the top and I'd take this regime over Kenwright's and Moshiri's every day of the week.

And we're currently unbeaten too so, despite it all, we're doing okay. We have players that can play up top if Barry gets injured, who may even do better than Barry!

Yes, the squad is thin… and yes. the transfer window ended on a very sour note… but it's more because we only had money for one striker due to the financial rules than it is pure incompetence.

Anyway, my glass is half-full today and the sun is shining (somewhere behind the clouds).

Steve Jones 16
As Brendan said in his post 25 in the part of the interview the manager does with the written press, he was asked have you met or spoken to the Friedkins since your return to the club to which he replied NO.
So not misinformation by the press.

Mark Steers 23 do you actually go to the game because if you think we are moving forward I can think of about 52,000 who might disagree with you there.

Brendan @ 25
Brian @32

I know that is not true - It is when they ask him in context of the transfer window just gone and investments - they all twist things and take things out of context - for a headline - even the BBC!!!!

I thought my mind might be playing tricks - so I went back to do my research.

On his welcome back presser ahead of the first game back against Aston Villa - he was asked the usual when did you know first being linked and how did it progress type of question.

He clearly states that he had several calls with Dan and Marc (Dan Friedkin and Marc Watts is the President of The Friedkin Group (TFG) and now the Executive Chairman of Everton F.C)

Also these were several calls - not over the phone but on Video Calls.

Everton manager David Moyes on the new ownership: "It is different because they are in America at the moment and I'm here so the conversations have been video calls. You can never tell how a manager is going to do but managers can not tell how owners are going to go so it works both ways.

"But at the moment I've found the conversations good and I've found they want to get us back on track. We all know we need a bit of a sticking plaster at the moment and we have to try and make that work."

Here is the link - https://www.dailymotion.com/video/x9cbex8

Enjoy!

Just picking up on a couple of things:

Mark @5: The latest chunk came in after the window shut so I can't see it being related to transfer deals, especially as we had a net profit of around £15-20M in the window.

According to my calendar, the transfer window was open when those last two injections totalling £28M were made. And we would probably have needed that money to fund the Balogun transfer.

Mike @6: ... drives the impression that ownership is building the club's financial strength for the long term rather than preparing for a quick sale and a fast profit.

Couldn't both be true, Mike? The healthier the club is financially, the higher the value, surely?

Mike @8: NBA star Jason Kidd, who did buy directly into the club.

I'm not so sure about that, Mike. Jason Kidd does not appear on the list of shareholders, and the Echo described him as 'joining the ownership team'. All the shares in Roundhouse Capital (all 396,827,376 of them) are held by Toffee Investments LLC.

Paul @9: I would think this means we are desperate for cash.

No, Paul. Quite the opposite. Flush and in fine fiscal health -- thanks to TFG.

Raymond @17: When a company issues more new shares, doesn't that reduce the value of each existing share.

This happened immediately after the takeover, when the number of Everton shares skyrocketed from 135,000 to an incredible 1,621,787. In the process, they knocked the nominal value down from £3,000 per share to £175 per share.

Paul @19: "Now we have an owner who won't spend a penny."

Not a penny, but they have injected hundreds of millions of pounds into the club. Can you really not see that?

Michael @34.

Yes I can see it. I can see they saw an opportunity to get a Premier League club at a bargain price.

Now they have paid off the debts, I don't see them spending anymore of their own money.

Brian 32.

I go to every game, home and away — not missed an away game in the last 6 seasons. I’ve seen some hard times but not no more, Brian.

At the end of the Palace game, I've not seen so many happy people watching Everton since the ‘80s.

At Preston, 5,600 Blues had a lovely night singing their heads off watching goals.

At Bournemouth, the atmosphere we made there at the Vitality was second to none.

Maitland-Niles said the reception the fans gave the players at the end brought goosebumps to the players and he thanked the fans for the incredible noise.

All done by your 52,000 you claim to disagree with me Ha Ha. Oh, do you go the games, Brian? Probaly not.

Paul,

They restructured the debts ages ago.

They have just injected £28M in July and August that goes straight to the bottom line.

They had presumably authorised payment for Balogun, or at least expenditure on players up to that amount, which, if it had gone through, would have seen a net spend of around £20M.

How is that not them spending their money on Everton?

Lot of figures being bounded about.

Friedkin’s investment is nowhere near £850M.
Nor did they clear all the debt. They did clear some toxic debt (777 Partners etc) but restructured the rest onto better terms with different providers.

They did sell some shares through Roundhouse to Christopher Sarofim, significant, exceeding 9.9%, precise figures not published as far as I'm aware.

Sure they've put hundreds of millions in, I agree they've done all the sensible financial restructuring. Everton are in a financially better place. Can't be in dispute.

The debate really is are they simply cleaning up a distressed asset, building pure asset value, or do they share fans’ ambitions to challenge for honours, investing in the team?

They could do both, does it feel like they are currently….

Michael. The Balogun deal could only go through once Ndiaye had been sold to City.

They’re nothing but half-baked chancers. The sooner they are gone, the better.

Paul,

The net profit from player transactions was £20M, including the sale of Ndiaye.

The purchase of Balogun for £35M would have required at least £15M from somewhere (if indeed this is how player transfers are paid for).

What the above shows is that TFG (through Roundhouse Capital) had put that money (and more) in place in anticipation of the Balogun deal going through.

How is that not them spending their money on Everton?

Thanks Steve #33

Will check that out later but reading your post it seems to me that those conversations were prior to Moyes return.

Doesn't necessarily invalidate the claim that, since Moyes returned, he has neither met nor spoken to the Friedkins.

Brendan at 41

Well I believe there were ongoing conversations and in following pressers, Moyesiah actually referred to Marc again and he referred to conversations with “Brian” their VP Strategy Brian Walker, who is responsible for new acquisitions, financial onboarding and sports strategy.

I know this as he is a contact of mine and asked to pick my brains on EFC which I duly obliged and shared my own thoughts to him.

I can't honestly see them trying for a quick sale, they are keeping the clubs books looking healthy to spark interest from potential investors.
They can sell of shares, recoup some money, maintain control.
They want a healthy bussiness first, competitive team comes second to that for them.

It's not exciting to fans.
It's not the big spending billionaires splurging £££s them days are over.

The more I think of the SCR rules, have these new breed if owners brought it in as a mechanism for owners to take the extra 20% that you can't spend on the squad with scr for themselves ?

If a club had revenue of 1bn - 80% on squad leaves 200m where would that go ?