Throughout the summer, takeover rumours have continued at Everton, including most recently by the Financial Times confirming, as has been said on this site and podcasts, on-going talks with the US real estate investor Maciek Kaminski. Poor player and management recruitment, under-achievement on the pitch, the absence of European football, Covid, the invasion of Ukraine and now soaring borrowing costs make the last six and a half years extremely expensive for Farhad Moshiri.

So before looking at the potential takeover/investment options available to Kaminski and any other potential investors, how much it might cost and what would be on offer, it is worth examining the scale of Moshiri’s commitment to Everton. Whatever opinions may be held about the manner in which he has run the club, how he communicates and the uncertainties about his future ownership, his financial commitment is beyond question.

A breakdown of Moshiri’s financial commitment to Everton

The above table shows the timings and amounts invested by Farhad Moshiri in three separate categories:

  • The amount he paid existing shareholders for their shares (priced at £5,000 a share)
  • The aggregate outstanding shareholder loans provided by Moshiri through the Isle of Man Company, Blue Sky Capital
  • The conversion of shareholder loans to equity by the issue of new shares priced at £3,000 per share

The table also shows the commitment made by Farhad Moshiri at the time of publication of the last accounts (29th October 2021) but not yet drawn down

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In  summary, his acquisition and loan commitments are as follows:

    • Acquisition of shares from shareholders (Kenwright, Earl, Woods and Abercrombie) £135 million
    • Issue of shareholder loans & equity, in total £550 million (£250m & £300m respectively),
    • Further commitment, not drawn at the time of the last accounts £145 million
    • Total funding and commitment £830 million

It should be noted, his commitment may have grown beyond the £145 million committed but not drawn down as at 29th October 2021.

So what has Moshiri got for his money to date? He owns 94.1% of Everton Football Club, and he has a minimum of £250 million outstanding in shareholder loans, although with him bearing the ongoing cost of the stadium that is likely to be at or near £395 million this financial year (2022/23). Whilst the club’s finances are starting to improve as various player contracts and transfer costs from previous years fall off the books the club is still forecast to make a loss this year of around £70 million and further losses in 2023/24. 

Bramley-Moore Dock Funding

Whilst the stadium build continues visually at an impressive rate, the stadium is not, as yet, completely funded.

Ground preparation works were widely quoted as costing £100 million and with Moshiri underwriting a further £145 million of funding it’s a reasonable assumption that up to £250 million of the estimated £550 million is covered. This still leaves a potential funding gap of up to £300 million.

The intention was for funding to be provided by two sources over and beyond Moshiri’s contributions, namely debt and a capital contribution from the naming rights option holder USM.

Through no fault of the club’s, the USM relationship is over. The appointment of Elevate to seek a new naming rights partner as well as the commercial opportunities arising from Bramley-Moore is discussed in detail in this article, published earlier this week. It is unlikely that the types of terms offered by USM will be matched given current market conditions. It is also less than certain (in fact unlikely) that a naming rights partner would capitalise future naming rights payments, providing capital upfront.

From the heady pre-Covid days of easy credit when Tottenham Hotspur financed their stadium at an average interest rate of 2.9% for maturities of between 10 and 30 years, market conditions for corporate lending are now very different. Indeed, the inability to secure long term finance in the most benign of market conditions is perhaps one of the greatest failings of Farhad Moshiri and his Board. 

Even if Everton were deemed to be sufficiently strong and credit worthy enough to warrant long term debt financing on the stadium, in current market conditions the cost of borrowing  is prohibitively expensive. 

BBB rated commercial debt yields in the US (the primary market for such) now stand at above 6% – double that of Tottenham’s. Benchmark non-investment grade bond yields, often referred to as junk, stand above 10%.

£300 million of debt three years ago would cost around £9 million a year to service. Even if available, that figure today would be in excess of £18 million if typically rated BBB, and for non-investment grade in excess of £30 million per annum – figures which would totally wipe out the revenue increases of a brand new stadium. 

Thus as funding options, whilst naming rights will provide long term income, they’re unlikely to provide a significant capital contribution, and frankly, the debt market is closed to Everton due to market conditions, expense and the state of Everton’s balance sheet and ongoing profit and loss issues.

So what are the options?

Moshiri, should he be so willing and able to do so, can continue to fund the stadium, but he is likely to have to find another £300 million to do so – bringing his overall commitment to Everton to in excess of £1 billion.

Alternatively, he can look to sell completely or find co-investors.

If he was to sell, any new investors would have to commit to completing the stadium costs as well as purchasing Moshiri’s 94.1% in Everton. The issue of existing shareholder loans (potentially as high as £395 million) would be up for negotiation.

How much would an investor pay for Moshiri’s equity? People close to the club and in capital markets suggest Moshiri is looking for a minimum of £400 million for his equity. Where that would leave his shareholder loans is unclear, but it is unlikely in the extreme he would receive that value for his equity and have his shareholder loans repaid. 

Personally, as I have expressed before I find £400 million an absurd price for the equity given the on-going losses and future Capex. A price of £400 million and no debt repayment would see Moshiri nursing losses of up to £430 million based on the information above.

Would he be prepared to take such a loss at this time? That will depend on his circumstances, does he need the funds, or is he prepared to push his commitment towards £1 billion in the absence of other funding options?

Co-investment?

It has been suggested that Moshiri might find a co-investor. Indeed the Guardian newspaper reported that Kaminski’s role would be as a co-investor alongside Moshiri in order to fund the stadium.

However, there are significant challenges to this notion. Any investment into Everton would be at the expense of Moshiri’s current ownership.

For example, even if Kaminski agreed with a £400 million pre-cash injection valuation, a £200 million investment in Everton would see him own half of the club, making Moshiri a minority investor. Kaminski would then control the board and no doubt make significant changes, something that would please most Evertonians, but would that be acceptable to Farhad Moshiri and again, what would Kaminski’s view be on the existing shareholder debt? In order to agree a valuation of £400 million on the club would Kaminski demand debt write-offs from Farhad Moshiri?

Position of weakness

Whichever way one looks at Moshiri’s position, he is in a position of weakness regarding future funding from third parties or new investors. With debt markets closed and naming rights relatively insignificant in terms of capital raising, a partial sale is possible, but the terms offered are not going to be easily accepted.

If he is to invest, Kaminski has the capital to fund the remainder of the stadium financing and the ongoing cash requirements of the business. However I don’t see him carrying the legacy of the current owner with him. If he was to do so, the price of effectively bailing Moshiri out would be extraordinarily high, he would demand control to  manage his investment as he sees appropriate.

Would that be acceptable to Moshiri? Despite his huge financial investment he appears less than fully engaged with the club these days, not appearing at matches and only communicating in response to fan pressure. To sell the club completely, would be a painful, expensive decision, but it would bring closure on what has been a difficult investment for him.

Whichever way it plays out a significant proportion of the £830 million invested and committed is unlikely ever to be recovered. He might point to circumstances beyond his control, and there are mitigating factors in the pandemic and the invasion of Ukraine. Above all else though, it is the manner in which the club has been run, particularly in the earlier days of his tenure that has cost fans so dear in footballing terms and is costing Moshiri financially. Bramley-Moore will be our new home, a catalyst for the club’s and city’s redevelopment, something for all Evertonians to enjoy in the years ahead – but it will also be, despite his enormous financial commitment, for him a folly to his own mismanagement. 


Reader Comments (28)

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Don Alexander
1 Posted 30/09/2022 at 20:41:40
Another penetratingly depressing assessment of the fact that Kenwright, after a 20-year trophy-less wait (with precious little to enjoy on the pitch), finally found a billionaire to make himself rich beyond his wildest dreams whilst consigning us to seasons more mundanity.

So it looks like Moshiri is going to spunk nigh on a £1billion or so to realise he's a muppet of a club owner, whilst praying for a Gonzo to buy him out.

I wouldn't have needed to spend a quid.

My missus would've told me.


Tony Abrahams
2 Posted 30/09/2022 at 21:37:48
Keeping hold of the club until the stadium is built looks like the more sensible and logical option but, as Paul has stated in this article, cutting his losses, in these very uncertain times, must also be crossing Moshiri's mind.

Moshiri has obviously been very instrumental in getting the new stadium at Bramley-Moore Dock off the ground but, if he does leave Everton, life will go on, for Farhad, whereas I'm not sure that Bill Kenwright would feel the same way, because In Jehovah's Witness terms, our good times are still to come, and imagine if the saviour wasn't around to see them?

After countless lies and two failed ground moves already being part of Bill's great legacy, life just won't feel fair, if the ribbon isn't cut by Mr Kenwright. One can dream... 🤞

Brendan McLaughlin
3 Posted 30/09/2022 at 21:42:03
"a folly to his own mismanagement"

Moshiri's epitath?

Tony Everan
4 Posted 30/09/2022 at 22:14:40
Thanks, Paul, it sounds concerning from all angles, if he keeps the club or if he sells it to Kaminski.

Something I find odd is that there is just this guy in the frame, why is that? The financial climate is unpredictable but at the same time our currency is weak, assets in Sterling could be a long-term bargain for US and other investors.

Surely, in all that is holy, there has to be some other investors or consortia out there who are interested? Preferably ones with deeper pockets looking to build a perennially successful football club. A genuine Champions League qualification contender every season.

This likely partial takeover just seems like an opportunistic stepping stone. It may help us a rung further up the ladder to complete construction but it feels like desperation rather than a game changer.

John Hodgkins
5 Posted 30/09/2022 at 22:24:06
He won't be selling to Kaminski, the guy doesn't have a pot to piss in.

Have a look on the GOT website, he's a charlatan.

Paul Birmingham
6 Posted 30/09/2022 at 22:31:05
All in all, I'd take the completion of the new stadium at Bramley-Moore Dock, and then a new phase, only on condition. Big foundations are being made for the future of EFC.

I don't see any pedigree at all in even going to a part-ownership sell to Kaminski, as I don't see any foundation nor confidence in his backup plan. There doesn't seem to be one?

But for me, this is the best stability position for EFC, long term, for decades, in view of The Board, minus at least two star operatives – Boys Pen Bill, and Little Miss Dynamite.

There's a degree of Karma being built at Finch Farm, and it's no mean feat, miles to go, but I feel genuine belief in the current set-up under Frank and his team.

Paul Hewitt
7 Posted 30/09/2022 at 22:38:12
£ 830 million on what?. Were shit.
Ed Prytherch
8 Posted 30/09/2022 at 22:50:04
It looks like Moshiri will need outside money to complete the stadium and, as Paul points out, that will probably require giving up control of the club. The question is: to whom?

Moshiri is like the guy who buys an old classic car and spends a fortune restoring it then finds that it is only worth half of what he has in it.

Tony Hill
9 Posted 30/09/2022 at 23:07:15
I don't think this rumour about Kaminski as an owner has credibility.

The real battle coming up is to hang on to Lampard and his team. England will be coming to call. I think we have potentially the best young(ish) management in the country with impeccable FA credentials. Lampard/Cole (the latter, in particular, as a coach) will have the Southern dickhead press at our door when Gareth Waistcoat fucks it up.

We need to be ready to tell them to fuck off.

Paul Birmingham
10 Posted 30/09/2022 at 23:10:59
All in all, I’d take the completion of BMD, and then a new phase, only on condition. Big foundations are being made for the future of EFC.

I don’t see ant pedigree at all, in even going to a part ownership sell to Kaminski, as I don’t see any foundation, nor confidence in his back up plan. There doesn’t seem to be one?

But for me this is the best stability position for EFC, long term, for decades, in view of The Board, minus at least 2 star operatives, - BPB, and LMD.

There’s a degree of Karma, being built at FF, and it’s no mean feat, “miles “, to go, but I feel genuine belief, in the current set up under Frank and his Team.

Fekk, the rest, “ Whats Our Name?”

Beat Soton, tomorrow.


UTFT!

Paul Birmingham
11 Posted 30/09/2022 at 23:14:47
I sent this in an hour ago, but the gift of ipads and the internet.

Lol, all have a great weekend.

“Whats Our Name?”

Paul Birmingham
12 Posted 30/09/2022 at 23:19:45
Tony, all the way, m8, spot on.

And let’s ride the storms, as we all do, and see what happens.

Beat the Saints, tomorrow.

UTFT!

Kevin Molloy
13 Posted 30/09/2022 at 23:51:23
I first smelt a rat over Moshiri when he stalled on the sweetheart deal from the Council. He 'wanted to explore the commercial sphere for borrowing' which made zero sense. he was never going to get a better rate than the Council at the time were offering. And so it came to pass. So why did he turn it down? In my view, cos he doesn't want to build it. Why not? cos it's way over budget if he wants it to pay for itself through match day revenue. Somebody (not him, but the guy he sells to) I imagine is going to have to break it to the fans that a stadium is possible on the site, but not the stadium we thought we were getting. It'll still have the same footprint, hence he's got the ball rolling, but someone else is going to come in and knock a hundred to a hundred and fifty million off the budget. Plastic seats, the works.
so this appalling chap Kaminsky is gonna Geta the club on borrowed money, have a pretend look at the plans, and then throw up his hands in theatrical style 'oh heavens to betsy, but the last chap didn't really know what he's dong. I've been building stadiums for twenty years. and I can tell you right now that Bla Bla bla'
Mike Gaynes
14 Posted 01/10/2022 at 01:07:55
Excellent and informative summary, Paul, as always.

Regarding this statement: "Kaminski would then control the board and no doubt make significant changes, something that would please most Evertonians," that is a significant assumption that really cannot be made, because we know zero, zip, zilch about Kaminsky. He has absolutely no public profile and there is no visibility into his existing companies or financial structures. Be careful, Everton fans, what you wish for -- Kaminsky is a blind alley.

And I would question the assumption that Moshiri is disengaged, simply because he doesn't attend games or communicate much with the fans. He has not done so in the past, either, and this is not a significant change in his behavior. He has always been low profile. He has certainly learned to delegate important decisions, which is nothing but good news -- Thelwell, Lampard and our recent transfer business are all marked improvements over what came before.

Ed Prytherch
15 Posted 01/10/2022 at 02:06:20
Mike, there can be legitimate reasons for an investment company to keep its business private. For instance, activist groups harass companies and directors for being in things that they don't like - traditional energy, Israel, etc. An advantage of not going public is you are to a degree shielded from unnecessary distractions. I am more inclined to give the Americans the benefit of the doubt unless we have evidence to the contrary.
Dupont Koo
16 Posted 01/10/2022 at 04:10:10
Thank you for the rundown, Paul. Informative and stratight forward as always!

Having a big hole burnt in his wallet in the past 12 months (not just by Everton but also by the drop in dividends from his USM shares and giving up the Board of Director Emolument after his resignation from the USM Board), I believe Moshiri is seeking an exit ferociously behind the scene.

If you don't ask, you don't get: if I were Moshiri, I would ask for a high enough initial price to negotiate down further into any conversations. It's just that the combination of the weakening of the Sterling, the Ukrainian War and the Post-Covid commercial repurcussions represents an "All Hells breaking loose" scenario on seeking a break-even exit.

Mike Gaynes
17 Posted 01/10/2022 at 06:02:20
Ed, it's not just about being a private company. More than 99% of US companies are privately held (including mine). But this guy has no public profile AT ALL. Minnesota has only a handful of billionaires (Forbes and Money Inc ratings vary), but Kaminsky is nowhere on the list, and as I've mentioned before, my business contacts in Minneapolis know absolutely nothing about the guy.

That's certainly not the typical profile of an aspiring club owner, who are usually somewhat public personages and at least have some Google mentions and a LinkedIn page. Somebody this secretive makes me nervous.

Chris Williams
18 Posted 01/10/2022 at 08:24:26
Kevin,

It could be argued that the club dodged a bullet by avoiding the offer from the Council given the local political shitstorm that such a deal could create, and more importantly the massive political shitstorm that did subsequently envelop the Council, some of it to to do with their property dealings.

Whoever advised them probably played a blinder.

Colin Glassar
19 Posted 01/10/2022 at 09:21:19
Karma, karma, chameleon…… the chickens are coming home to roost!! The Moshiri/Kenwright combo has ruined our club and now we could be saddled with a white elephant (not Bill, BMD) and massive debts and owned by some American shyster who owns a shop, or two, in Minneapolis USA.

These two morons will go down in the annals of football infamy.

Brian Harrison
20 Posted 01/10/2022 at 10:27:21
As always Paul you have covered all the options that are open to Moshiri, and to be honest whichever option he takes looks like a lose lose for him. Obviously the sanctioning of Usmanov has really thrown the whole thing into turmoil, as its quite obvious that Usmanov was going to be the main source of the money needed to build the stadium.

While the club have reduced their wage bill, it still looks according to your figures that we will still lose £70 million this season. So I think that will be 4 years of the club losing money, and while this years loss is less than the previous 3 years its still completely unsustainable.

I am sure Moshiri is actively looking to get out of this mess asap, and it doesn't look as having Kaminski on board is a good solution for Everton. I cant see Moshiri willing to suffer even more losses and I do think we might have to accept a delay to BMD being completed on time. While nobody can argue with Moshiris financial commitment you have to seriously question his ability to own a Premier league club. I don't think Moshiri has any great interest in football and was only a shareholder at Arsenal because Usmanov gave him the shares in the hope he could get control of Arsenal. But within weeks of Kronke declaring he would never sell Arsenal to Usmanov, Moshiri sold his shares in Arsenal and put the money into Everton, almost certainly under instruction from his boss.

I think Usmanov saw Everton as a safe place to invest with hopefully a great return on their investment once the new ground was built. On the face of it the purchase of Everton for £250 million looked like a bargain. A club that with little money regularly finished in the top 7, Usmanov probably thought throw a few hundred million at this club and they should be challenging for a Champions league spot every year. But despite putting in the money their managerial appointments were woeful. Had Usmanov followed what his compatriot Abramovich had done then it could have worked, Abramovich while changing managers on a regular basis, he hired some of the best managers in World football so with his financial backing it was no surprise that Chelsea became successful under his ownership.

Barry Rathbone
21 Posted 01/10/2022 at 10:28:43
One thing football does is expose the populist notion that rich, materially successful folk are clever.

I'd be tempted to feel sorry for Mosh if it wasn't for the fact he seemed completely out his depth from day 1with Jim Smith as mouthpiece and mind-boggling inanities about Rom and McCarthy.

Hindsight is always 20/20 but his biggest mistake was not riding out the storm over Bobby. If he had funded him we wouldn't be in the shit we subsequently wallowed in.

All in all he really is a bit of a tool.

Phil (Kelsall) Roberts
22 Posted 01/10/2022 at 18:10:11
What amazes me about all this is that a billionaire savvy accountant has been totally outthought and manoeuvred by a two bit theatre producer.

Something doesn't quite stack up with that equation.

Tony Abrahams
23 Posted 01/10/2022 at 18:13:04
Funny, Phil, (although not for us Evertonians) but he has essentially had the kecks off a multi-billionaire Oligarch. What an actor!
Ed Prytherch
24 Posted 02/10/2022 at 01:58:49
Moshiri needs someone to come in and either buy the club from him or take a large equity stake. The current strength of the dollar vs the pound probably means that the new investor will be American.
Chris Williams
51 Posted 04/10/2022 at 15:33:23
He's very persistent!

Is it to do with the recent sterling devaluation?


63 Posted 04/10/2022 at 20:15:39
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64 Posted 04/10/2022 at 20:15:42
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65 Posted 04/10/2022 at 20:15:59
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