With a great deal of media interest surrounding possible investment into Everton for a minority stake (more later) and with the caveat that the 2021-22 accounts are yet to be published, the scale of Farhad Moshiri’s financial commitment, yet the unresolved issues at the club, are significant.

With Farhad Moshiri’s introduction to Goodison Park against Chelsea in the FA Cup 6th Round in March 2016, amid the euphoria of a Lukaku inspired victory, Moshiri famously said (relating to funding Everton) “I give them whatever I have.”

So, how much has Farhad Moshiri spent to date?

As a result of the accounts to June 2022 not yet being published, the figures quoted only include commitments made (and quoted in the 2020-21 accounts). They do not include any financial commitments made from 1 July 2022 to present date.

Article continues below video content


Farhad Moshiri has funded Everton in two specific ways – shareholder loans and the issue of new shares paid for in cash or through the conversion of some of the shareholder loans into shares.

The loans have always carried no interest and there is no commitment from Everton to repay the shareholder loans. The loans are provided from an Isle of Man company controlled by Farhad Moshiri, Bluesky Capital.

The table below sets out the loans provided by Farhad Moshiri plus the financial commitment made for 2021-22 as recorded in the 2020-21 Strategic Report contained within the accounts.

Year

Amount contributed  £m

 Total outstanding shareholder loans  £m

New shares issued (aggregate)  £m
2016-17

105

105

  
2017-18

45

150

  
2018-19

150

300

  
2019-20

50

350

  
2020-21

100

 250

200
2021-22

97

 247

300
Drawdown facility* 

145

392

  
Total  

392

300

The drawdown facility is included in the Strategic Report (signed on 29 October 2021) and is reported as follows:

Post year end, the Majority Shareholder has made a further £242m of financial support available for drawdown and use by the Club via an extension to the interest-free Shareholder Loan. At the date of signing these accounts, £97m of this has been received by the Club (see note 21), with the remaining £145m to be drawdown by the Club when required and as included in management’s forecasts.

Assuming the full drawdown facility was used in the financial year 2021-22, that brings Farhad Moshiri’s commitment to 30 June 2022 to a staggering £692 million.

Where has all the money been spent?

Moshiri’s funding has repaired the balance sheet to a degree, funded losses and partially paid for the stadium development. We will talk about the stadium financing later in the article.

Bear in mind these figures will be superseded by the publication of the 2021-22 accounts on or before 31 March 2023. As of 31 May 2016 (the first year end of Moshiri’s ownership) shareholder funds showed a negative value of minus £43.4 million. As of the last published accounts shareholder funds stood at £49.7 million – a positive change of £93 million. (Shareholder funds include fixed assets, current assets/liabilities, capital and reserves).

Aggregate losses for the period 31 May 2016 to 30 June 2021 increased from £68 million to £423 million, an increase of £355 million, reflecting every year bar one being loss-making, despite the profitable sales of Stones, Lukaku, Deulofeu, Lookman, Vlasic and others in that period. A reflection of the appalling recruitment and some losses attributed to Covid-19.

The cost of the stadium & recent transfer activity

It is impossible to extrapolate precisely how much has been spent on the stadium to date, particularly with the last published accounts to June 2021. However, Moshiri has indicated the total cost of the stadium, and from various sources involved in fund-raising, a fairly accurate estimate of what has been spent can be made.

Moshiri informed the Everton Shareholders Association in a private meeting that the total cost of the stadium was estimated at £760 million, a considerable uplift from previously reported figures of around £500 million. This figure was subsequently confirmed in Farhad Moshiri’s recorded interview with the Fan Advisory Board Chair, Jazz Bal in January 2023.

People close to the efforts to raise funds to complete the stadium put Farhad Moshiri’s Bramley-Moore Dock expenditure at the end of December at £450 million. This tallies with the estimated cost and the reported funding shortfall of approximately £300 million (more on this below). It also suggests that the £142 million drawdown facility mentioned in 2020-21 accounts will have been largely used. Additionally (profitability and sustainability regulations aside) it explains the minimal expenditure in the summer of 2021, and 2022’s January and summer expenditure being funded by the Richarlison sale and extended credit terms on those purchases.

Furthermore, the data supports the financial reasoning behind not spending the funds received from the Gordon sale – those funds becoming a contingency against possible relegation and any unforeseen delays in the final funding of the stadium.

The remaining stadium funding

In the aforementioned FAB interview, Farhad Moshiri commented that whilst looking for funding for the stadium, if necessary, he could fund it himself. It is clear though that this is not his preferred option. Whilst always prepared to fund the final costs of the stadium, Moshiri had always intended to use a combination of debt and a significant contribution from the assumed naming rights partner, USM.

As a result of market conditions (partially attributed to the pandemic) and, more specifically, the very poor financial performance of the club, the debt markets tapped by Tottenham Hotspur so successfully in their stadium funding, have remained stubbornly closed to Everton. Equally, despite the £30 million naming rights option package paid by USM, the illegal invasion of Ukraine and subsequent sanctions applied to Alisher Usmanov put paid to an estimated further £150 million of naming rights payments.

Thus, Moshiri having already spent an estimated £450 million, requires a further £300 million to complete the stadium funding.

Minority Investors

Despite denials of a total sale to new investors, it is well known that various groups have unsuccessfully attempted to acquire the club from Moshiri. An asking price, quoted in various financial journals of $450 million, seems unreasonable given the current losses, threat of relegation, and future capex requirements of the stadium.

However, the prospect of a minority investor seems much more likely. MSP Sports Capital have become favourites to acquire a minority stake in Everton Football Club. Run by Jahm Najafi and Jeff Moorad, US-based MSP is an established investor in several sports teams, leagues and businesses. Perhaps their highest-profile deal to date is their investment of  £185 million into McLaren Racing.

Share Issue

It is thought that MSP will invest approximately £105 million into Everton Football Club. This is likely to be achieved by Everton issuing 45,000 new shares, giving MSP 25% of a new total issue of 180,000 shares. This in turn would reduce Farhad Moshiri’s stake in Everton from 94.1% to 70.6%.

MSP would likely demand perhaps two new board seats, appointing non-executive directors, and as is often the case with minority investors, have control over various financial matters, so-called “reserved matters”. From my perspective, the appointment of minority shareholder directors and, one would hope, a greater commitment to massively improved governance standards would be hugely welcomed and valued. Expertise in other sports and a global perspective would add so much to a board and executive lacking in such skills and experience.

Additional Funding

The injection of £105 million and a strengthened board would open debt markets, as mentioned previously closed to Everton. It is understood that with the introduction of minority equity investors, Everton would be able to raise a further £200 million from debt markets, thereby completing the financing of the Everton Stadium. The cost of debt funding (the interest rate paid) has increased significantly in the last 2 years, and will be at least double, perhaps close to three times the amount paid by Tottenham Hotspur (based on current corporate bond yields in the US).

Given the timing of such investment and debt raising, it is not thought that either are contingent on survival in the Premier League. It is anticipated both capital raises would be completed well before the end of the season.

A successful funding of the stadium, in itself, obviously, removes a huge financial burden from the club and, by implication, Farhad Moshiri, albeit at a price in terms of his reduced holding. It doesn’t however, address the continued issues of the management of the club, particularly at board level.

The sustained losses, the merry-go-round of managers, directors of football and the appalling recruitment of players has cost Farhad Moshiri dear. Indeed, until survival in the Premier League is assured this season, it may still go on to cost much more.

Assuming no additional financing in 2022-23, Moshiri’s reported commitment of £692 million in funding for the club and estimated £135 million of share purchases from existing Everton shareholders (Kenwright, Woods, Earl etc) have proved to be hugely expensive. Based on what would be a new holding of approximately 70% in  Everton and a post-investment value of £420 million, approximately £830 million of funding/investment has an implied value of only £294 million, a reflection on the appalling management of the club in the last seven years and at a time when football club valuations are soaring.

Recovery of more or all of his investment is contingent on Premier League survival, the successful completion of the stadium, and a wholesale change in his approach to running the club. If all three are not achieved, not only does the club continue to face an uncertain future but his investment will remain “under water” as investors put it for many, many years.

Let’s hope that now is a turning point in terms of doing what is necessary for greater performance and appropriate future management – wholesale changes at board and executive levels. If not, the option of a complete sale must be the only solution, for all concerned.

Reader Comments (35)

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Michael Kenrick
1 Posted 11/02/2023 at 07:52:39
Paul,

The value projection of £420M assuming all this goes ahead... I think it was on your podcast that you said this does not and would not reflect the value of the new Everton Stadium, at least until it was successfully completed.

At some point, the construction cost of the stadium must transition into a tangible fixed asset of considerable value that should radically change the financial status of EFC – especially considering its total cost could represent around two times the current valuation of the club. It may be too early to ask but does this get fully or only partially recognized as real asset value in future accounts?

This depends on ownership and completion of the new stadium, of course, and I'd like to get your view on the changes in the status of the Stadium Development Company that was hived off from direct EFC control in 2021 but put under the Stadium Development Holding Company that itself remains under full EFC control as a 100% wholly owned subsidiary.

Jim Potter
2 Posted 11/02/2023 at 08:59:32
Interesting, if unpalatable reading Paul.

It just reinforces how badly we have been run on and off the pitch for so many years.

On the one hand, I'm thinking Moshiri really has put his money where his mouth is, and yet his mouth must therefore be a garbage disposal unit!

It seems incredible to me that someone has been that successful in one sphere of business only to be so incompetent in running our club.

Baffling, frustrating, scary and a really, really bad joke.

Tony Abrahams
3 Posted 11/02/2023 at 09:46:23
Good question Michael, because on reading this initially it looked to me like Moshiri, had lost over half a billion pound.

Reading it again, it’s clear that getting the stadium built, is the only way he’s got a chance of recouping most of his money, so hopefully it continues to be built on time.

The Russian invasion of Ukraine, which brought about massive sanctions towards the Oligarch’s, has definitely impeded Moshiri, but because he didn’t want Everton, to take up to much of his time anyway, then hopefully soon, he will take a much smaller loss, and depart?

Laurie Hartley
4 Posted 11/02/2023 at 10:02:02
Well he certainly kept his promise. “I give them whatever I have”. Personally I think he has given us enough and I hope we at least give him his money back.
Paul [The Esk]
5 Posted 11/02/2023 at 11:56:09
Michael #1,

Certainly once completed, the stadium will add to shareholder value as an asset that will generate future income for the business. The degree of additional income will depend on ticket pricing and the financing costs of the debt.

Currently I'd argue that's not reflected in the value of the club because the stadium is not yet fully funded. The capex required deflates the current value of the club.

Re the company structure, it is obviously sensible to place the stadium and its current liabilities into a seperate company. Funders and future lenders will also certainly want their funding, the asset and the income it will generate placed in a separate company (albeit wholly owned by the football club)

My understanding of the current subsidiary companies is as follows: Everton Investments is a dormant company wholly owned by The Everton Football Club Company Limited. Everton Stadium Development Limited is wholly owned by Everton Stadium Holding Company Limited, in turn wholly owned by the Everton Football Club Company Limited.

Michael Kenrick
6 Posted 11/02/2023 at 20:48:59
Thanks, Paul.

So stupid question: if the stadium and all related instruments are in a separate company, but that company remains a wholly owned subsidiary of the parent company, how does that differ from it all being in the parent company anyway, as it all still gets wrapped up in the 'Group' accounts of the parent company, does it not?

Paul [The Esk]
7 Posted 11/02/2023 at 22:08:14
Correct, it does. Having the stadium in a separate company protects the top company if, for whatever reason, the stadium company couldn't pay its bills.

It protects a lender in that the income generated by the stadium is contained in the company that will be encumbered with a legal charge and, if an owner ever wanted to sell the stadium, it is much easier to sell the stadium company than sell the asset itself. Other reasons too, relating to the lease, insurance for example.

Don Alexander
8 Posted 11/02/2023 at 22:41:35
Perhaps the only thing I have in common with Moshiri is a complete lack of understanding when it comes to accounts and accountability, so I really welcome Paul's ongoing commitment to shed further light on the total ineptitude Moshiri and those he still bizarrely employs as directors have displayed to our present-day and future (as in several) seasons, new stadium or not.

As an aside, I'm grateful to have been relieved of the mantle of Kenwright-tormentor-in-chief, and doff my cap to Tony A, my appointed-by-Michael successor. He's a great bloke too!

I've endured years of complaint on here for speaking what I and learned others have always identified as the tumour in the heart of our club, but I'm very happy that at last there's significant public protest to spell it out to the world how badly we've been run.

We need a new everything, except the manager.

Michael Kenrick
9 Posted 12/02/2023 at 09:58:52
Paul,

Okay, thanks for that – it makes sense from that perspective.

Don,

And there was me thinking that your diminished role was a classic case of "Absence makes the heart grow fonder"...!!!

Brian Harrison
10 Posted 12/02/2023 at 10:41:57
Paul,

As always, a very detailed explanation of not only our financial position but also the likely scenario that the new stadium could be sold as a separate entity. But, although it could be sold separately, as I understand it, the club would get the money from the sale.

I would be seriously worried if the stadium was owned by anyone other than the club. This would then allow them to use the stadium for numerous events that may not be conducive to taking care of the playing area.

Also, it would leave the club exposed to huge rises in renting the ground from the owners, which could impact the money the club would have for transfers.

Maybe I haven't fully grasped how the stadium is still owned by the club but can be separately funded and owned by a 3rd party?

Andrew Taylor
11 Posted 12/02/2023 at 10:50:12
I don't get where the valuation of the club at £420m comes from here. £105m for a 25% stake is just that – the cost of a minority stake. To value a controlling interest in the club is quite another thing, and much more complex than £105m multiplied by 4 suggests.

Add to that the dynamics of a complete asset in a few years versus an 'asset under construction' as it is now (ie, the new stadium) and it's clear that there's no way Moshiri, MSP or anyone else would value the club for £420m as quoted here.

Michael Kenrick
12 Posted 12/02/2023 at 11:09:27
I saw your earlier post on the other thread, Andrew, making the same point, which went unanswered, so I'm glad you brought it up here too.

I'm no expert but it does seem to be somewhere in line with other estimates I've seen recently.

Forbes did a 'Team Value' table which had us at $940M (as of May 2022). If you factor in the exchange rate, and an inflationary factor when comparing their Team Value to recent prices paid or being quoted for Chelsea, Man Utd and Liverpool, somewhere between £400M and £500M seems reasonable.

I've also looked at it another way: share price. Current Everton Share Price is reputed to be around £3,125. Multiply that by 135,000 and you get just over £420M.

So is it really that unreasonable? Bearing in mind of course, Bob Cratshit's old adage: "A club is only worth what someone is willing to pay for it."

John Chambers
13 Posted 12/02/2023 at 15:15:40
I appreciate that Moshiri has “put” a lot of money into the club but, presumably, he could ask for the loans to be repaid, presumably today they would appear as an asset on his balance sheet?

Also as regards the shares, they will have a value on his balance sheet. At the moment, they are going to be showing a loss at today's valuation but, in a couple of years, with a new stadium and hopefully an improvement in the playing side, they could be showing a profit.

Basically what I am saying is that, whilst he has provided the club with £692M, at the end of the day, the actual cost to him is likely to be much less.

Paul [The Esk]
14 Posted 12/02/2023 at 16:02:03
Andrew #11,

Moshiri has been seeking buyers of the club at around $450m with no serious takers. One group offered less than $400m. That reflects where we are, loss-making, still large capex to find, relegation-threatened.

Paul [The Esk]
15 Posted 12/02/2023 at 16:10:25
John #13,

The balance sheet reflects the money put in by Moshiri, including called-up share capital, share premium account and other reserves (shareholder loans).

The £692m is the amount of cash that has gone into the club from Bluesky Capital in loans and share purchases or conversions (assuming all the drawdown was used).

One day, the club may be worth more than that but currently, it is worth nowhere near that, IMO.

Bill Gall
16 Posted 12/02/2023 at 17:34:26
I understand that shares are privately traded and, with no official share price, the cost of shares is governed by how much one is prepared to sell or buy, with at times the price dropping significantly for bulk lots.

If this transaction goes ahead, as you believe, there were other shareholders who held 6.12% of the shares, do they maintain 6.12% of the total shares and do you think it will increase or decrease the value of shares in Everton FC?

Allen Rodgers
17 Posted 12/02/2023 at 17:49:03
Bill @15.

Not sure where your figure of 6.12% comes from. There are 6,219 shares held by small shareholders out of a total of 135,000, ie, 4.6%.

Tony Abrahams
18 Posted 12/02/2023 at 18:36:39
Has Moshiri got anyone looking at the club now, Paul?

I've heard there's interested people who have moved things on to their solicitors, but also been told that nothing will be happening before May. Who knows?

Bill Gall
19 Posted 12/02/2023 at 18:41:03
Allen #17

They were from the last figures that I had noted with the totals of Blue Holdings having 93,698 or 92.16% and Kenwright having 1,750 or 1.72% and others having 6,219 or 6.12%.

If your figures are correct then it answered what I was asking, in that more shares have been added. Blue Holdings who now hold 127,031 shares or 94.1% and that dilutes the percentage of shares owned by others. I note that Kenwright's have gone down to 1.3% and others to 4.6%.

Christopher Timmins
20 Posted 12/02/2023 at 18:46:16
Valuations relating to minority shareholdings are usually heavily discounted due to the lack of influence they yield!
Allen Rodgers
21 Posted 12/02/2023 at 19:21:26
Bill, you are correct. Figures from the club website:

Blue Heaven Holdings Limited* 127,031 94.1%
W Kenwright CBE (Chairman) 1,750 1.3%
Other Shareholders 6,219 4.6%
Total 135,000 100%

I own one share for sentimental reasons. I'm told current trades are £3k/£3.5k. As others have said, small shareholdings are not very valuable as they have no influence on how the club is run. In my opinion, however, a large block of shares could be worth considerably more per unit.

Paul [The Esk]
22 Posted 12/02/2023 at 22:22:17
#18 Tony, my understanding is that yes other parties have been interested but the expectation is that a minority investor will close in the next few weeks.
Dupont Koo
23 Posted 13/02/2023 at 03:32:31
Thank you Paul for another detailed explanations.

Whoever chips in that £105+Million, be it MSP or others, will not allow Kenwright & his entourage to flush their investment down through River Mersey to the Irish Sea. That would be exactly what we need in terms of moving the needle towards ousting the current board.

Mike Gaynes
24 Posted 13/02/2023 at 06:05:07
Paul, many thanks for this clarity.

As you point out, the minority investment from MSP would improve the balance sheet, the quality of the board (especially if both Najafi and Moorad take directors' seats) and the opportunity in debt markets due to increased credibility.

But it would also be a strong endorsement of the overall future of Everton. These two guys are smart, disciplined and expert in all aspects of sports management and marketing, and they do not make mistakes with their investments. If they buy into this club, it's because they see tremendous potential.

As a bit of background, Najafi remains minority owner of the NBA Phoenix Suns, whose ownership change was approved by the league last week. When the new majority owner bought out his the scandal-destroyed predecessor, some of the minority owners were asked to sell him their shares as well. Najafi was not. The new owner wanted him to remain part of the structure.

(And two days after the changeover, the Suns stunningly traded for Kevin Durant, probably the most highly valued superstar in the game.)

Tony Abrahams
25 Posted 13/02/2023 at 08:24:21
Thanks Paul.
Trevor Powell
26 Posted 13/02/2023 at 09:29:55
Jim Potter @ Comment 2 "It seems incredible to me that someone has been that successful in one sphere of business only to be so incompetent in running our club."

I know I have mentioned this before (and may be apt with our new Burnley revolution).

In the early seventies, veteran Burnley Chairman Bob Lord was interviewed on a Sportsnight about his opposition to live televised football would ruin football.

He then made a comment to the effect of how very successful business people buy out football clubs and at the the exact moment of dotting of the i's, ignore all their business skills and make a**** of themselves.

Clive Rogers
27 Posted 13/02/2023 at 10:17:28
I wouldn’t expect anything before May. These people are no fools and would not want to buy into a PL club only to find they have bought into a championship club if relegation happens. They will sit tight until PL safety is assured. If we are relegated who knows what will happen.
Lenny Fisher
28 Posted 13/02/2023 at 11:10:27
Unbelievable the damage Kenwrong has done to our club.

We need to lever him and his pals OUT.

KEEP UP WITH THE PROTESTS UNTIL HE IS GONE.

Danny Baily
29 Posted 13/02/2023 at 12:31:04
Lenny 28, did you read the article?
Mike Owen
30 Posted 13/02/2023 at 13:40:29
Paul, thanks for your latest effort to bring clarity to our financial situation.

Key for me is something you said in the comments section:

"The stadium will add to shareholder value as an asset that will generate future income for the business.
The degree of additional income will depend on ticket pricing and the financing costs of the debt."

I don't have accountancy skills, nor have I studied the numbers in the detail that you have, Paul, but I would suggest that we cannot assume the "additional income" will exceed the "financing costs of the debt".

Although, by the "financing costs of the debt", are you referring to just the interest payments, or to the interest payments PLUS actual debt?

Andrew Taylor
31 Posted 13/02/2023 at 16:28:48
Michael 12 and Paul 14 -
I think the Forbes valuations from May 22 are interesting actually - the numbers for the RS and Man Utd, once converted for currency, are NOT far off the valuations being discussed by loitering bidders in the press as they are both touted for sale. Our neighbours less so perhaps, but then they look altogether less attractive than 6 months ago with Champions League/Europe no longer seemingly guaranteed.

The point about Moshiri being offered "under $400m" for the club is that he rejected it - if it's even true - so it is clearly NOT the established value of the entire club. If I considered a Forbes valuation (and why wouldn't I over, say, fan conjecture) then they valued us at about £740m in May last year. Don't get me wrong, at this very moment, that's clearly not a number that's going to happen. But then we're not likely to be sold right now at all with our status in doubt and THE significant asset still under construction.

You're right Michael, we're only worth what someone will pay. The converse is also true: as a private company our 'price' for a controlling stake is whatever it takes to make Moshiri sell. And we need to face the fact that right now it looks like he is not going anywhere, there is nothing we can do about it, and a new minority stakeholder bringing new equity capital and the promise of some external expertise is about as much as we dare hope for.

Paul your analysis of the published figures is superb, but when you stray into comments below the line like 'Moshiri is looking to sell for $450m and was offered less than $400m' - where does that come from? What is the evidence? It is known that Moshiri has sought minority investment - possibly even at a discounted price equivalent to the quoted figure pro rata for that minority stake - but it's quite a leap to then say 'he wants to sell the lot for $450m' at a significant loss and at possibly the worst possible time to realise the value of his 'investments'.

Paul [The Esk]
32 Posted 13/02/2023 at 16:31:58
#30 Mike. The debt is likely to be relatively long term debt, repayable in 10,15 maybe even 25-30 years with annual fixed interest payments to the debt providers. Corporate debt is consoderably more expensive than pre pandemic & will be anything from 7% upwards IMO

So £200m of debt may cost £14m min pa to service. Difficult to say what the increase in matchday revenues will be but I have estimated perhaps close to £50m a £32m gross uplift on expected Goodison receipts. Add in naming rights (?) and other sponsorship, assuming we stay in the PL then the new stadium will generate maybe £20-25m pa more than Goodison after financing costs. All very rough figures as there are so many variable. Hope it helps though

Paul [The Esk]
33 Posted 13/02/2023 at 16:35:07
#31 Andrew, thanks for your comments.

I am privy to information from people who have or who are currently working on Moshiri's ownership options relating to Everton. I can't give any more detail.

Tom Hughes
35 Posted 20/02/2023 at 13:09:32
It's always been quite difficult to see how the finances work for this project moreso since USM were sanctioned and costs have supposedly risen by 50%. Beyond the ultimate act of owner Philanthropy it struggles to add up in my "non-financial" mind. So any further analysis and explanation is very welcome, thanks.
Joe Hurst
36 Posted 22/02/2023 at 12:02:31
It’s always appreciated, the work you do - on explaining things that many (including me) couldn’t understand, as well, the depth of.

You continue to highlight important matters that affect the club we love.

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