Latest Everton share auction requires careful handling by the Friedkins

The multiple factors which led to the near financial collapse of Everton Football Club, including the huge debt burden, loans from non-prime lenders, failed takeovers and lending from 777/A-CAP combined with the huge, inflated cost of building and funding Bramley-Moore and poor on-the-pitch performance could not, even with the best will in the world, occur without significant damage to Everton’s competitiveness, its PSR position, Moshiri’s wealth, huge interest costs incurred by the club, and yes, consequences for the minority shareholders of Everton, those that hold a tiny 7,969 shares (0.5%) of the 1,621,287 shares in issue.

The remaining shares, totalling 99.5%, are owned by the Friedkins, through their acquisition vehicle, Roundhouse Capital. In the course of the takeover and financial restructuring, Everton issued 150,250 new shares at a non-cash value £3,000 each to convert Moshiri’s loans of £450.75 million and a further 1,336,537 shares at £174.66 to fund the repayment of loans and provide working capital.

The vast majority of the minority holders own Everton shares for emotional or family reasons rather than as an investment. That in itself is fine, it is well documented that almost all holders have no desire to sell their shareholdings which are often just one, two or a single-digit number of shares.

What is not so well documented, or had even been discussed (other than the question being asked on this site several times) is what impact the financial restructuring would have on minority shareholders.

Let me be absolutely clear, that this is not a dig at the Friedkins. It was obvious and backed by numerous examples of takeovers of failing businesses that the existing shareholders pay the price for the mistakes of the previous management. And this is the case here.

However, what is unusual, and worthy of comment at least, by our new owners, the Friedkins, is the situation that allowed shares in Everton Football Club to be traded at nearly twenty times the price the Friedkins paid for their newly issued shares, just a few days before the takeover was completed. Again, just for clarity, the issue of the new shares was absolutely necessary and the share price paid by the Friedkins created a recapitalisation at a reasonable, fair value, in my opinion.

Buying and selling Everton shares

 

As most will know, Everton Football Club Company Limited is a private limited company. It is not a quoted company (ie its shares are not traded on a recognised stock exchange) such as, for example, Manchester United.

Historically, Everton shares have been bought and sold on a matched bargain basis, through Liverpool-based stockbrokers, Blankstone Sington.

In common with several other non-quoted football clubs, Everton moved to a service called Asset Match who receive a commission for bringing buyers and sellers together via an online auction. The service is administered through the stockbrokers Albert E Sharp.

What does this mean? It means that buyers of shares bid for shares at a certain price, and sellers offer shares at a certain price and a deal is done when the two match over a defined period. Asset Match’s website can be found here.

All deals are subject to the approval of Everton’s directors (as per Everton’s Everton Articles of Association, Article 6.2) which gives the directors absolute discretion to approve a transfer of shares.

The three auctions since 12 October 2023 have produced the following results:

Date	Shares traded	Price	Auction Details
12 October 2023	42	£3,700	Everton – Auction Result
1 August 2024	101	£3,500	Everton – Auction Result
29 November 2024	72	£3,400	Everton – Auction Result

It is important to note that the last completed auction, completed on 29 November 2024 was completed before the conclusion of the Friedkin takeover. The terms of the takeover were communicated with shareholders by letter on 18 December 2024 (details here).

On 23 January 2025, Matt Lawton, Chief Sports Correspondent of the Times wrote an article (here). In the article, he included the concerns as expressed by a buyer of circa 60 shares in the last auction concluded on the 29 November 2024. The article also expressed the concerns of the Everton Shareholders Association.

Concerns

The concerns centre on the fact that the board of Everton under Moshiri (Farhad Moshiri, Colin Chong, Katie Charles, and John Spellman) permitted a public auction of shares to be held when it might be reasonably argued that they had knowledge of, or a reasonable expectation of a significantly dilutive share issue in the very near future, Based on the share prices achieved at previous auctions it might not be unreasonable to assume a similar price in the November auction.

Thus the new owners, the Friedkins, and the new directors of Everton Football Club have a tricky issue to resolve, although again it should be stressed the Friedkins had not acquired ownership of Everton at the time of the auction.

Wider concerns re the role of minority shareholders

With the minority shareholders (including the former Chairman’s estate)  now only owning collectively 0.5% of Everton Football Club, a wider issue with regards to their future role needs to be addressed by the Friedkins.

It is clear as minority holders within a private limited company, the individual and collective rights are extremely limited. However, nonetheless, shareholders still retain some rights including the right to vote, receive company accounts and have access to certain information – for example the right to inspect director’s service contracts.

As a football club one can argue, and must argue that any prudent majority owner would recognise that there is an expectation of minority shareholder rights’ that go beyond the minimum rights granted via statute.

This is an issue that I believe the Everton Shareholder Association are about to address with the club in the coming days.

Handle with care

What exactly can be resolved with regards to the results of the auction is much more difficult to ascertain. Whilst the most recent buyers will feel hugely aggrieved with the outcome and the likely highly dilutive effect on the share price of the takeover and recapitalisation, the sellers will argue that the concept of buyer beware – “caveat emptor” – and the fact they sold in good faith must have some bearing.

It is an unfortunate issue for the Friedkins to inherit. Instinctively, it feels that doing nothing is not a viable solution (even if strictly it appears a legal option). It needs handling with care.

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