If any club in the Premier League has needed a leg-up financially in recent years, it is Everton. And now, at the dawn of the Dan Friedkin era, one could be on the horizon.
As well as their well-documented issues in terms of Premier League Profit and Sustainability Rules (PSR), Everton were until recently staring down the barrel of a cash flow crisis under Farhad Moshiri.
The British-Iranian billionaire’s money appears to have almost totally dried up after pumping hundreds of millions in Everton, leaving Everton just weeks away from being unable to pay bills.
However, Dan Friedkin’s imminent takeover will not only reduce their debt burden and ease anxieties about the transition to Bramley Moore Dock but also ensure that the club can continue operationally.
To explore the financial issues of the day for Everton, TBR Football spoke exclusively to Liverpool University football finance lecturer and industry insider Kieran Maguire.
Bramley Moore Dock naming rights
Over two years ago, Everton appointed an agency to find a naming rights partner for the new stadium at Bramley Moore Dock.
Less than a year out, Everton have not yet named a branding partner, despite having held talks with the likes of Qatar Airways.
However, Maguire is confident that an ultra-lucrative deal is still on the cards, potentially surpassing the £20m-a-year that Spurs wanted for the naming rights for the Tottenham Hotspur Stadium.
“Everton have a lot of positive attractions for a prospective sponsor,” he said.
“There is the stadium coming online and a lot of benefits in terms of first-move advantage there,” he said.
“Having a combined front-of-shirt and naming rights deal could be significant.
“We have seen that at the Emirates, Etihad and Amex Stadiums. All of those have been long-term deals, 10 years-plus.
“If they are going to do something on this front, it is important that they are proactive. We have seen at Spurs that they prevaricated and have potentially lost money.
“There is also the danger that if a stadium goes with one name for a very long time, trying to get a new name into the public consciousness can be difficult.
“However, Arsenal were originally Ashburton Grove and City were originally the Commonwealth Stadium.
“But I do think they can benefit from getting the naming rights tied up with the opening of the stadium itself.”
“In terms of value, I think £20m-plus is realistic. That’s likely to be £200m over a 10-year deal.
“Everton are still a big hitter as far as interest in the Premier League is concerned and they will always point out that they are the senior club in the city of Liverpool.
“They have history and heritage and a passionate fanbase. All of those are appealing to sponsors, as is their relative closeness to John Lennon Airport and Manchester Airport.”
Soft loans and the impact of Man City’s legal victory over the Premier League for Everton
Last week’s big news was that Man City had at least partially succeeded in their challenge to the Premier League’s rules on associated party transactions.
The rules, which cover commercial deals, were introduced to ensure agreements struck with owner-linked entities represented fair market value, so as to prevent clubs artificially inflating commercial income to bypass PSR.
Everton, whose relationship with the Premier League has deteriorated significantly over the past two years, gave evidence in favour of City at the tribunal.
Showdown talks between Premier League clubs have scheduled for some time this week to iron out the direction that a new set of APT rules will take, with Everton one of the clubs known to be in attendance.
One other outcome of the APT hearing has been that soft loans – that is interest-free loans from shareholders – will now be treated as an APT and therefore be subject to fair market value rules.
Everton have over £450m in soft loans, and they could theoretically see a commercial interest rate applied to those loans for the purposes of PSR.
However, Maguire believes that Friedkin’s imminent takeover will ensure that Everton’s PSR quota is not strained any further by this development.
“Farhad Moshiri’s loans to Everton are being classified as equity in the accounts.
“This has caused a few raised eyebrows among certain members of the accounting community.
“If you are going to treat them as equity, why not just reclassify them as shares and be done with it?
“However, as far as the Friedkin deal is concerned, my understanding is that Moshiri is looking for something up to £50m for his part of the settlement.
“Effectively, he will be writing off the value of the shares he has bought and the £450m of loans in a combined payment of up to £50m.
“I presume he will be happy with this. The ultimate source of his funding has always attracted a lot of discussion.
“His non-appearance at Goodison and lack of communication at recent times shows he has already checked out mentally. He is probably ready to check out financially.
“It has been a very bruising experience for him because of his naivety and his lack of understanding of the nuances of the industry.
Friedkin assembling new Everton exeuctive team
In a telling update last week, Friedkin set up what appears to be the vehicle through which he will buy Everton.
Roundhouse Capital has been incorporated by Toffee Investments LLC and has named two Roma directors, Analaura Moreira-Dunkel and Marc Watts, on its board.
It is likely that the two executives will also take seats on the Everton boards in a move which Maguire thinks can only be positive for the Premier League club.
“Dan Friedkin will be keen to make the right decisions as quickly as possible if his plan to take over succeeds.
“Having people with experience in the industry on the board will be significantly beneficial.
“You only have to look at clubs who have had American owners come in an presumed that their knowledge of US franchise sport is sufficient to be successful in football only to have their fingers burnt.
“If you take a look at Ellis Short at Sunderland and Randy Lerner at Aston Villa, they both lost hundreds of millions.
“Friedkin will want to make sure he appoints the right people. I think the most important thing will be appointing a chief executive who understands football, the club, and the finances.”