Aries
Player Valuation: £10m
Guess what....
Manoukian is an Evertonian.
“all equity bid would not see club take on additional debt”
Well that’s the pick of the bunch thus far for me.
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Who's your money on in the takeover 'battle'?
- Thread starter BNJ1878
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“all equity bid would not see club take on additional debt”
Well that’s the pick of the bunch thus far for me.
Can't hold that against him...
Lapeno77
Player Valuation: £35m
That's a well thought out, reasoned choice.
I voted for Manoukian because he's Armenian, and they got stuff done in GTA5
Tony’s Carp
Player Valuation: £50m
Doesn’t sound like an “unserious” bid to me. Lot of PR spin to all these things of course but it sounds like there is proper (non-borrowed) heft behind that one. Got my vote too, for the next hour at least.
Had a feeling Manoukian was a blue when he declined GrandOldTeam's request to follow him on Instagram last night...
Imagine him sat there "not having them nobs follow me"
Imagine him sat there "not having them nobs follow me"
Aries
Player Valuation: £10m
See what you’re saying but they do follow up these original posts with another with a link to the article. I like this account personally, saves me trawling through all the guff that’s on my timeline these days.
Glasshalffull
Player Valuation: £10m
Thank God!!!!! Somebody else who knows nothing about the complex financial machinations involved in all this. I thought I was alone in my ignorance. That's two of us, now, then.
Mutzo Nutzo
Player Valuation: £70m
I’m all over the shop here. Exciting times
summerisle
The rain, it raineth every day
Think it's got a lot easier now.
One group can buy Everton with their own money. An all equity bid.
Another group would borrow loads of money, debt Everton would carry.
….FOMO, Manoukian for me too.
Librarian
Player Valuation: £70m
Credit to some lad on Reddit:
__________________________________________________________________________________________
Hello Evertonians! I am an FC Barcelona fan, based in Los Angeles, who works in Sports Finance. My neighbor and his wife, who are Evertonians, came over to chat and understand what’s up with the club. It's Saturday night here, and I didn't have anything better to do, so I dug into things.
I will try to simplify things from what I read and the conversations I have heard. I am not involved with the buyout but know folks who are. It's a much smaller industry where everyone knows everyone.
Here we go.
The Debt
MSP Sports Capital has two distinct security arrangements:
- £159 million – MSP Sports Capital
- £225 million – Rights and Media Funding
- £4-5 million – Metro Bank
- £190 million – 777 Partners (Inherited by A Cap)
- £450 million – Moshiri Shareholder Loans
Rights and Media Funding is a five-year rolling credit facility. Think of this as something similar to a credit card. Here is where you get conflicting information. A significant discrepancy in reporting, which in my opinion can be a dealbreaker. A few outlets report this loan is secured by future payments from transfers/media, etc. I likely believe it is secured against Everton’s bank accounts, fixed charges over Everton’s property portfolio (near Goodison Park), and a floating charge over all other unencumbered assets. (Shoutout to The Esk, he is an absolute gem). This RMF debt accrues a 10.25% interest.
- Assets of Everton Stadium Development Company Limited. This means that in default, MSP can acquire the new stadium to recover their loan. Slightly complicated to explain, but Andy Bell, George Downing, and Moshiri through Blue Sky Capital are also funders of this project.
- Alternatively, MSP has an option to acquire 50 per cent plus one share of Everton’s issued share capital, which would give MSP majority control over Everton Football Club.
These are the loans that Everton will have to pay regardless as they are secured well.
Loans to 777 Partners (Inherited by A Cap) are likely junior to these two loans. In any bankruptcy event, MSP and RMF get paid first before 777 Partners and Moshiri. However, A Cap says their loan is secured and they are senior creditors of the club, which would put them at the same level as MSP and RMF.
The Timing
Something that came up in the chatter was the timing of this takeover. It is interesting as Everton is due to receive prize money payments from the league which are stood at £133 million. This is the money the club receives from the overall competition commercial pool, which is distributed to all the teams, based on a few things, for example, their position in the league table at the end of the season.
Folks involved in financing other clubs have said this payment likely hits before 30th June. There is another payment due in August/September which is the first tranche of payments from the league. (Unsure on this one, but this is what I heard, payment flows vary a lot).
Despite the timing, the payments would go only so far in helping the club and were likely factored in during takeover talks. My bet is the takeover is likely to complete before 30th June, or at least a structure is agreed upon. 30th June is the deadline used for accessing Premier League Profit & Sustainability Rules (PSR) compliance.
If deals can be done before that “deadline”, they fall within transfers for the 2023/24 season and are included in the club’s financial accounts for last season, rather than moving into the new campaign. If the plan of the new owners is to recapitalize the team, pay down some debt, and sell players to avoid another PSR violation penalty, my bet is the deal gets done before June 30th.
The Sale
The Buyers As of today, June 8 11:00 pm PDT, here are the potential suitors:
Hear rumblings of another group, but almost everyone is looking to finance the takeover using debt along with equity. Many suitors will be willing to provide debt-based financing for the purchase, hence allegiances are bound to change.
- Andy Bell, George Downing, backed by BDT & MSD Partners (More on this later)
- A consortium led by MSP Sports Capital
- Vatche Manoukian and Investors from Gulf and USA
- John Textor, founder of Eagle Football, owns 45% of Crystal Palace
- Dan Friedkin, Owner of AS Roma
The Possibilities
Here are the things that can happen. I am simplifying this to the bare minimums. The actual deals are complicated af and take months to put up and months to complete.
Possibility I: New Owner comes in, pays all debt, and recapitalizes the team
Highly unlikely. The Premier League is a lucrative league for almost every single private equity investor. It’s the league that is expected to continue to grow and firms take less downside risk when buying a team versus a team in a league like Serie A.
However, this would cost any new owner over £1 billion. My bet it costs somewhere around £1.3 billion. Deals of this size happen, but Everton is in a unique position and negotiating from a position of weakness. In my opinion, only someone in the Middle East or a single buyer would be able to pull this through. No one in private equity would commit to this, as they are all answerable to their investors.
Simply put, Everton is not worth £1.3 billion.
Possibility II: New Owner comes in and negotiates with creditors
A likely option. In this case, a new owner comes in and negotiates with the creditors to either forego some of this debt or restructure it over an extremely long period of time at low rates. This would make Everton a more lucrative option. However, the club would still owe a lot of money over the long run and will be paying interest on that loan.
This would mean Everton is run like a lean machine for a few years, with fewer resources going towards things like player transfers, etc. It would, however, still be able to stay afloat.
Possibility III: MSP Capital exercise the option to take majority control of Everton
Another likely option. More likely than Possibility II. MSP Capital takes majority control and would, in all honesty, look to buy out Moshiri. They will need a lot of capital, and they are already pulling strings, putting up their stake in FC Augsburg for sale last week. MSP buy out Moshiri, restructure some of the debt, and put up some more capital. They would likely clear the RMF loan first.
The managing partner of MSP Sports Capital, Jeff Moorad, was a professor of mine in a class I took at UCLA. He is an absolute beast, and an amazing dude to hang with. Unbiased view, MSP is actually highly respected in the industry, and widely regarded as having a razor sharp approach to finance.
They are known to take long positions, but I think Everton would likely be a position they hold for the short term, IF they go alone on this deal. (This is my take, not Professor Moorad). It would be akin to what Elliott Investment Management did with AC Milan when their Chinese owners backed out. They would step in, stabilize the ship, hope the new stadium attracts enough new commercial and matchday revenue, and sell the team to another buyer recovering some of their investment. What Elliott did with AC Milan was absolutely legendary, and in no world would Gerry Cardinale and RedBird have bought AC Milan had Elliott not done its job.
INSIDE INFO HERE: I cannot reveal others in the MSP Sports Capital consortium. Texted a former colleague who is at the firm that are bidders with MSP. If the consortium is agreed upon, MSP comes in with others, who are capable of buying majority control, and running Everton over the long term. MSP in this case would still retain a minority stake. The new stadium holds the key to this deal.
Possibility IV: Everton goes into administration
Cannot rate this option or its likelihood. Let me walk you through this. Administration is a major taboo in the football world, but something extremely common in finance. It is a way for a firm to basically restructure its debt and get back to good health. It does not mean the club ceases to exist.
The preferred way that things are done is through a method called ‘company voluntary arrangement’ (CVA). In a CVA, a deal is put forth, which creditors vote on, usually giving them less money than they are owed, with voting power decided based on seniority. In this case, MSP and RMF would get more votes in the say versus A-Cap and Moshiri.
CVAs are extremely common in the EFL and other leagues, with advisory firms literally minting millions every year, doing nothing but advising teams here. In the Premier League, only Portsmouth has ever gone into administration. Going into administration would see 9 points being docked at the start of next season for Everton.
The Pros of this approach:
The Cons:
- Everton sheds a ton of debt. This would make it extremely attractive for someone to buy the club.
- The reduced debt will likely be restructured over the long run, hence a free-spending owner coming in can actually devote more money to things like rebuilding the squad, enhancing facilities, hiring more staffers, and growing the club.
There are some speculations online as this being the preferred way in for new owners. I doubt it, but the threat of administration is enough for even the world’s biggest banks/financiers to come to the negotiating table. Every possible new owner would hold this gun over Moshiri’s head, to get him to agree to a deal, and forgo as much of his loans.
- A ton of people likely get fired at Everton, as the club must break even.
- The club cannot spend any more money on signings. They may even sell players.
- Local businesses are affected the most, these are folks who provide things like catering services, produce, florists, etc.
- The Big Kahuna: Going into administration can trigger certain clauses in player contracts that allow them to leave for free. I have seen it happen with teams in the EFL, but the situation remains subjective. Any player with such a clause would need assurances from the new owners before the takeover is complete.
Some Questions I think are FAQs
Is Michael Dell buying Everton?
No, Michael Dell is not buying Everton. Michael Dell’s family office is DFO Management, which was formerly known as MSD Capital. MSD Capital was Michael Dell’s family office, meaning it exclusively invested his money. However, in 2009, MSD Capital opened up to outside investors and became an investment firm of its own. In 2023, MSD merged with BDT to create BDT+MSD, the firm that is backing the Bell and Downing bid.
They do still invest some of Dell’s money, and Dell may be their biggest investor, but as far as I know, BDT is huge itself, managing some of the capital from the Walton Family (Walmart), the Pritzkers, and the Mars Family. BDT’s founder, Byron Trott, is worth about $3.2 billion alone. Trott is considered a legend at Goldman, where he helped Buffett structure his investment in Goldman Sachs during the financial crisis of 2008. One of my ex-bosses worked at Goldman during this period under Trott’s team and considers him a legend, even saying he single-handedly saved Goldman Sachs by convincing Buffett to invest and structuring some wild deals.
One thing I know for sure is BDT+MSD would likely pursue a debt-based financing structure. They are not built to go heavy into equity-based financing for sports teams. BDT+MSD have already done a bunch of debt-based deals; Everton won’t be different. In the scenario where Bell and Downing succeed in taking over, Everton would likely owe a lot of money to BDT+MSD.
Would Bell and Downing with BDT+MSD make sense?
My take here is no. Running a football club is no joke. Even though Bell and Downing being Evertonians makes it ideal, I am not entirely convinced of their ability to run a team. Everton would still be severely constrained financially, as they would owe money to BDT+MSD, and Bell and Downing wouldn’t be able to pump a lot of cash into the business from their end.
There is nothing that guarantees Everton will not see the same scenario as it does now, three years after Bell and Downing take over. Private equity folks make sense, as they come in knowing they may know other clubs but don’t know much about Everton. They will, by default, bring on Evertonians on the board, and will have much more incentive to run it over the long term, as the only way they see a return is through actually growing the club economically, which only means a better Everton on and off the pitch.
Are BDT+MSD backing only Bell and Downing?
No, BDT+MSD are free to back anyone in the contention. They are committing to debt-based financing, so as long as the buyer is credible enough, they should have no problem going ahead. Considering they are backing Bell and Downing, I would be surprised if others in the race did not get better financing terms.
As I said, allegiances in debt-based financing are fluid. The hard truth here is BDT+MSD would likely be calling up other potential buyers who bid to see if BDT+MSD can provide financing for their deal. Debt-based financing for a Premier League club is pretty much a dream scenario for any firm, as the underlying asset securing the loan is more stable than in other deals.
Simply put, BDT+MSD are not competing with other potential buyers; they are competing with firms like JP Morgan, Sixth Street, Ares, Arctos, etc., who may want to front one of the buyers.
What’s up with A-Capital?
I do not know. Conflicting things online. I doubt A-Capital will get to invest anything more in Everton, through debt or through equity. I also read that their financial position is under question as the rating they rely on no longer reflects their financial standing. However, I still do not know what there position is.
Who do I want to see win the bid?
Biased towards MSP Sports Partners because of Jeff Moorad. If they pull the consortium through, and the other investors take over the majority club, all I can say is Everton would be lucky. That being said, there are plenty of other people willing to buy Everton with MSP. As of now, the one most likely, along with MSP, would be a dream scenario.
Also, it wont take time for someone entirely new to emerge as a suitor. That is how consortium works. People are surprised, but its literally like texting friends to pitch in and creating a group chat. Things happen over Telegram/Whatsapp/Signal. My boss had once raised $xxx million for a deal texting the LP in the deal. The conversation went along these lines.
Prospectus sent over Mail + WhatsApp
My Boss : What do you think?
LP : $xxx m
LP : Jeff also $xx m and Jake $xx m
I can bet there are plenty of group chats of potential consortiums that may enter bidding. Everton FC is low-key a bargain, the debt will eventually get restructured. There are plenty of more messy restructurings that have happened in Finance before. Creditors eventually cave, but its a dogfight.
Enough written. Feel free to drop any Qs you may have, I will answer them to the best of my ability and knowledge of Everton’s finances. Massive shout to The Esk. The guy seems incredibly passionate about Everton.
I really hope you guys pull through, I know you will.
Agreed Everton are an absolute bargain with a bit of debt restructuring
PeregrineT
Player Valuation: £35m
So we went from Esk saying the Manoukian bid wasnt serious, to less than 24 hours later the papers reporting he has made an actual 400m all-equity bid, and has been planning this for weeks.
New record?
New record?
davids
Player Valuation: £70m
Bit odd though. Given his background.
Milk
Udderly delicious
But was that time limited or could they revisit it?
Oddly I think I’m in the MSP corner as I think they will give short term stability and then look to sell on in five years or so
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