Everton hit by new cash crisis as MSP Capital deal collapses

2 minute read

Farhad Moshiri’s attempts to sell a potential 25 per cent stake of Everton to a United States investment firm have collapsed at the 11th hour amid fresh misery for the crisis-torn club.

Telegraph Sport understands MSP Sports Capital walked away from an exclusivity agreement after being told it would have to pay off an existing lender.

Under the terms of a prior deal by Everton, Rights and Media Funding Limited demanded “high tens of millions” from MSP before a penny went into the club.

A deal had been expected to be sealed this month but the existing lender’s demands could now present a major headache for the club should it seek to find a new partner. Instead of buying a stake in the club, MSP have instead handed over a £100 million loan which will support the construction of Everton’s new ground at Bramley-Moore Dock. However, there will be no club equity purchase which was expected to amount to £150 million when an exclusivity agreement was struck in May.

The timing of the deal collapsing piles more pressure on a club ownership that has faced years of criticism from fans. Everton have lost their opening two Premier League fixtures, to sit bottom of the table, and there have been bitter complaints about the team’s failure to recruit adequately over the summer.

The club is also preparing to appear before an independent commission on October 25 over its alleged breach of financial fair play rules. Executives have been confident they will prove they are compliant over charges which are understood to relate to a tax issue surrounding loans for the club’s new stadium. Everton have denied wrongdoing and said they were “prepared to robustly defend” their position.

However, after back-to-back relegation battles, fans are running out of patience with an existing regime which announced financial losses for the fifth successive year in March. Cumulative losses over the past five years now amount to more than £430 million. Under Premier League rules, clubs are permitted losses of up to £105 million over a three-year period, but Everton blamed the Covid-19 pandemic for part of the losses.

Last year, Leeds and Burnley wrote to the Premier League asking for Everton’s accounts to be independently investigated, although they later dropped their threat of legal action.

Chief executive Denise Barrett-Baxendale, chief finance and strategy officer Grant Ingles and non-executive director Graeme Sharp all left their boardroom roles at the end of last season.

Bill Kenwright has remained as chairman, however, at Moshiri’s request. Cheshire-based Rights and Media Funding Limited have a loan facility with the club that extended to £200 million this year. The firm struck negative pledge clauses which mean the holder can demand repayment of its debt before the borrower takes on any further borrowing.

The £100 million loan from MSP will at least allow Moshiri to repay £40 million borrowed from English businessman Andy Bell in May as a bridging loan. MSP, a private equity firm, has stakes in a host of European teams as well as F1’s McLaren and the NBA’s Phoenix Suns.

However, with an expensive stadium to pay for, Moshiri will now be expected to pursue an alternative new partner. One option will be to resume talks with 777 Partners.

Prior to Russia’s invasion of Ukraine, Moshiri had no trouble generating fresh investment. His business partner Alisher Usmanov was a major sponsor for the club but the Uzbek-born oligarch was added to the UK’s list of sanctioned individuals.

Everton, MSP and Moshiri were approached by Telegraph Sport for comment.