The proposed sale of Premier League soccer team Everton FC to a Miami holding company has stalled after the firm, 777 Partners, failed to provide audited financial statements to the British regulator that must approve the deal.
The regulator, the Financial Conduct Authority, submitted its request to 777 Partners this month, according to multiple people with direct knowledge of the approval process, who spoke on condition of anonymity because they were not authorized to discuss it publicly. If the company fails to provide the requested financials or an acceptable explanation, its proposed takeover of Everton — a deal involving hundreds of millions of dollars in assumed debt and a coveted spot in the world’s richest soccer league — could fall apart.
The missing documents pose the biggest complication yet in 777 Partners’ bid to add Everton to the group of high-profile but financially troubled teams the club has acquired over the past two years.
If the deal fails to go through, it could have serious implications for the financial viability of Everton, a founding member of the Premier League that is struggling with the running costs of a half-built new stadium, more than $500 million in debt and projected annual losses of around $100 million. Everton’s finances are so dire that the club requires monthly injections of millions of dollars, most recently a multimillion-dollar loan from 777 Partners, to stay in business.
“Out of respect for the process, 777 Partners will not be commenting on the ongoing regulatory approval process for the proposed acquisition of Everton FC,” the company said in a statement.
Everton’s current owner, Farhad Moshiri, on Monday dismissed concerns about delays or the suitability of 777 Partners as Everton’s administrators. “They are very professional and deliver exactly when they say they will, and I look forward to them getting all their regulatory approvals and proceeding with completion on the timescale we have set,” he told Sky Sports News.
When it announced in September that it had struck a deal for a controlling stake in Everton, 777 Partners said it hoped to complete the takeover by the end of this year. That timeline now appears in doubt.
To get the sale approved, 777 Partners must convince not only the Financial Conduct Authority, but also the Premier League and the English Football Association that they believe it is a “fit and proper” manager of the 145-year-old club.
But those agencies are unhappy with the financial statements provided, according to several people familiar with the process and a review of related documents. They are particularly concerned that 777 Partners has failed to provide up-to-date audited financials for a holding company whose subsidiaries include not only well-known soccer teams in Belgium, Brazil, Germany and France, but also investments in structured finance, insurance, media and aircraft leasing.
The audited data is not the only hurdle to approving a sale of Everton. Authorities are also asking the company, run by owners Josh Wander and Steve Pasko, to provide details about the source of the funds behind the takeover.
The questions echo concerns raised by Belgian soccer authorities last year as they considered granting a license to another of the company’s teams, Standard Liège. In those discussions, 777 Partners told the Belgian soccer federation’s licensing committee that it could not provide the company’s most recently audited accounts — a routine requirement in any assessment of the suitability and soundness of the companies that fund teams in the country’s top league.
Ultimately, the prospect of throwing one of the biggest Belgian football teams out of the competition was deemed unacceptable by the committee and a compromise was found. Now 777 Partners finds itself in the same position and the clock is ticking again.
As 777 Partners focuses on completing its purchase of Everton, current and former employees have questioned its own viability. The firm, which has grown rapidly since its inception in 2015, continues to miss routine payments to companies, suppliers and partners, including agents who acted on a number of football deals, according to four people familiar with 777’s operations.
One person said the company, which Mr Wander recently claimed to own, had 3,000 employeeshas missed paychecks at least twice. Current and former employees have also reported missing bonus payments, a key component of some executives’ compensation.
777 Partners said Tuesday that “all contractually guaranteed bonuses have been paid,” but acknowledged another incident this year in which the company failed to pay the electricity bill for its headquarters, an omission a spokesman attributed to a miscommunication.
If 777 Partners were to provide a fuller picture of its finances to UK regulators, they would likely discover that most of 777’s football ventures have been funded by one company, A-Cap. A-Cap has been a long-standing financial backer of 777 Partners and has the largest exposure to many of 777’s businesses, including its football investments.
For example, an A-Cap unit financed the bulk of a loan of at least $25 million to Everton after the deal to buy the team was announced, according to two people familiar with the matter. At 777 Partners, the reliance on money from A-Cap — loans that now total at least $1 billion — has grown so great that 777 Partners is required to regularly update A-Cap executives on the company’s continued operations, according to people with direct knowledge of the matter.
The relationship between the companies is so intertwined that 777 Partners last year provided A-Cap with a $9 million loan to acquire a beachfront condo in one of Miami’s wealthiest neighborhoods. Officials at 777 Partners declined to comment on the arrangement. A-Cap did not respond to an email requesting details about its relationship with 777 Partners.
The questions about 777 Partners’ finances and football ambitions do not seem to affect its figurehead, Mr Wander. He was recently elected to the board of the European Club Association, an influential grouping of the best teams in European football.
That board seat was highlighted in a prospectus produced by 777 Partners to raise more capital for its soccer business. The group hopes to raise around $250 million by the end of the year to finance the purchase of Everton, which is at risk of going bust without a new owner or new capital.
