The American company, 777 Partners, attempting to acquire the Premier League club, has not supplied the necessary information to a British regulatory body.
The proposed sale of Everton F.C., a Premier League soccer team, to a Miami-based holding company called 777 Partners, has hit a roadblock. The reason is that 777 Partners has not provided audited financial statements to the British government regulator responsible for approving the deal, the Financial Conduct Authority.
This request from the Financial Conduct Authority was made this month, as confirmed by sources familiar with the approval process. These sources spoke anonymously since they were not authorized to discuss the matter publicly. If 777 Partners fails to furnish the requested financial documents or offer a satisfactory explanation, their plan to take over Everton, which involves a substantial amount of assumed debt and a coveted spot in the world’s wealthiest soccer league, could be in jeopardy.
The absence of these financial documents represents the most significant challenge in 777 Partners’ ongoing effort to acquire Everton, adding to their collection of high-profile but financially troubled sports teams over the past two years.
The failure to complete the sale could have severe consequences for Everton’s financial stability. Everton, a founding member of the Premier League, is burdened with the ongoing expenses of an unfinished new stadium, over $500 million in debt, and an anticipated annual loss of around $100 million. The club’s financial situation is so dire that it relies on monthly injections of millions of dollars, including a recent multimillion-dollar loan from 777 Partners, to continue its operations.
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“777 Partners has stated that, out of respect for the ongoing regulatory approval process for its proposed acquisition of Everton F.C., they will refrain from making any comments,” as mentioned in their statement.
Farhad Moshiri, the current owner of Everton, addressed concerns regarding any potential delays or doubts about 777 Partners’ suitability as Everton’s custodian. He expressed his confidence in 777 Partners, emphasizing their professionalism and commitment to meeting deadlines. He eagerly anticipates their successful completion of the regulatory approval process, adhering to the initially set timetable, as stated in his interview with Sky Sports News.
In September, when 777 Partners initially announced their deal to acquire a controlling interest in Everton, they aimed to finalize the takeover by the year’s end. However, this timeline is now in question.
To gain approval for the sale, 777 Partners must satisfy not only the Financial Conduct Authority but also the Premier League and England’s Football Association, demonstrating that they are a “fit and proper” steward for the historic 145-year-old club.
Nevertheless, according to several individuals familiar with the process and a review of related documents, these regulatory bodies are dissatisfied with the financial statements provided. They have particular concerns about 777 Partners’ failure to supply up-to-date audited financial records for a holding company that encompasses renowned soccer teams in various countries, alongside investments in structured finance, insurance, media, and airplane leasing.
The approval of an Everton sale faces obstacles beyond the audited records. Authorities are also requesting information about the source of funds for the acquisition, a concern similar to what Belgian soccer authorities raised last year when considering a license for another team owned by 777 Partners, Standard Liège. At that time, 777 Partners couldn’t provide their most recent audited accounts, a standard requirement for assessing the financial stability of businesses funding teams in the top league.
Ultimately, the Belgian soccer committee found it unacceptable to remove one of the league’s major teams, so a compromise was reached. Now, 777 Partners faces a similar situation with the clock ticking.
While 777 Partners focuses on buying Everton, current and former employees have raised questions about the company’s financial viability. The firm, which has grown rapidly since its 2015 founding, has reportedly missed regular payments to various businesses, vendors, and partners, including brokers involved in soccer deals.
Some individuals claimed that 777 Partners, despite Mr. Wander’s recent statement of having 3,000 employees, has missed payroll on at least two occasions. Current and former employees have also reported unpaid bonus payments, a significant part of some executives’ compensation.
777 Partners stated that “all contractually guaranteed bonuses have been paid,” but acknowledged a separate incident this year where they failed to pay the electric bill for their headquarters due to miscommunication.
If 777 Partners were to provide British regulators with a more comprehensive financial picture, they would likely find that most of 777’s soccer ventures have been funded primarily by A-Cap, a single company. A-Cap, a long-term lender to 777 Partners, has the largest exposure to many of 777’s businesses, including their soccer investments.
For example, a unit of A-Cap provided most of a loan of at least $25 million to Everton after the team purchase was announced. The reliance on money from A-Cap, totaling at least $1 billion in loans, has become so significant that 777 Partners is required to regularly update A-Cap executives about their ongoing business plans.
The relationship between the two firms is so interconnected that 777 Partners provided A-Cap with a $9 million loan last year to acquire a beachfront apartment in one of Miami’s wealthiest neighborhoods. Officials from 777 Partners declined to comment on this arrangement, and A-Cap did not respond to an email seeking details about their relationship.
Despite the questions surrounding 777 Partners’ finances and soccer ambitions, it has not seemed to affect Mr. Wander, who was recently elected to the board of the European Club Association, a prominent group of Europe’s top soccer teams.
This board seat was highlighted in a prospectus by 777 Partners to raise more capital for its soccer business. The group aims to raise around $250 million by the end of the year to support its purchase of Everton, which faces bankruptcy without a new owner or additional capital.
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