Everton fans are understandably fearing the worst. Photo: Getty Images/Alex Livesey
Everton players have been paid this month, and all other payrolls, as well as contractors at the new stadium at Bramley-Moore Dock, as well as HMRC, which may be a minimum requirement, but something… that means another stormy week.
The collapse of the proposed takeover by 777 Partners has sparked a new wave of pessimism about the club, and it's not hard to see why. American investors with such a dubious reputation, moving forward with the blessing of owner Farhad Moshiri, were hoping for a quick deal. They had nothing like this, and now the problems are piling up. On Friday night, Belgian club Standard Liege, part of 777, postponed its game when fans blocked the team bus from passing in protest against Miami owners.
For Liege, the immediate future looks bleak. As for Everton, it cannot be said that it is a standard of stability. But they continue to work in the short term. Debt of around £500 million to three key parties, including 777, each of which has different levels of collateral on its loans, looms on the balance sheet. These are difficult problems and Moshiri has spent so much time relying on 777. But Everton have yet to find the most radical solution of all.
Administration is not an easy solution, but it is not the best solution either. It only becomes a real solution when it becomes the only way out. Despite all the penalties that come with it, this may seem attractive to some potential buyers. But its consequences will be devastating for many people who had little to do with the matter, including around 900 Everton staff. The same goes for many lenders. And the less, the stronger the effect.
In Everton's case, Laing O'Rourke's stadium contractors will have no choice but to stop working on the site if the administration does so. This isn't a wardrobe build that you can just pause and come back to later. The sheer complexity of these construction schedules makes the idea of so-called tactical management — absorbing a mandatory point deduction this season and starting again next season — patently absurd.
Everton's new stadium at Bramley-Moore Dock is nearing completion. Photo: Peter Byrne/PA
Administration, as in many of these cases, is always an option. But this is far from a good option. At the moment, Everton's position is clear: they are not even close. Between what may well be confirmation of the end of 777's interests and difficult negotiations over the debt of the proposed new bidder, much remains to be done.
It would be difficult, to say the least. It will be a difficult road ahead which will see a new owner take over the club with £500m of external debt restructured and, thanks to the sales of players already monitored by Sean Dyche, keep the team competitive in the Premier League next season. It can be argued that the experience gained by the club in recent years allows it to effectively manage football crises. They know how to do it.
Moshiri will need to write off his staggering loan of around £450 million. He certainly assumed he would do so, and it would remain a striking addition to the legacy of one of the most unpopular football club owners in recent history. The club will need to find a way to sell players such as Jarrad Branthwaite and Dominic Calvert-Lewin for good prices in a market crowded with sellers struggling to comply with profitability and sustainability rules (PSR). They will have to turn the loan market into a team capable of finishing 17th or better. They will have to come to an agreement to avoid a possible third PSR violation.
All this is not an easy task, but it is better to try to create a miracle. Everton's value depends on the market. However, there has never been a club of this magnitude and a new stadium so close to completion. This alone should be enough to try to create some incentive to find a solution to the debt problem.
Football has had its own sad history of club administrations in the recent past, dating back to a single case in the Premier League, with Portsmouth in 2010 year. Remarkably, everyone from Bury to Derby County have returned in some form. Football clubs tend not to disappear. But that doesn't make the task easy, in this case or any other, and the scars on the club run deep.
In 2010, Portsmouth chief executive Peter Storrie (left) faced angry fans when the club went into administration. Photo: Glyn Kirk/AFP
Governance is an outcome that will of course not be entirely in Everton's hands if one of their biggest creditors decides that is the best option. The ripple effect from 777's troubles, with loans totaling around £192 million and likely under intense pressure from its creditors, is difficult to predict. MSP Sports Capital, which has debts of around £160m, is unlikely to be such a candidate. Their partners in this loan include Everton fans and property developers Andy Bell and George Downing, as well as Moshiri himself.
Football is a risky business and, despite the possibility that a new independent regulator will try to impose clubs a regime in which sustainability makes investment almost impossible, such is the nature of the sport. Moshiri's years at Everton will be hailed by those who believe owners should be forced to issue bonds and provide guarantees for every pound invested. Many clubs walk a fine line and achieve success, but that was not the case with this club's owner.
What matters now is how Everton come out of this situation — and the scale of the task is enormous. The prospect of control always exists, but in the meantime many things can happen that could prevent it.
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