Everton’s US buyer leaves trail of questions over its finances
As the Premier League decides whether to approve the takeover, 777 Partners says there’s a campaign to torpedo its purchase
LIFE for English Premier League (EPL) team Everton seemed to be finally looking up. After over a year of fruitless takeover discussions, their US$700 million stadium was progressing, the performances on the pitch were picking up and a a US investor with a history of football deals had agreed to buy the club.
That optimism now looks misplaced. Everton were docked 10 points last month for breaking financial rules, and their buyer, 777 Partners, is under scrutiny.
Over the past five years, the Miami-based investment firm has rapidly become one of football’s biggest multi-club owners, targeting teams in financial distress. It previously stated it has up to US$10 billion of assets under management, with businesses ranging from airlines to film studios. It has used assets from its insurance arm to build out its push into football.
But EPL officials studying the suitability of 777 Partners to own a major English football club have also begun adopting a more sceptical stance in recent weeks after questions were raised about its finances.
With the sale of Manchester United looking downsized, Everton are the biggest club in English football changing hands since American investor Todd Boehly and his consortium bought Chelsea last year. Everton would be the prime asset in the burgeoning footballing portfolio of 777 Partners, along with a stake in Spanish team Sevilla.
Fears over the future of Everton as an EPL club have continued, though. Narrowly missing the drop to the second tier last season, current owner Farhad Moshiri has halted funding. 777 Partners decided to make loans of at least £100 million (S$169 million) to keep the club running.
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As the EPL decides whether to approve or block the takeover of Everton, 777 Partners says that there’s a campaign to torpedo its purchase.
In October, The New York Times reported that the deal had stalled because the firm failed to provide audited financial statements to the UK regulator. The US Attorney’s Office in Manhattan has started probing 777 Partners, its investments in sporting teams and whether the firm ran afoul of US money laundering laws.
“777 Partners considers these scurrilous and damaging accusations to be deliberately timed to undermine its ongoing commercial activities, including the ongoing period of regulatory approvals for the proposed acquisition of Everton by 777 Football Group,” the firm said in a statement.
People involved with the firm say there are questions about the company’s financial practices. Bonuses that were offered to some staff never materialised. On some occasions, payroll was delayed due to a lack of funds.
A consultant hired for its acquisition of Belgian club Standard Liege in 2022 was paid only last month. The person said that the money arrived after they had threatened to complain to the EPL. A 777 Partners spokesperson said that the company “endeavours to pay financial commitments on time to the best of our ability and knowledge”.
Everton, founded in 1878 in Liverpool, are one of England’s biggest teams and have played continuously in the top flight since the early 1950s. They last won the league title in the 1980s. The 10-point deduction means they are just above the relegation zone, even after beating Newcastle 3-0 on Thursday.
Josh Wander, one of 777’s founders, has sought to allay concerns among Everton fans. He told them in October that 777 Partners has over 3,000 employees who have built “relatively conventional but profitable finance and insurance businesses that enabled us to invest and build positions in more exciting industries such as aviation and sports.”
“Not all of our 60 businesses will be profitable at any one time but the fundamental underlying business performance of the 777 Group is strong,” he said in a letter.
The investments have also enabled Wander to gain influence within European football. He was elected to the board for the European Clubs Association as Standard Liege’s representative.
More often than not, owning football clubs means footing annual losses with the hope of recouping money when the club manages to put together a successful run on the pitch, or cashing in on the rising valuations of sports teams. When Everton are included, 777 Partners is forecasting 180 million euros (S$260 million) in losses across its eight football teams for 2023.
Earlier footballing deals attracted attention. 777 Partners this year purchased a majority stake in Hertha Berlin from Lars Windhorst, a German financier who is selling assets to repay creditors. Windhorst told a UK court in July that he sold Hertha for 65 million euros, adding that it helped repay a 50 million-euro loan previously provided by 777 Partners. But he also told the court that the firm had not yet paid the remaining sum. The company, though, wouldn’t have been able to take over the club had it not paid, according to a source.
777 Partners was founded in 2017 and is led by Wander, who started his career focusing on insurance settlements for injury claims, and former investment banker Steven Pasko. Its initial success came from structured settlements, a controversial US industry where claimants agree to settle personal injury claims in exchange for a series of payouts. Its Bermudan reinsurance business, 777 Re, is the group’s biggest business.
In November, credit rating agency AM Best downgraded 777 Re’s financial strength rating from “excellent” to “fair”, due to 777 Partners not providing audited financial statements for the past two years.
Based on the EPL’s test for owners and directors at its 20 clubs, prospective buyers must show sources of funding. 777 Partners also has to get the blessing of England’s Football Association.
Everton have several contingency plans that have been in place for months, in case the EPL rules against the American buyer.
“We recognise that change can be unsettling,” Wander said in his letter. “We also acknowledge that there have been a number of misleading and concerning reports in the media which have created a perception of instability and unrest around our proposed purchase. Rest assured, in this case, that the truth is far more boring than the fiction.” BLOOMBERG
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