Sports lawyer Daniel Geey explains the next steps for the prospective new Everton owners
Prospective new Everton owners, The Friedkin Group, are now in the process of gaining regulatory approval. The US firm agreed a deal to acquire Farhad Moshiri’s majority shareholding on Monday.
Having been courted by a number of suitors over the past two years after it emerged that Moshiri wanted to sell his stake in the Toffees, and having seen one protracted takeover deal by the controversial and crisis-hit 777 Partners bite the dust at the end of May, it would be understandable that Evertonians were weary of takeover talk.
The hope now is different, with The Friedkin Group, helmed by US multi-billionaire Dan Friedkin, who already own Italian Serie A giants AS Roma, looking like the strongest of all the candidates to have shown their hand when it comes to taking on, and trying to turn around the Toffees after several difficult years on and off the pitch.
READ MORE: Chief of influential Everton lender Rights and Media Funding speaks out over Friedkin takeover dealREAD MORE: How The Friedkin Group will tackle Everton debt as takeover moves forward
The current state of play is that a deal has been agreed with Blue Heaven Holdings Limited, the company through which Moshiri owns Everton, and that both the club and The Friedkin Group have released statements stating their intention to move forward with gaining regulatory approval and completing the takeover.
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The Friedkin Group are required to pass the Premier League’s owners and directors test (ODT), as well as an FA test to prove they are fit and proper persons. They must also gain approval from the Financial Conduct Authority and show that they are able to legally operate a business in the UK.
The expectation is that the prospective new owners won’t have much trouble passing the three tests, and while approval can take around 12 weeks, there is the hope that it will arrive in time for Christmas so that Everton can begin a new era at the start of a new year. It is understood that the process is already well underway.
But what does it look like, and what hoops does The Friedkin Group have to jump through?
Renowned sports lawyer and author Daniel Geey, a partner in the sports group at Sheridans, who has experience in working on such deals, told the ECHO: “It looks like there are a number of facets, but from my experience it is now a regulatory angle, ensuring compliance with the Premier League.
“Usually you will need to have an interview with the Premier League and particular individuals there. They would need to pass the ODT, they would need to show sufficient funding, and they would need to show who was the ultimate beneficiary.
“It is pretty unusual for there to be a press release and it being subject to approval unless they were pretty far down the line and feeling pretty confident that this was going to happen.”
The long-doomed bid by 777 Partners to purchase Everton was held up due to the Premier League having concerns over the Miami-based company’s suitability and inability to provide proof of funds. Conditional approval did arrive earlier this year but required 777 to place significant funds for the takeover into an escrow account and settle some of the debt that existed on the balance sheet, as well as turn its own loans into equity. They were unable to meet all of the conditions set out.
“Everton have been there before with other bidders, but this does appear to be moving in the right direction.” explained Geey.
“The tests are pretty stringent.
“Proof of funds isn’t just a piece of paper. What the Premier League will be concerned about is the ability of new owners to come in and run the club and fill any financial gaps to ensure the sustainability of the club is first and foremost. That will involve a forensic approach as to whether that is paying off certain debts and creditors, whether there is a working capital deficit, and how much money from an acute financial planning perspective is going to be needed in year one, year two, year three etc.
“The Premier League has to be satisfied that whoever is coming in has the pockets to be able to substantively take on whatever financial liabilities there might be for the club.”
A share purchase agreement (SPA) was reached between the two parties. While Geey acknowledges that there are conditions that could be included in such an agreement to allow for a break in the deal should something come up out of the buyer’s control, he stressed that these agreements are usually thrashed out in deep detail and that the confidence that both parties have in releasing a statement should be instructive as to the way the deal is heading.
“There can be lots of conditionality attached to closing an SPA, but I think that ultimately it is on an ad-hoc basis and every deal is so different, so it is difficult to speculate,” said Geey.
“You can have conditionality on an SPA for things that might be outside of a buyers control, and those negotiations are usually quite tough and possess a lot of detail.
“But, again, as there has been a press release put out there both parties have to feel pretty confident that things are going to complete because as soon as you put your head above the parapet and make public statements, then that confidence has to be pretty resolute.”
