Everton's quest for stability at the helm suffered a setback this week as The Friedkin Group decided to abandon its takeover bid.
This decision has deflated the buoyant mood that had been building over the summer and reintroduced uncertainty about the club's ownership future. Despite the collapse of talks - marking the fourth deal for a significant stake in the club to fall through after reaching a period of exclusivity in two years - causing frustration, insiders at the club maintain that progress can still be made this summer.
With a new stadium to be paid for and moved into, however, the clock is ticking to get a deal done. As the dust settles and parties contemplate reviving last month's failed bids, here's a breakdown of exactly what happened.
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So, what transpired this week?
On Friday morning, Everton issued a statement on behalf of The Friedkin Group and Blue Heaven Holdings, Farhad Moshiri's vehicle for owning the club. The 11am announcement confirmed that formal discussions between the parties had ended and would not result in a deal.
This news thrust the club into uncertainty as the hunt for new ownership suffered a significant blow. Although The Friedkin Group had emphasised that the exclusivity period did not guarantee a deal with Moshiri, the possibility of the club being taken over by a company with a successful football track record and access to billions of pounds had sparked hope for a brighter future following 18 challenging months off the pitch.
The statement read: "Following a period of exclusivity, discussions between Blue Heaven Holdings and The Friedkin Group over a potential sale of a majority stake in Everton have ended and The Friedkin Group will not be progressing with a purchase of the club. Both Blue Heaven Holdings and The Friedkin Group entered discussions in good faith to explore whether a sale could be agreed. Those discussions have concluded. The parties agree it is in both their interests for Everton to explore alternative options. The Friedkin Group will remain a lender to the club and is proud to have played a key role in enabling the new stadium to be built, which will help ensure a bright future for both Everton and the city of Liverpool. Blue Heaven Holdings maintains a positive relationship with The Friedkin Group and would like to thank them for the time and effort they have put into this process."
Why did the talks break down?
The Friedkin Group had emerged as the frontrunner from a crowded field to sign an exclusivity agreement with Moshiri last month, a deal that paved the way for the US organisation to conduct further due diligence into the club and its finances. However, it was this process that unearthed issues that ultimately derailed the discussions. Interestingly, it is understood that the problem did not lie within the state of the club itself. Instead, the issue revolved around the club's debt - specifically its loan from 777 Partners.
The Miami-based group was poised to complete its own takeover of Everton after signing a deal with Moshiri last September. Expectations that the group would receive regulatory approval from the Premier League by Christmas were misplaced, and by spring, the arrangement began to unravel as 777 Partners faced legal action and the collapse of its portfolio of interests.
Against this backdrop, talks with Everton concluded at the end of May as it failed to meet the terms of its share purchase agreement. Despite the failed takeover, 777 Partners maintained a presence in the club through the nearly £200m in loans it had provided to Everton. It was this debt that proved too much for The Friedkin Group. The issue was not the size of the borrowing but the prospect of having to navigate through the problems faced by 777 Partners to resolve it. Ultimately, there were too many questions that The Friedkin Group found too difficult to answer. The group needs to feel at ease before they can take on the club.
What does this mean for Everton?
This development signifies a return to the drawing board for Moshiri and Everton. The majority shareholder has been on the lookout for an exit strategy from Everton for over two years, and this marks the fourth exclusivity deal to collapse during that time. The search for a new buyer is back in full swing, and as a result, a summer where fans had started to solely concentrate on the football will now see supporters anxiously following off-pitch developments.
The recent setback has cast a shadow of uncertainty over the long-term state of the club. However, in the short term, insiders at the Blues remain confident about the club's position. The Friedkin Group had previously provided £200m, which was utilised to settle the lending of another potential investor, MSP Sports Capital, and offer around £40m of working capital towards the club and the stadium development. It has been explicitly stated that this money will not be sought after immediately.
The summer season often sees the club's finances at their healthiest, with the first instalment of TV money coming in and the opportunity to generate funds through the transfer window. Yet, the ghost of instability is now ominously looming on the horizon. Everton depended on the funds provided by 777 Partners to survive until the end of last season. It remains unclear how much more Moshiri can or is willing to invest into a club he has already poured hundreds of millions of pounds into. Therefore, the longer the takeover situation remains unresolved, the more severe the problem will become.
Who took an interest last time and could they make a return?
Last month, The Friedkin Group faced competition from several rivals. John Textor, a stakeholder in Crystal Palace, expressed his interest in Everton and had discussions with Moshiri. However, any potential move would be halted while he tries to offload his 45% share in Selhurst Park. Local businessmen and Everton fans, Andy Bell and George Downing, spearheaded a bid supported by the investment bank managing IT tycoon Michael Dell's wealth.
Other consortiums, reportedly backed by billionaires, were led by businessman Vatche Manoukian and umbrella group Vici Private Finance. Another group, headed by Kevin Malone with a background in baseball, was also in the mix.
Whether these parties will re-enter negotiations is uncertain, but the level of interest following the collapse of the 777 Partners deal brought a sense of optimism within the club. However, questions linger about how they will interpret the reasons behind The Friedkin Group's withdrawal - primarily, if a company of such magnitude and expertise felt incapable of resolving the issues raised by the 777 Partners loans, could anyone else?
So, how did the club internally react to the news?
The collapse of the takeover deal has been met with a wave of disappointment within the club. The potential for an end to one of the most significant sources of instability in recent years was lost, and this hit hard for departments that had put in considerable effort to help the club advance both on and off the pitch.
The Friedkin Group communicated its intentions to Moshiri on Thursday, and the news gradually spread throughout the club. There are many dedicated individuals who deeply care about Everton within the club, and this news will have caused personal and professional pain. For Sean Dyche, it means facing questions about off-pitch events rather than on-pitch ones when the season resumes - something he's already had to do far too often during his 20 months in Merseyside.
What does this mean for the transfer window?
This news is unlikely to cause any immediate changes in the club's transfer activities this summer. Director of football Kevin Thelwell clarified before the end of last season that this would be another period of strategic manoeuvring in the market, with clever work required to bolster the squad while generating sales that would contribute towards the club's efforts to comply with spending regulations.
Even with The Friedkin Group's takeover in the works, this wasn't a transfer window being conducted with the anticipation of newfound wealth. The focus has been on enhancing the club's regulatory standing and bolstering in a sustainable manner.
The business already completed, coupled with the departure of Amadou Onana to Aston Villa in a £50m deal, has laid a solid foundation for the window. If there's no progress on the takeover by summer's end, more transactions could potentially be contemplated as the club anticipates upcoming bills in the months between windows.
However, Everton couldn't have made a stronger reassurance statement than the message sent to Manchester United this weekend: the takeover setback won't result in any decrease in the club's valuation of Jarrad Branthwaite - which far exceeds anything the club has offered so far.
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