Everton PSR saga nowhere near over as fate of £21m issue confirmed - Kieran Maguire
Today at 03:10 PM
Everton have been on the front lines of the lawfare that has gripped the Premier League in recent years and has intensified in recent weeks and months.
The Premier League knocked back 777 Partners’ takeover of the Toffees earlier this year as the Miami-based investment firm failed to satisfy the legal and financial criteria in its Owners’ and Directors’ test.
While that frustrated cash-strapped Everton owner Farhad Moshiri, it was ultimately to the club’s benefit as 777 Partners have since been liquidated and implicated in several legal issues.
The legacy of that tryst with Josh Wander and Steve Pasko’s multi-club acquisition vehicle will continue to be felt for some time, with Dan Friedkin’s takeover of Everton still being held up by it.
777 Partners lent Everton £200m as part of their failed attempt to buy the club, with that debt having now been claimed by one of their creditors, A-CAP, who are in turn being sued by London firm Leadenhall.
Leadenhall have filed an injunction that make the £200m Everton loan unrepayable – through no fault of the club’s – until the case is resolved, meaning Friedkin’s takeover will also have to wait.
Friedkin and all other parties are confident that issue will be resolved, but the takeover purgatory is hardly ideal for Sean Dyche’s side while they teeter two points above the relegation zone.
| Position | Team | PlayedMP | WonW | DrawnD | LostL | ForGF | AgainstGA | DiffGD | PointsPts |
| 10 | FulhamFulham | 12 | 5 | 3 | 4 | 17 | 17 | 0 | 18 |
| 11 | BrentfordBrentford | 12 | 5 | 2 | 5 | 22 | 22 | 0 | 17 |
| 12 | Man UtdManchester United | 12 | 4 | 4 | 4 | 13 | 13 | 0 | 16 |
| 13 | B’mouthBournemouth | 12 | 4 | 3 | 5 | 16 | 17 | -1 | 15 |
| 14 | West HamWest Ham | 11 | 3 | 3 | 5 | 13 | 19 | -6 | 12 |
| 15 | EvertonEverton | 12 | 2 | 5 | 5 | 10 | 17 | -7 | 11 |
| 16 | LeicesterLeicester | 12 | 2 | 4 | 6 | 15 | 23 | -8 | 10 |
| 17 | WolvesWolves | 12 | 2 | 3 | 7 | 20 | 28 | -8 | 9 |
| 18 | IpswichIpswich | 12 | 1 | 6 | 5 | 13 | 23 | -10 | 9 |
| 19 | Crystal PalaceCrystal Palace | 12 | 1 | 5 | 6 | 10 | 17 | -7 | 8 |
| 20 | SouthamptonSouthampton | 12 | 1 | 1 | 10 | 9 | 24 | -15 | 4 |
Elsewhere in football’s legal ecosystem, Everton have been battling the Premier League on Profit and Sustainability Rules (PSR) lines for years.
Having already sustained points deductions for breaches in 2021-22 and 2022-23, Everton’s treatment of interest payments on loans for their new stadium at Bramley Moore Dock are also under scrutiny.
At a third PSR hearing scheduled for an as yet unspecified juncture this season, Everton could be hit with another sporting sanction if the capitalisation of those payments is not deemed exempt from PSR.
If Everton’s finance and compliance departments weren’t already spinning enough plates, they have also had to contend with the ongoing fallout from Man City’s challenge to the Premier League’s APT Rules.
There as has been some positive developments on that front, but – as expert Price of Football author Kieran Maguire will later explain – Everton are not out of the woods just yet.
Everton dodge £21m in soft loans interest
When Man City claimed ‘victory’ in their challenge to the Premier League’s Associated Party Transaction (APT) Rules in October, Everton’s C-suite will have had mixed feelings.
On one hand, the Toffees gave evidence in support of City at the tribunal and, given that their relationship with the Premier League is strained, would have celebrated any PR setback Richard Masters and co.
On the other, it was a Pyrrhic victory in that the £451m of soft loans that Moshiri had provided the club, the highest in the top flight by far, were now under the spotlight.
City want soft loans – that is interest-free loans from shareholders – to be treated as a subsidy in the APT rules and therefore have a commercial interest rate applied to them for the purposes of PSR.
Significantly, they wanted this reading of the rules applied retroactively.
Using the industry benchmark SONIA, this would have seen an extra £21m in annual interest on the loans hit Everton’s PSR calculation.
This was the reason that Everton voted against City for a revised version of the APT rules which introduced the treatment of soft loans as a subsidy but – crucially – not on a retroactive basis.
They will have breathed a sigh of relief when that motion passed at a Premier League shareholder meeting last Friday.
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Man City want the whole APT system declared null and void and have sought further clarification on the APT system that a tribunal are expected to outline in February.
Kieran Maguire argues that City, whose 115 charges hearing is also ongoing, will continue to litigate on APT and PSR for the foreseeable, meaning Everton cannot be certain of their financial footing.
“I think the devil will be in the detail when it comes to the actual publication of the new rules,” said Maguire, an industry insider and football finance lecturer at Liverpool University.
“Everton would be hit significantly if there was retrospective charges
“That would be completely illogical given that the vast majority of Premier League clubs voted in favour of shareholder loans only a few years ago. Clubs have made decisions on the back of that.
“If Moshiri wanted to convert those loans into shares, that is actually how they are presented in the accounts at present.
“One would imagine that the likes of Tony Bloom and FSG may have considered a conversion into equity but thought there was no necessity to do so because there was no financial penalty arising as a result.
“I don’t think we have seen the ends of litigation if Simon Cliff’s letter to other clubs is anything to go by.
“Man City will not take this lying down and they feel this is evidence of the tyranny of the majority, as they describe it.
“If I was a sports lawyer, I would be cancelling my holiday and upgrading my range rover.”
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Everton takeover: When Will Dan Friedkin arrive at Goodison Park?
Friedkin is no stranger to the slings and arrows of football governance having already endured several crises in Italian football with his other club, AS Roma.
But the scale of the legal conflict in the Premier League at present will be daunting even to him.
Some reports today have suggested that his takeover could yet be completed by the turn of the year, giving him the opportunity to endear himself to fans in the January transfer market.
However, that seems vanishingly unlikely unless there is a breakthrough in the Leadenhall case very soon.
The takeover will happen, but given that the legal fire fight involving the £200m Everton loan may not be resolved until February according to court filings, Everton fans may have to wait for now.
Even when that is resolved, The Friedkin Group must complete all the necessary bureaucracy in terms of the Premier League and Financial Conduct Authority’s checks.
