Everton have restructured the existing debt on the club's new stadium at Bramley-Moore Dock
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Everton owner Dan Friedkin and the club's new stadium
Everton owner Dan Friedkin and the club's new stadium
While a stadium refinancing deal wouldn’t usually be a reason for excitement, for Everton it is a different story. The club announced a £350million long-term funding deal to restructure debt on Thursday.
The deal was related to the existing lending on the new 52,888-seater stadium development at Bramley-Moore Dock, due to open later this year in time for the 2025/26 season, with the project having had to borrow from multiple lenders in recent years in order to reach completion.
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As the club lurched into a financial crisis under former owner Farhad Moshiri, something exacerbated by the withdrawal of some key funding and sponsorship deals as a result of conflict between Russia and Ukraine, in order to meet the costs of construction for the stadium which had been Moshiri’s grand vision, the finance had to come from various sources.
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But lending to the club and Moshiri carried perceived greater and greater risk from lenders, meaning that the capital had to be acquired through high-interest bearing loans from lenders such as Rights and Media Funding Limited.
Last year, as the club were going through a sale process with the now-doomed 777 Partners, money loaned to 777 by A-CAP, a U.S. lender, was provided on an almost monthly basis to meet working capital requirements, including the construction of the new stadium.
Some of those loans carried high interest rates of nearly 20% annually, reflective of the perceived risk and the financial situation at the football club.
But now, a little over three months into their tenure as Blues owners, The Friedkin Group (TFG) have managed to restructure that debt at far lower interest rates, thus creating more money for the club to be able to put back into aiding the product on the pitch, something that they haven’t been able to do meaningfully for several seasons. The club claim that the move will save them ‘tens of millions’ annually.
“It is a bit like having your mum and dad guarantee your mortgage,” said Price of Football author and University of Liverpool lecturer Kieran Maguire, speaking to the ECHO.
“The debt to Rights and Media Funding limited was kind of a reflection of the risk of lending at the time to Farhad Moshiri. Now, with The Friedkin Group, they are held in far higher regard with debt capital markets and that has allowed the club to make significant savings, having engaged New York merchant bank JP Morgan Chase and Co to identify new lenders earlier this year.
“All the bad news in terms of debt has been capitalised on the interest front. It has been borne in the development cost of the stadium which means it doesn’t count towards PSR as the debt was added to the cost of the stadium.
“Now the stadium is a completed project, interest can be charged against profit.
“The savings that the club are making by restructuring the debt will be in the tens of millions, and that is something that can be put back into the playing budget to aid competitive success on the pitch.
“Spurs borrowed money for their stadium build at the right time and from the right people. The Friedkin Group might not be borrowing at such a good time as debt isn’t cheap right now, but they are able to borrow from the right people, and for Everton that is something that hasn’t always been the case in recent years.”
For Everton fans the restructuring of the debt should be instructive as to the kind of ownership that they now have, as opposed to the ones that they came very close to having under 777 Partners, who agreed a deal to purchase the club in September 2023 but failed to gain the required regulatory approval.
TFG are a company with major visibility and revenue streams across the business, and that is something that lenders take far more comfort in. In clearing up the debt issue the new owners have moved to draw a line under the onerous debt and messy arrangements that had been in situ and have put the club on a far sounder financial footing.
It won’t be the first change to be made, and it’s likely that things start to look different operationally in the coming weeks and months. But it is a case having more savvy, competent and responsible people at the wheel, and for a club moving into a game-changing new environment at a new stadium next season, and with Premier League status all but secured, it represents something of a new dawn for a football club that has been unable to free itself of the shackles of gloom for some time.