'Someone hasn't checked the paperwork' as Dan Friedkin faces 'crazy' Everton problem - Kieran Maguire
Everton have had more than their fair of financial and regulatory issues in the Farhad Moshir, and it looks as though Dan Friedkin’s takeover will...
Everton have had more than their fair of financial and regulatory issues in the Farhad Moshir, and it looks as though Dan Friedkin’s takeover will not represent a clean slate just.
Friedkin, the American automotive retailer turned Hollywood producer-financier, has agreed a deal in principle to buy Everton.
He is now waiting for the resolution of a lawsuit against one of Everton’s former takeover suitors and lenders, 777 Partner, in order to progress to the next stage in process.
Once that case – which is entirely separate from Everton themselves – is concluded, the Premier League and Financial Conduct Authority will be able to commence its final checks.
Friedkin already owns two football clubs in AS Roma and AS Cannes, and he is expected to breeze through the bureaucracy and be installed as Everton owner shortly after.
However, once he is in charge, he will still have to reckon with the legacy of the Moshiri era, which was littered with Profit and Sustainability, or PSR, issues.
Indeed, Everton face another PSR hearing at an as yet unspecified date at some point this season that could see them issued with another points deduction – or perhaps even multiple separate sanctions.
Premier League’s case against Everton over Bramley Moore Dock loans is ‘crazy’, says finance expert
The hearing, whenever it takes place, centres around the capitalisation of interest on loans that Everton took out to pay for the construction of Bramley Moore Dock.
Speaking exclusively to TBR Football, Liverpool University football finance expert Kieran Maguire explained the outstanding case against Everton.
“If we look at the capitalised interest, we could be talking £20m, although it depends over which period.
“Given that Everton are already in breach, this could lead to an increase in the breach and therefore we could be looking at a few more points deducted this season.
“Whether the rules should be there is a separate discussion, but if you broke the original rules then there needs to be an appropriate tariff.
“A financial penalty to a billionaire is not a deterrent, so therefore a points deduction is the only way to go.
“That might seem crazy and we know that the PSR system isn’t really fit for purpose, but those are the rules.
“However, I a completely at the other spectrum when it comes to the rules on interest payments.
“Everton have not gained a sporting advantage because this money is being spent on a stadium that will not come into play until 2025-26.
“The accounting rules are unequivocal. During construction, if you incur borrowing costs then you are given the opportunity to capitalise those interest costs.
“If you said you were going to buy a property from a construction company, they would have included the interest they incurred in the price they quoted to you.
“So I have a huge amount sympathy with Everton here. I think once again this is evidence of poor governance at the club. Someone is not doing their job properly in terms of checking the documentation. I think it reflected badly on senior management.
When will Dan Friedkin’s takeover be complete?
When Friedkin first agreed terms with Moshiri, it was hoped that the takeover would be complete by the end of the year.
However, while that timeline is still not beyond the realms of possibility, the 777 Partners case may complicate matters.
According to court filings, a judgement in that case may not arrive until February at the latest.
Until that transpires, Everton will not be able to change hands.
That said, all parties are confident that a resolution will be found – it is a matter of when, not if.
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