Everton new owners The Friedkin Group are making moves to free the club of historic predatory loans at eye-watering interest rates.
Bloomberg has reported JP Morgan Chase is seeking investors for a £300m private-placement deal on Bramley Moore Stadium. While the words ‘debt’ may be a worry for Everton fans who have endured decades of predatory lenders the latest move would be a beneficial one for the club.
The stadium, set to be one of the best in the country when it opens its doors for the 2025/26 season, cost around £750m to build according to latest estimates and as recently as last year US equity fund GDA Luma Capital was rumoured to have offered the club over £100m in refinancing in partnership with prospective owners 777 Partners. Given the collapse of 777 and subsequent legal issues the refinancing would have been a disaster for the club, weighing it down with more debt and high interest payments.
In fact, Everton were said to be paying over £1m a week in interest to the likes of RMF, a shady Cayman Islands-based lender brought on by former chairman Bill Kenwright.
The latest move to finance the stadium follows the example of Spurs and Barcelona, who have both used US private placement deals to refinance the cost of building a new stadium. Crucially the deals allow the club to pay lower interest over a long period of time, allowing better financial flexibility.
In the case of Spurs, the club borrowed £637m across 23 years. As part of the financing the Club obtained a strong investment grade credit rating from two agencies.
In short, the financing does two things for Everton. The first is lower interest payments from a more reputable lender. The second is shows confidence in the market for Everton’s long term vision and credit rating. Securing this finance would be a huge green flag from the financial markets that owners The Friedkin Group are trusted to secure the club’s long term future.
The reaction of the market to the stadium refinance will go a long way to highlight the confidence the markets have in Everton’s new owners.
As a comparison, after the Spurs refinance, Elliott McCabe, Managing Director in Bank of America Merrill Lynch’s Sports Finance & Advisory Group, said: “The management team of THFC continue to position the Club for long term success by growing the brand through ongoing investment, particularly in relation to the iconic new stadium. This is reflected in the strong market reception met by Tottenham Hotspur as a first-time issuer in the Private Placement market.”
Everton are not completely debt free outside of the potential new stadiun refinance deal. The Friedkin Group reportedly loaned £230m to pay off MSP Capital’s loans, while JP Morgan has also delivered £130m to the club in recent weeks as part of a new loan agreement. However, these moves put the club in a much better position overall.
However, a move towards reputable lenders at lower interest rates is a positive move for the club as it slowly pulls itself out of the PSR and debt issues under Farhad Moshiri’s disastrous reign.