John Textor’s Everton bid: ‘New equity’, Moshiri’s options and what of his Palace shares?

Has this week’s big television event actually changed anyone’s mind?

Sure, they said the right things about wanting to be president of the United States, but did they provide any new details on their plan?

Are we closer today to meaningful change than we were last week?

So many questions but at least John Textor tried, right? After years of silence from the current custodian of English football’s “White House”, Farhad Moshiri, it is refreshing to watch a candidate for the post answer questions.

We are, of course, talking about the never-ending story that is Moshiri’s attempt to sell Everton, the Premier League club the Anglo-Iranian businessman has owned since 2016.

Textor, the American sports and technology investor who owns stakes in Crystal Palace and three other clubs, is the fifth party to enter exclusive negotiations to buy the Merseyside club in the last two years.

He is an Anglophile, loves football and Botafogo, his Brazilian club, are top of the table, while Lyon, his French side, fought back from a miserable start last season to qualify for Europe. He is also, as he has shown this week, always available for a chat, on or off the record.

So, without further ado, let us dive into the remarks he made on Wednesday at Lyon’s post-transfer window media conference and in an interview with Sky Sports.

“The potential acquisition of Everton would be funded by new equity that I’m investing. That contract, as it is being drafted, is with myself as the buyer, not Eagle Football Holdings in the UK, not Eagle Football Group in France.”

This was Textor’s answer in the media conference to a question about what impact his move for Everton would have on Lyon. The subtext is that life has been a little bumpy for Textor in France = since he bought a majority stake in the Ligue 1 side from their long-standing owner Jean-Michel Aulas in 2022.

It is a story we have told before but the short version is that Aulas changed his mind about giving up control and that made the handover more difficult than it needed to be.

Lyon’s finances were not in the best shape when Textor bought them, either, as Aulas had spent a fortune on a new stadium but the club had stopped qualifying for the Champions League every season and a conveyor belt of sellable talent from the academy had slowed down. Throw in French football’s disappointments in the media-rights market and you have a recipe for recriminations.

To his credit, Textor strapped on his armour and stuck to his plan of integrating Lyon into his Eagle Football multi-club group, selling non-core assets, such as the Seattle-based NWSL franchise OL Reign, and backing the academy to come good again.

But every move he makes in Lyon, or elsewhere, is treated with suspicion by the local media, hence the question.

His answer, though, is significant, as it is contrary to the plan he has consistently outlined since he started looking at clubs to buy in 2021. Right from the off, when Eagle Football was meant to be a convocation of Eagles from Benfica and Crystal Palace, Textor has talked about creating a group he would float on the New York Stock Exchange (NYSE).

That is still the plan… for Eagle Football, the group comprised of his majority stakes in Botafogo, Lyon, Belgian side RWD Molenbeek and, for the time being, his minority stake in Palace. But it is not the plan for Everton.

Why? Well, Textor has told The Athletic that it is because his more risk-averse partners at Eagle Football could not invest in Everton right now. There are still concerns in U.S. banking circles about the relationship between Moshiri and his former boss and business partner Alisher Usmanov, the Uzbek billionaire whose companies generously sponsored Everton for several years until he was sanctioned by several countries following Russia’s full-scale invasion of Ukraine.

The Monaco-based Moshiri has not been sanctioned and he has always strongly pushed back at any suggestion he might be — but the Usmanov link has troubled potential investors, rightly or wrongly.

There is a second reason more cautious investors might be reluctant to take on Everton and that is the legal uncertainty that surrounds one of the club’s earlier suitors, 777 Partners. The Miami-based investment firm is now under the control of insolvency experts while fighting its creditors in court. One of its contested assets is a £200million ($263m) loan it gave to Everton in monthly chunks while it waited for the Premier League to approve the takeover.

That nod never came but the debt remains and working out how much of it you need to pay, when and to whom is a headache Everton’s last would-be proprietor, The Friedkin Group (TFG), decided it did not need.

So, there are two good reasons Textor cannot use his multi-club group to buy Everton.

But several sources, speaking off the record to preserve business relationships like others in this article, have told The Athletic that Textor’s Eagle Football partners and the group’s main lender, Ares Management, do not want to buy Everton as they are concerned that Eagle Football is already overstretched. They are more worried about getting their money back than taking on another difficult project.

When we asked about this, Textor said his relationships at Eagle Football were solid and advised us to stop listening to idle gossip.

Sound advice, but we are still a little confused why he has spent the last three years planning to take a group of clubs to market, with an English team at its heart, but is now talking about a side project, with new partners, that will be “highly collaborative” with Eagle Football.

To be fair, one reason for our confusion is that he spoke to Queens Park Rangers this summer about them becoming Eagle’s English outpost, and this was after he linked himself with Everton.

The sales pitch to QPR’s owners was their shares in the west London side for shares in the NYSE-listed Eagle Football. That conversation did not get very far, as the two parties were miles apart on their valuation of the Championship club, but the fact those talks happened only two months ago suggests that his Everton proposal is a departure from the original plan.

Textor expressed an interest in Championship club QPR (Jacques Feeney/Offside/Offside via Getty Images)

“It is just a straight, equity purchase of the shares of Everton Football Club, if it happens. While I like to feel it’s greater than 90 per cent probability, I’m not the owner of Everton Football Club and (Moshiri) still has plenty of options.”

There are two important parts to this answer at the media conference.

The first is the bit about using equity to buy Everton — earlier in the answer, he stressed that the transaction would be “debt-free” — which will be music to the ears of the club’s supporters, as the nine-time English champions are already more than £1billion in debt.

However, what Textor means is he is using cash — his own and an unspecified amount from “a couple of friends with terrific resources” — to buy Moshiri’s 94 per cent stake in Everton. It does not mean he will be wiping away all of Everton’s debts or not using new debt to recapitalise the business.

Almost half of Everton’s debt is owed to Moshiri but he knows he is never seeing that money again. That leaves about £550million in secured debt to three parties: two lots of £200m to 777 and TFG, and about £150m to Cheshire-based lender Rights and Media Funding (RMF).

The latter was owed considerably more until recently but that sum has fallen, as planned, thanks to the arrival of scheduled transfer-fee instalments.

Of those three debts, the most significant for any new owner is TFG’s, as it is secured on all of Moshiri’s shares and the new £760million stadium Moshiri has been building for Everton in Liverpool’s historic northern docks.

Everton’s new stadium is taking shape (Alex Livesey/Getty Images)

Textor believes he can borrow up to £350million on the new stadium, as it is now only £50m-£60m away from completion, which he will use to pay off TFG, the American, family-run business that owns Serie A’s Roma. TFG has told The Athletic that it would want to be repaid immediately if there was a change of control at Everton.

RMF, Everton’s longest-serving lender, appears to be happy to sit tight, reduce its exposure gradually and collect interest, so there is no pressing need to address that debt.

The 777 debt is the interesting one, though. As mentioned above, it is legally problematic as 777’s biggest backer A-Cap, an American insurance firm, has claimed control of 777’s assets but that is being challenged in a New York court by London-based investment firm Leadenhall, a very disgruntled creditor.

This is another complicated tangent we have written about before. What is important to note here is that anyone wanting to buy Everton, Textor included, would want to do a deal with whoever is in charge of 777’s portfolio. That deal would be along the lines of: ‘Come on, you know you’re not getting £200million — here’s £50m and we’ll say no more about it.’

Textor thinks he can sell that type of deal, particularly when 777 finally lurches into full-blown administration and a court-ordered trustee turns up and asks for repayment.

The Athletic, however, has spoken to people close to the Leadenhall case and they think his optimism is misplaced. They believe A-Cap will fight until its last breath to make sure that £200million note on its balance sheet remains at that value.

Textor meets Lyon fans at the French Cup final (Christian Liewig – Corbis/Getty Images)

Let us turn to the second half of the quote: Textor’s belief that he is very likely to buy Everton but it is not a done deal and Moshiri has choices.

Working backwards, we can suggest that Textor was being polite about Moshiri’s options. Nobody else is talking to him about buying Everton.

That is not to say nobody else is interested in Everton. It is merely to say that any interested parties are waiting to see if someone else can finish paying for the stadium, the 777 situation gets resolved and the team pulls away from the relegation zone.

The next part is 100 per cent accurate. Textor cannot become the owner until he has sold his Palace shares. More on that in a moment.

Given all of the above, do you think his chances of doing this deal are more than 90 per cent?

Cards on the table, I don’t. I think there is a 90 per cent chance he will not be the next owner.

But, yes, I’m telling you there’s a chance.

“We have two who have made what we believe are good, qualifying bids, and we still have the possibility that our partners may want it — they love the club as much as I do. We’re now in the final week or two of knowing who the buyer will be.”

This is his answer to Sky Sports’ question about his Palace predicament and nothing else matters if he cannot answer it.

The Premier League’s rules seem clear. Rule A.1.235 defines what it means by a “significant interest” in a club — the ability to exercise voting rights of 10 per cent or more — and rule I.5 says “no person may either directly or indirectly hold or acquire any significant interest in a club while such person either directly or indirectly holds any holding in another club”.

Textor owns 45 per cent of Palace’s shares but, thanks to a shareholder agreement with the three other principal shareholders, only 25 per cent of the votes. Not enough to persuade Palace chairman Steve Parish to lean into the Eagle Football model but more than enough to meet the definition of significant interest.

Textor first signalled his willingness to accept offers for his Palace shares in a long interview with The Athletic in July 2023. That ‘come and get me plea’ was a little too subtle so he made it more formal this year when he told us he had appointed U.S. bank Raine to run an auction process.

That did not stop him, though, from making one last attempt to buy out his Palace partners last month.

The problem he has found is that everyone in football knows about the shareholder agreement at Palace, so while 45 per cent sounds tantalisingly close to a majority, it is only worth one vote in a constituency of four and the other three vote as a bloc. As a result, his stake has been described to The Athletic as “the most expensive season ticket in sport”.

He paid about £120million for it and that is what his “partners”, fellow David Blitzer and Josh Harris, have offered. He wants double that since most estimates of Palace’s value are in the £500m-£600m range, giving his stake a pro rata value of at least £225m. Unfortunately, pro rata does not usually apply to minority stakes, which is why he has not sold those shares yet.

Harris and Blitzer fronting a press conference at their New Jersey Devils in 2013 (Andy Marlin/Getty Images)

That said, it is fair of him to point out that having started a process with Raine, we should let the bank do its thing. Textor has already told us that 14 interested parties were identified this summer, with that number then being reduced to a shortlist of five.

According to Textor, we have now reached the final two and he is very confident one of them will get close to his desired number. Blitzer, Harris and Parish have the right to match the offer but they cannot block a sale.

Textor is not saying who the final two are, but The Athletic has a decent idea of the names on the long list and it was well-stocked with serious American and Gulf money.

There is one more thing to say about this crucial stage in the process.

Textor borrowed about $400million from Ares in two chunks to complete the Lyon purchase and those loans were secured on Eagle Football’s assets, including the Palace shares.

It has been suggested to The Athletic that this means Textor cannot just accept enough money to get his Everton deal over the line, particularly now he is doing that deal as a side hustle. Textor has assured us this is not the obstacle some imagine it to be and all these concerns about him being over-leveraged will be swept away by Eagle Football’s initial public offering (IPO) later this year.

When I have run this idea past others in football’s mergers and acquisitions industry, they have tended to reply with ‘popcorn’ emojis and memes. It is fair to say there are some doubts about his ability to float Eagle Football at a target valuation of $2billion, particularly if it does not include an English club willing to play multi-club ball, but Textor would no doubt say they do not know the value of Eagle’s technology assets.

And he might be right.

“I’m in an awkward spot but we’re working through it.”

This short sentence in his answer to Sky Sports about his deal with Moshiri is doing a lot of lifting.

Textor’s period of exclusivity with Moshiri started in June and he has effectively been told he must now pay for that privilege, with £25million being the asking price.

But part of the awkwardness Textor is feeling is how that money goes to Moshiri and what Moshiri does with it. As long as Textor has a significant interest in Palace, he cannot just give Everton’s owner cash.

Everton owner Farhad Moshiri (Simon Stacpoole/Offside/Getty Images)

This is the dilemma the respective parties’ legal teams have been trying to sort out. Can Textor, acting separately from Eagle Football, loan Everton money in the same way three of the previous would-be buyers did? Or does he have to take more of a leap of faith by handing Moshiri a non-refundable deposit for his shares?

As of the start of this week, Textor was not sure himself but seemed to be leaning to the latter idea, while stressing that everything would be subject to Premier League approval. One idea was that the money goes into an escrow account, where it cannot be touched by Moshiri until the league has given its assent.

There is also a view that lending money to the Everton subsidiary building the stadium is not the same as one man funding two clubs at once. But that is one for the lawyers to hammer out.

This raises the obvious question, what is the rush? Why not wait for the Palace process to finish? Does Moshiri need this money or not?

That last one seems crucial, as it has been suggested to The Athletic that there is another payment due to the stadium’s contractor, Laing O’Rourke. Neither the club nor the building firm has been willing to discuss the schedule of payments, but Everton’s chief executive Colin Chong told Sky Sports last month that the club can “effectively self-fund” the stadium now.

ICYMI here’s CEO Colin Chong on the progress of The Everton Stadium: pic.twitter.com/1sVnps2MYs

— Alan Myers (@ALANMYERSMEDIA) August 14, 2024

This is basically true, as Everton have cash in the bank thanks to this year’s player sales and could get short-term loans to complete the stadium. There is also the fact January is not far away and more than one Premier League club is chasing Jarrad Branthwaite, Everton’s most valuable player.

But Everton still lose money every month and they have lost their first three games. It is a long season, of course, but it is not hard to see why the potential arrival of £25million from Textor now, with more to come in January, would be useful (once he has sold those Palace shares).

Branthwaite is Everton’s most saleable asset (James Gill – Danehouse/Getty Images)

There is one other aspect to Textor’s “awkward spot”. Because he is the co-owner of another Premier League team, he has not been able to get full sight of Everton’s finances. He explained this in the Sky Sports interview by saying there was a “Chinese wall” between him and Everton, which has created an “information gap”.

Again, that wall could come down fast if he can get out of Palace, but can he do it quickly enough to complete the Everton deal by Moshiri’s deadline of November 30 (a deadline Textor agrees with, as he wants to be in charge before the January transfer window opens)?

This piece is already long enough, so we will skip over the crowd-pleasing comments he made about wanting to do this deal even if Everton were staying at Goodison Park — the prospect of a fresh start at a new, state-of-the-art stadium is Everton’s biggest selling point — and his comparison between owning Everton and being the leader of the free world. But this was not just sales patter. Textor loves football and embraces reclamation projects.

While writing the piece, news came in from France that trading in the shares of Lyon’s old holding company, the renamed Eagle Football Group, had been suspended.

The immediate cause was Textor saying a little more than he should have about the plan to delist EFG from Euronext Paris, the stock exchange it has traded on since 2007, during his media conference in Lyon. The mistake was relatively minor and nobody is going to get in trouble or lose any money.

But it does confirm that Textor’s original plan has started. The next step will be moving the UK-registered parent company Eagle Football Holding to Delaware and filing registration papers for a New York IPO by the end of the year.

Whatever is going to happen has started. It might be chaotic but Textor has shown he has an appetite for carnage.

Maybe I have underestimated his chances of buying Everton, maybe I haven’t. He is going to try anyway.

Good luck to him and Everton — sincerely.

(Top photos: Getty Images)