(Bloomberg) — The takeover of Everton FC by 777 Partners is facing increasing scrutiny from Premier League officials studying the investment firm’s suitability to own a major football club, according to people familiar with the situation.
Decision-makers in the Premier League have begun adopting a more skeptical stance in recent weeks after questions were raised about the finances of Miami-based 777 Partners, the people said, asking not to be identified because the information is private.
The deal was agreed to in September but needs approval from the Premier League as well as the UK’s Financial Conduct Authority in order to go ahead. The review is ongoing, and it’s unclear which way the Premier League will ultimately rule.
Spokespeople for the Premier League, Everton and 777 Partners declined to comment. The Premier League hasn’t given any indication to 777 or Everton regarding its position, two people close to the club said. The league has recently asked for more financial information on 777, one of the people said.
Everton on Friday also lodged an appeal against a recent decision by the Premier League to impose a 10-point deduction on the club for breaching financial rules. The points deduction puts the club in danger of dropping out of the lucrative 20-team competition.
Founded in 1878 in Liverpool, Everton is one of England’s biggest football clubs. The team has played continuously in the country’s top division since the early 1950s.
Despite that record, Everton hasn’t won a trophy since 1995, and last won the league title back in 1987. In recent years the club has struggled financially off the pitch and has put in a string of poor performances on it.
The deal for 777 to acquire 94.1% of Everton from owner Farhad Moshiri was reached in mid-September after months of talks between Moshiri and prospective buyers.
To pass the Premier League’s Owners’ and Directors’ Test, prospective buyers have to pass a series of requirements or risk being seen as failing to provide a source of funding, or providing “false, misleading or inaccurate information.”
In October, a New York Times report said the deal had stalled due to 777 failing to provide audited financial statements to the Financial Conduct Authority. A spokesperson for 777 said at the time that the firm would not be commenting on the “ongoing regulatory approval process.”
The US Justice Department has also been considering an investigation into 777 Partners, according to a report from Semafor on Thursday.
“777 Partners is not aware of any investigation into its business and has no reason to believe that one exists,” 777 Partners said in an emailed statement. 777 “considers these scurrilous and damaging accusations to be deliberately timed to undermine its ongoing commercial activities, including the ongoing period of regulatory approvals for the proposed acquisition of Everton FC.”
A spokesperson for the Justice Department couldn’t immediately be reached for comment. The FCA declined to comment.
777 Partners is one of the new wave of multi-club owners sweeping world football.
Over the past couple of years, 777 has built up a portfolio of historic clubs. It has majority stakes in Hertha Berlin in Germany, Genoa Cricket and Football Club Spain in Italy, Standard Liege in Belgium, Red Star FC in Paris and Vasco da Gama in Brazil. It also has minority stakes in Sevilla in Spain and Melbourne Victory in Australia.
In November, credit rating agency AM Best downgraded the financial strength of 777 Re, its Bermudan reinsurance business, from ‘Excellent’ to ‘Fair,’ due to 777 Partners LLC not providing audited financial statements for the past two years.
AM Best also assessed 777 Re.’s balance sheet strength as weak, and is currently reviewing the ratings with “negative implications.”
(Updates with 777’s clubs in 15th paragraph. The date of Everton’s last trophy was corrected in an earlier version of this story.)
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