Everton Getting Another Points Deduction Explained
Having already been hit with a 10-point deduction following breaches of FFP, Everton are facing another 9-point penalty for entering administration. What's worse, it could happen as soon as next month. How realistic a proposition is this, and how damaging would it be for their proposed takeover with 777 Capital.
Transcript
00:00 Hello everybody, Adam Cleary from 442 and I know you normally tune in for the sport,
00:07 but today we've actually got the weather.
00:09 Yes, as you can see here, it doesn't just rain on Merseyside, it pours.
00:17 The massive headline coming out of Goodison Park yesterday was that Everton are potentially
00:21 facing yet another points deduction, this time as a result of entering administration.
00:26 Now we're going to get into precisely what the reasons are behind this and how realistic
00:30 the points deduction actually is and what potentially could make it worse or make it
00:34 better, but the first thing to say is this is not related at all, sort of, to the existing
00:40 points deduction.
00:41 We're not going to get bogged down in all the details of that because if you're an Everton
00:43 fan you're probably sick of hearing about it, but that was all FFP related.
00:47 The club had overspent over a period of years and were punished as a result.
00:52 They are obviously appealing that decision, the 10 points they were hit with may well
00:55 be reduced at some point this season, but that's a whole separate thing.
00:59 Put that to one side.
01:01 This is new and the crazy thing about it is this isn't even related to their current owners
01:05 necessarily.
01:06 It's more about their prospective owners, 777 Partners.
01:10 Now this is the American investment group that have a huge portfolio of sports and television
01:15 and other brands and stuff like that.
01:16 In September of this year, they agreed a deal to purchase Everton.
01:21 They are going to buy 94.1% of the existing owner, Farrad Moshiri Stakes, making them
01:26 the majority owners of the club.
01:28 Their plan is to revitalise it, to take it on to new levels, to see them move into their
01:33 new ground.
01:34 They've got big plans for this.
01:35 They've been quite successful with other franchises in the past.
01:38 It is good news, but takeovers do take a while.
01:42 Now the deal was agreed in September, but it takes the Premier League quite a long time
01:45 to do its due process for all of this.
01:47 It has to examine the potential investors, there's a fit and proper whatever test.
01:52 They've got to make sure it passes all of this before they will give it the green light
01:55 to go through.
01:56 Now if you remember the Newcastle United takeover, because of all this stuff going on with that,
02:01 that ended up taking years.
02:02 Now obviously 777 Partners are nowhere near as controversial or as complicated as any
02:07 of that, but the makeup of their company means it's really, really difficult for the Premier
02:12 League to do all of these tests.
02:13 But the easiest way of explaining the problem here is you can't think of 777 as one single
02:19 entity.
02:20 Like they're a portfolio group.
02:21 They are made up of 60 different entities, different companies, different investors.
02:24 They all play a part in the management of this, so they all individually need to be
02:29 assessed.
02:30 But they have varying degrees of control with loads of different football clubs.
02:34 Like they own Genoa in Serie A, they've got a major stake in Hertha Berlin, Sevilla in
02:40 La Liga, Red Star FC in France, Melbourne Victory in the A-League in Australia.
02:44 But they also own the British Basketball League here in the UK, and one of its biggest teams,
02:49 the London... should have researched this...
02:52 Dunk Boys, I think that's what they're called.
02:55 But it goes way beyond that as well.
02:56 They're in film, television, media, insurance, aviation, I think, you name it, they've got
03:01 a finger in it somewhere.
03:02 So this is a really wide and varied group of companies and individuals that have a really
03:07 wide and varied portfolio, so it makes it really difficult for the Premier League to
03:11 do everything it needs to do, which means it's taking time.
03:15 But, and not to sound like Dr. Who here, time is the problem.
03:19 Moshiri and Everton's current ownership group are just not willing to continue to fund what
03:24 they see as a completely failed operation.
03:26 They don't want to put any more money into the club.
03:29 That's why they were selling it.
03:30 So when the deal was agreed, Moshiri negotiated with 777 and said, "Look, I'm not putting
03:35 the money into this that it needs, so if you want to buy it, you guys can pay for it while
03:39 all the tests are being done."
03:41 And they said, "Okay, fair enough."
03:42 That's sometimes how these things work.
03:44 They gave Everton around about £100 million for its operating costs to last this year.
03:51 But I don't know if any of you have looked at a calendar lately.
03:53 This year is now down to a matter of days and weeks.
03:56 And the big news, what started this whole story, is that the Premier League have confirmed
04:01 this is not going to be sorted.
04:02 We are not going to have waved this through by January 1st.
04:06 So on the one hand, you've got the current owner, Moshiri, who is not going to put any
04:10 more money in.
04:11 And on the other hand, you've got the new owners who have put quite a lot of money in
04:15 already but aren't going to put any more.
04:17 And the maths of this situation is that on top of all the money they generate naturally
04:21 anyway, Everton need an additional £20 million a month to meet all of their operating costs,
04:27 to keep the lights on, to pay the staff, to pay the players, to run as a business.
04:32 And if you need an additional £20 million every single month and your original source
04:36 of that has been turned off and your current source of that is about to be turned off,
04:40 you're f***ed.
04:42 To lay this out as simply as I can, right, in January 2024, which again is incredibly
04:47 soon, Everton will not have the money they require to continue to do business.
04:52 And if that happens, you enter administration.
04:55 And if you enter administration as a Premier League club, there is an immediate points
04:59 penalty.
05:00 Now remember, this has happened once before, back in the 2009/2010 season.
05:04 Portsmouth entered administration and they were hit with an immediate nine-point penalty.
05:08 But just to slightly put your mind at ease here, Everton fans, this is the table from
05:13 that year.
05:14 The nine points wouldn't help them.
05:15 They were going down anyway.
05:17 And that's not to say, don't worry by the way, this is really, really bad news.
05:20 How any team survives in the Premier League after being docked ten points and then another
05:25 nine is beyond me.
05:27 But again, if we just sort of mentally do that to Everton in the league now, they'd
05:31 be five points off safety.
05:33 And I don't want to jinx it, but I am the man who has already done the "How Sean Dyche
05:37 has made Everton relegation proof" video.
05:40 They'd only need like two more wins across the rest of the season than Luton.
05:44 And they've already got five more than they have.
05:46 So the real question though, is this likely to happen?
05:51 Is this timeline of events that leads to them getting another nine-point deduction a reality?
05:55 Well, as it stands right now, yes, that is what is going to happen.
05:59 The money will dry up at the end of the year.
06:01 They will enter administration and the Premier League will hit them with a points deduction.
06:05 But this is all relatively breaking news.
06:08 It was only revealed yesterday that the deal will not be concluded in time.
06:12 That means that the ball is now firmly in the court of Moshiri and 7-7-7 partners because
06:17 they control the purse strings here.
06:19 They can make this problem go away if they can come to some kind of financial solution.
06:24 Like on the one hand, 7-7-7 won't want to put yet more money into a club that they still
06:28 technically may not get to buy.
06:31 Like that hasn't been sorted yet.
06:33 It almost certainly will be.
06:34 But think about it from a business perspective.
06:36 You've already paid a hundred million.
06:38 You don't own this club.
06:39 Do you really want to be putting your hand back in your pocket for 20 or 40 more?
06:43 But on the other hand, if there's one thing they don't want even more than that or want
06:47 less, I'm not sure what good English is, it's to buy a club that is then promptly relegated
06:52 out of the money spinning Premier League and they've got to spend money to get them back
06:56 in there.
06:57 So it's probably in their best interests to just sort this out.
07:00 But whether or not they will or whether or not that's something that's even possible
07:03 to do in the next like 15 or 16 days when most of your staff are probably about to take
07:08 long breaks for Christmas, I don't know.
07:10 Like here's a radical idea.
07:12 Moshiri still owns the club.
07:14 Why doesn't he get his hand into his f-
07:15 But I mean, as ever, the people who are going to suffer from this are not the billionaire
07:19 owners or the millionaire investors, it's the fans of a football team who've watched
07:24 them be really bad for really long through mismanagement and now finally felt like they
07:28 turned a corner and had a team they could support, but who are potentially going to
07:32 be playing this season with near enough a 20 point handicap.
07:35 But what I also really think is worth pointing out here is we're not just talking about a
07:39 football club and takeovers and whatnot.
07:41 We're talking about a business being unable to pay its staff.
07:45 You know, not the millionaires at the top, the normal people who actually run it and
07:49 do all the hard work.
07:51 They might not be getting a pay packet in January, pretty much the hardest month of
07:55 the entire year to keep your head above water financially.
07:58 So just never mind the football or the investments or the takeovers or any of that stuff like
08:02 that's background noise.
08:03 There is a real human cost to all this.
08:05 And whether it's the new owners or the old owners, it doesn't matter.
08:08 Somebody has to do the decent thing and not let this happen.
08:12 But Everton fans, I mean, my God, how bored of all this must you be by now?
08:16 Please let us know what you think is going to happen, what should happen, what have I
08:19 missed from this story that's really worth talking about.
08:22 All of that in the comments below, please.
08:23 And if you did enjoy this video, please always do consider subscribing to us here on 442.
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08:34 In the meantime, though, you can grab me wherever your social heart soars at Adam Cleary, C-L-E-R-Y,
08:40 the 442 socials in the corner of the video.
08:42 And yeah, just until next time.
08:45 What a mess.
08:46 a mess, goodbye.
08:47 (upbeat music)