777 Partners deal for Everton seen in new light after worrying shift in Europe
Premier League rights are set to be at their highest ever at a time when rights in Europe are diminishing, as 777 Partners continue their push for Everton ownership
For 777 Partners, a successful takeover of Everton would give them a seat at a very powerful table.
The Miami-based investment firm is currently going through the process of obtaining regulatory approval for the deal to acquire the entirety of current Toffees owner Farhad Moshiri’s 94.1% shareholding in the club, with the Premier League, Football Association and Financial Conduct Authority all needing to be satisfied that 777 Partners would be appropriate owners of the club, and have the necessary funds to complete the deal and a workable business plan moving forward.
While sources close to the firm remain confident that they will be able to clear all hurdles and take the reins at the club, scrutiny has arrived over just how the deal to purchase the club will be financed. The club are also still in a state of limbo as they await the decision of an independent commission into alleged breaches of the Premier League’s profit and sustainability regulations, a decision that may take some weeks to arrive.
777 Partners operate a multi-club model across the globe. They have majority ownership stakes in Belgian side Standard Liege, Red Star FC in France, Italian club Genoa, Vasco da Gama of Brazil, Australian club Melbourne Victory, and German outfit Hertha Berlin. They also have a minority position in Spanish side Sevilla.
With such a portfolio of clubs, spanning continents, there is one glaring omission, with the presence of a club in the world’s richest and most lucrative domestic competition, the English Premier League, something that has not yet landed.
The reasons for the Premier League’s continued rise are largely due to the sheer size of the broadcast deals that it has been able to negotiate both domestically and internationally, something that has come about through a remarkably successful push over the past decade or so to make the competition truly global, leveraging the size of the major clubs that reside in it and the fan bases that they have across the world.
The Premier League has put out to tender its domestic rights for the 2025 to 2029 cycle, one that is now four years as opposed to the long-established three. The addition of an extra year of the cycle, allied with an increase in live games from the current 200 to 270 per season, means that the current deal of around £5bn for three years will be significantly more valuable.
The deal that is in place at present was one that was negotiated during the uncertainty of the pandemic, where there was concern that audiences may not engage with the game in the way that they once did. The deal was rolled over at the same price as the previous cycle, but as the worries about the Premier League not being resilient to the economic challenges it faced dissipated, the deal for the international rights was struck at a value of more than £5bn for three years, more than the domestic rights for the very first time, aided by the £2bn deal that was inked with NBC for the broadcast rights in North America.
The Premier League’s next deal is set to be its biggest yet, and the clubs will benefit from that. At present, through the Premier League’s equal share, every club receives £31.8m annually from the domestic TV rights, with clubs receiving around £1.2m every time they feature in a live broadcast through what is known as facility fees. There is also a merit payment made from both domestic and international rights, dependent on where a club finishes in the league table, with payments made on a sliding scale and arriving from the money that the Premier League raises from its broadcast rights tender.
The extra security that is provided by growing media rights revenues in a market that is experiencing growth while its competitors across Europe see decline, will, in turn, see valuations for clubs increase. The trend for valuations growing year on year has seen plenty of investment interest, particularly from North American investment firms and private equity, where the value proposition is realised.
For Everton, that value proposition is predicated on their continued membership of the Premier League, domestic football’s most exclusive club. The imposed austerity due to the financial issues that the club has suffered in recent seasons has seen them ride their luck at times, with the club staying up on the final day of last season, a year on from managing to stave off another relegation dogfight down the final furlong of the season.
For 777 Partners, their interest in Everton is very much based on the Toffees being a Premier League asset for the long term, taking part and being beneficiaries of the value creation that will come from the strength of the media rights being sold, at a time when the global nature of the League will mean that member clubs are uniquely positioned when it comes to the streaming giants truly challenging the traditional broadcast bundle, something that will aid the ability to generate greater commercial revenues for clubs through better exposure for partners.
But 777 Partners’ desire to continue to pursue their Everton takeover play, despite the immense scrutiny that has come with it and the significant financial burden, through both existing debt obligations and the requirement to find the remainder of the funding for the stadium build at Bramley-Moore Dock, comes at a time when the media rights in leagues where they have other ownership stakes are diminishing, something that threatens the goal of value creation.
In France, 777 Partners have a controlling interest in Red Star FC, a side playing in the Championnat National, the third tier of the French football pyramid.
Media rights are not the motivator at Red Star, but the current trend in French football in terms of its broadcast rights is something that 777 Partners will likely be acutely aware of. French football’s Professional Football League (LFP) has scrapped the auction for Ligue 1 and Ligue 2’s domestic broadcast rights after failing to attract any bids matching its desired valuation. The LFP had been seeking €1bn (£870m) per year in revenue for the next five-year period, from 2024 to 2029, but while having received bids, none of them met with the desired sum that the LFP had been seeking, with one broadcaster DAZN understood to be preserving some funds for a serious play for a chunk of the expanded EPL rights from 2025.
The lack of a deal being agreed at the desired figure gives rise to considerable uncertainty for French teams, still bruised by the collapse of the Mediapro TV deal in late 2020 that saw the rights sold in a cut-price auction to Amazon after the company failed to keep up with its financial commitments.
But it is in Italy where the main concern will likely lie. Genoa are a club where 777 Partners have been in situ the longest, and one where they have aspirations to make them a challenger in Serie A.
On Monday it was announced that DAZN and Sky would keep the rights to screen live Serie A matches in Italy for the next five seasons after Italian clubs approved bids worth at least €4.5bn (£3.9bn), league officials said. After four months of negotiations, the Serie A clubs had met in Milan to review final offers tabled, which amounted to around €900m per year until the end of the 2028/2029 season.
The issue for Italian football is that the deal turned out to be just less than the one previously negotiated, and 7% less than what the value of the deal was a decade ago. Compare that to what the Premier League has achieved during the same period, a rise of 67%, and you can see why there is the desire for the likes of 777 Partners to get a slice of the action.
For Italian football it makes closing the gap between Serie A and the Premier League even more difficult, something that Napoli owner Aurelio De Laurentiis sounded a dire warning over, interrupting a pre-match press conference to say: “It’s a defeat for Italian football, with this deal our football will die. Sky and DAZN are not competent, they aren’t good for Italian football.”
The continued rise of the Premier League and its increased financial wealth, a time when European football rights are shrinking and there are new competitors aiming to hoover up audience in the shape of the Saudi Arabian Pro League, is good news financially for the member clubs and their owners and investors, although long term for the European football ecosystem it could prove very damaging.
While the Premier League and its member clubs may be extremely bullish on the potential for what comes next, with the value of their teams set to rise in line with the strength of the deal, especially in the case of clubs such as Liverpool, Manchester United and Manchester City, a word of warning for some potential pull-back before the streamers truly arrive to shake up the live sports broadcasting industry came from Atalanta owner, private equity giant and co-chairman of Bain Capital, Steve Pagliuca, whose Italian club were impacted by the Serie A agreement on Monday.
Speaking at Leaders in Sport 2023, Pagliuca said: “I’ve been investing in media companies for 40 years now and you’ve seen cycles of bundling, unbundling, re-bundling and unbundling. We’re now in an unbundling cycle due to the technological advances in streaming. The good news about the streaming is that when we used to count fans at the (Boston) Celtics it would be in the hundreds of thousands, then it became millions. With cable and now streaming it becomes hundreds of millions able to watch any game at any time.
“The bad news is that the streamers, the Google’s and Amazon’s, are now in a battle with the networks and so they spend so much money bundling the
