Biggest Stories of the Week

The Final Whistle: A Look at the Economics of Football Club Ownership

The Collapse of Everton's Takeover

Everton Football Club's anticipated sale to 777 Partners, an American private investment company, has fallen through, marking a dramatic turn in a saga that promised to reshape the club's future. The Miami-based investment firm, already embroiled in accusations of fraud and operational failures, failed to seal the deal, leaving Everton in a precarious position as it faces ongoing financial woes and the rather monumental task of completing its new stadium without steady ownership.

A Deal That Simply Couldn't Close

An announcement on Saturday confirmed that the agreement for 777 Partners to purchase Everton from British-Iranian owner Farhad Moshiri had "expired." Despite 777’s offer to provide of over $200 million in working capital, their inability to satisfy the Premier League's conditions, including clearing the club’s debts related to their new stadium, proved fatal to the deal. Everton, under Moshiri’s ownership, has faced significant financial instability. The club has been plagued by mounting debts exacerbated by the COVID-19 pandemic and the unraveling of sponsorships linked to sanctioned Russian billionaire Alisher Usmanov. This financial strain, coupled with expensive player acquisitions, has put Everton in a difficult position.

The 777 Vision: Ambitious Yet Flawed

777 Partners had envisioned Everton as the shining star of their multi-club ownership model, which spans sports clubs across Italy, Brazil, Germany, Belgium, France, Spain, and Australia. Josh Wander, 777's co-founder, touted a future of "hyper-commercialisation" for football clubs, seeing Everton’s Premier League status as a golden ticket that could boost the value of the company’s entire portfolio.

However, this vision was clouded by internal dissent. Some within 777 questioned whether the acquisition of Everton might actually strain the firm’s resources, jeopardising their broader ambitions. Despite these concerns, Wander pressed on, confident in the potential returns.

Financial Scrutiny and Legal Troubles

777 Partners’ aggressive investment strategy has attracted both regulatory scrutiny and legal challenges. Lawsuits from creditors (companies providing funds to 777) allege fraud and financial mismanagement, claiming that 777 used funds it did not have to fuel its football ambitions. In response to the mounting pressure, 777 has called in restructuring experts, essentially signalling that they are on the brink of collapse unless drastic action is taken to change the financial and operational fortunes of the firm.

What Now For Everton?

For Everton, the collapse of the 777 deal leaves owner Moshiri with the daunting task of taking the club through financial turbulence while also trying to complete the new stadium. The club, which narrowly avoided relegation last season, must now look for alternative investors to secure its future. Among potential suitors is US businessman John Textor, who has expressed interest but would need to divest from his stake in rival Crystal Palace to comply with league rules.

Investments in football, and in many other sports, are high-stakes and hugely volatile. What was envisioned as a transformative move for both Everton and 777 has instead resulted in uncertainty and continued financial strain for the club and for 777 Partners. For now, the dream of a new era at Goodison Park remains a dream deferred.

From The Team

The Controversial Rise of Abu Dhabi’s International Holding Company

The International Holding Company (IHC), headquartered in Abu Dhabi, has emerged as a curious phenomenon in the global financial landscape.  Within a mere three years, IHC has undergone a metamorphosis, transforming from a modestly sized company focused on the agricultural and real estate sectors, with a workforce of approximately 40 individuals, into a behemoth boasting a market capitalisation of $240 billion. This figure eclipses that of established industrial giants such as Siemens and General Electric.  Furthermore, IHC's employee base has ballooned to a staggering 150,000.  This meteoric rise has garnered significant attention, sparking intrigue and, in some quarters, apprehension.

Attributing the factors behind IHC's phenomenal growth presents a challenge.  One contributing element can be traced to the strategic acquisition of over 40 companies from Royal Group, another prominent Abu Dhabi conglomerate. This move served to significantly bolster IHC's size and overall value.  Additionally, the company has embarked on an aggressive campaign of global investment, strategically diversifying its portfolio and ostensibly aiming to maximise shareholder value.

However, a veil of secrecy shrouds IHC's operations, engendering a sense of unease among some observers. The company's ownership structure is demonstrably linked to Sheikh Tahnoon bin Zayed al-Nahyan, one of the most powerful figures in Abu Dhabi, and independent access to comprehensive financial information appears limited. This lack of transparency presents a significant hurdle in fully comprehending the true drivers behind IHC's growth trajectory and raises concerns regarding its long-term sustainability.

Further compounding the intrigue is IHC's dominance within the Abu Dhabi stock market.  Its colossal market capitalisation casts a long shadow, potentially hindering the growth prospects of other listed companies. The extent of this dominance is reported to have even discouraged discussions concerning a potential merger between the Abu Dhabi and Dubai stock exchanges.

Despite the controversy surrounding its operations, IHC's ambition cannot be understated. The company has established an ambitious target, aiming to achieve a revenue figure of $272 billion within the next five years, with acquisitions serving as the primary growth driver.  To facilitate this expansion, IHC has amassed a dedicated war chest of $10 billion earmarked for investments.  Furthermore, the company is actively pursuing deals across diverse geographical regions, including Asia, Latin America, and even the United States.

The ultimate trajectory of IHC remains shrouded in some uncertainty.  Its story serves as a potent illustration of the inherent complexities associated with rapid corporate growth, particularly when such growth is accompanied by a lack of transparency.  Can IHC maintain its current momentum and effectively address the concerns surrounding its operations?  Only time will reveal the answer.

Climate change and its growing impact on the economy: a case study on Brazil.

Never before has a natural disaster been seen to have such a disastrous effect on Brazil’s economy, not until April 29th, 2024. From this day onwards, heavy rainfall has built up to a tremendously high level, leading to devastating floods for the population of Rio Grande do Sul in the South of Brazil. 

As Brazilians continue to be exposed to the emerging water-borne diseases whilst battling the threat that the disaster poses, the impact of this event on the economy should not be taken lightly, as it threatens the livelihood of those living all across Brazil. 

While this threat definitely is not as immediate as a life-or-death scenario, the fact that Rio Grande do Sul is viewed as Brazil’s economic driver is a problem: this agricultural state contributes to almost 7% of the country’s GDP, specialising in the production of rice and soy due to its ideal climate. However, as a result of the ongoing floods, damage to the state’s harvests has been detrimental with 1-2 million tonnes of soybeans and 14% of Brazil’s rice destroyed. The biggest long-term impact is likely to be the country’s great financial losses from production, increasing job redundancies and a rising unemployment rate.

The impact of Brazil’s economy has been compared to 2005’s Hurricane Katrina in New Orleans, Louisiana. Some economists say that on a national scale, the impact of the floods on Brazil will be much worse due to the proportion of GDP that Rio Grande do Sul makes up (6.5% of Brazil’s economy) compared to Louisiana (1% of the US economy). Even further, the floods are estimated to result in a $2 billion loss in damages, resulting in a change of -3.8% economic growth from the previously growing 3.5%. 

The data shows us just how widespread the effects of climate change are, especially highlighting the importance of putting more effective preventative measures into place, in order to avert the exacerbation of extreme weather events such as this one. As emergency responses are currently being prioritised in the South of Brazil, the rest of the country must wait to see how the government will respond to this unexpected hit to the economy, and how they must learn to adapt to the difficult changes they are yet to face.

Read more: 

Heavy flooding in southern Brazil kills 150 and displaces 600,000

Brazil floods hit rice and soy crops - Rice News Today

Brazil’s Rio Grande do Sul faces economic woes after floods, and an unclear path to rebuilding - ABC News.

Thanks for reading through another issue! If you’ve read this far, you might be interested in joining the Girl Economics Ambassador program for sixth form and college students that is being launched this week.

Stay tuned to our LinkedIn page to find out more…

• Erin