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An earthquake strikes from the “Deep South” of the United States and reaches Italy, Belgium, Brazil, France, Germany and the United Kingdom. South Carolina gets into trouble with the 777 Partners investment fund which is behind all the major football leagues in Europe, from Serie A to the Premier League.
From Miami to Liguria and Liverpool
The American fund, based in Miami, like many other US financial investors, has been fascinated by European football, a sector that has been allergic to private equity for decades: in 2021, 777 rose to prominence because it became the owner of Genoa FC. The first and longest-running football club in Italy, after decades in the hands of the “King of Toys” Enrico Preziosi, had been sold for 150 million euros. Last year, then, the Americans came into the limelight even more because they stepped forward to buy Everton, in the Premier League. The English club is Liverpool’s second club, a bit like the “poor brother” of the city of the Beatles, which also had Carlo Ancelotti as coach for a short period. It is in the hands of the Anglo-Iranian businessman Farhad Moshiri, but with residence in Monte Carlo, who however has decided to get rid of it. The 777 fund showed up and has already paid a bridge loan of 140 million pounds to keep the club afloat.
The ax of the regulators
Despite the exotic domicile in Florida, a portion of the capital in the hands of 777 comes from South Carolina, a rural state on the American East Coast. And they are insurance capitals: specifically the A-Cap group, a sort of consortium that brings together Sentinel Security Life, Haymarket Insurance and Jazz Reinsurance in Utah; more Atlantic Coast Life Insurance and Southern Atlantic Re in Carolina, has invested nearly $3 billion in the hedge fund out of a total of $12 billion in assets. The disproportion has raised the alarm in South Carolina where the rules on insurance companies are stringent: the maximum risk investment threshold is 3% of the total; and A-Cap exceeded it by double (it should have stopped at 1.4 billion). Hence, as anticipated by the Financial Times, the request to reduce the exposure on 777 for the fund’s shareholder companies.
In 2008, the public companies Fannie Mae and Freddie Mac were on the verge of going bankrupt and, as a result, blowing up Americans’ pensions, precisely because they were too exposed to high-risk investments. Since then, America no longer wants to take the risk.
A wild ride?
Founded a few years ago, in 2015, by Steven Pasko and Josh Wander, the American financial company, in just 8 years, has rounded up numerous clubs around Europe and around the world: from Herta Berlin of the Bundesliga, to Standard Liège of Belgium, to the Red Star of the Ligue 1 of France up to the Vasco da Gama of Brazil. The problems of 777 are also a broader signal for the football industry and the world of finance where, thanks to the harmful zero rates, which are too low and for too long, many sports teams have ended up in the crosshairs of the so-called alternative funds, fueled even by institutional investors, desperate for the lack of returns.