Season 2011-12
The Mail Bag

What is a fair price for Everton?

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I think all the current unrest amongst many of us is because the club seems to be stagnating. We have a situation where the current majority shareholding lacks either the will or the financial capacity to take the club forward. The supporters have been repeatedly told that the club is for sale but the asking price is never publicised so it?s really impossible to confirm this independently. The asking price is surely the key to everything.

I?m quite happy where I live at the moment and I am not looking to move or sell my house. However, if someone comes along and offers me three or four times what similar properties are being sold for then I?ll move out tomorrow. In that sense I?m looking to sell my house. I?m thinking that recent evidence suggests this is the realistic position of Everton Football Club currently being available for sale.

However, if I was serious about selling my house I would seek professional advice and be given a fairly realistic idea of what it may fetch. I would then probably be advised to initially market it at a certain figure but be prepared to accept a figure some 10% - 15% less than that.

My understanding is that when the current regime bought out Peter Johnson over ten years ago they paid approximately £854 per share which valued the club in the region of £30 million. A few years ago for my wife bought me one share for my 50th birthday at a cost of around £1250 and based on this the current value would I suppose be in the region of £45 million.

Taking these facts into account and then considering any financial improvement or deterioration since the current majority shareholders took over and the recent sale prices of football clubs, are there any Evertonian accountants or other financial experts out there who could estimate a current fair value of the club?

To put simply, if BK is serious about selling, and as he is bored with questions about the asking price but not bored enough to divulge it, what should the asking price be (assuming an allowance for this to be discounted slightly during negotiations)?

Andy Riley, Widnes     Posted 15/07/2011 at 19:05:06

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Dennis Stevens
1   Posted 15/07/2011 at 22:36:07

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£18.78
Ian McDowell
2   Posted 15/07/2011 at 22:55:36

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Off the top of my head, considering players, training facilities, ground and future earnings, I would say around £50-70 million although I may be well off.
David Hallwood
3   Posted 15/07/2011 at 23:05:08

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I think anyone looking to buy the club would want the (hopefully) outgoing administration to clear some of the debt; at an estimate of £45mill, there wouldn't be much profit for Bill and his chums.
Gavin Ramejkis
4   Posted 15/07/2011 at 23:09:49

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The current debts, if they were called in, are greater than the value of the club's only remaining assets.
Tom Brown
5   Posted 15/07/2011 at 23:25:01

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Zero. On a business basis.

Net present value of future earnings taking into account of servicing debt that would be aquired with the business, using a risk adjusted discount factor ? the answer is zero.

But what sort of idiot would buy a Premier League club as a business venture?

No, the real motivation for buying would be politics or vanity. So the "value" depends on how badly the buyer needs to look good... eg Roman, desperately needed to be high profile in the West etc etc, so has been happy to sink a fortune into Chelsea.

How many times in the next year are we going to hear talk about someone "investing" in Everton? Investing implies some sort of economic return and that simply isn't going to happen. It might make someone feel good or make them look good but it certainly ain't going to make them money.
Trevor Mackie
6   Posted 15/07/2011 at 23:59:53

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Andy your post captures in a nutshell the Everton question.

The accompanying answers show why Destination Kirkby was pushed so shamelessly ? it made selling the club easier and potentially more profitable for the Kenwright crew ? and bollocks to the fans.

This is why they won't entertain pertinent questions, but just like the erstwhile News of the World, the truth will out and I'd put money on it being shameful.

If idiots like Hicks and Gilette can put an asking price on the RS there's no reason why Billy can't do the same here ? unless there's something to hide.
Louis Platt
7   Posted 16/07/2011 at 05:46:01

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Bernie Mullin, the Evertonian who was CEO of Atlanta's NBA & NHL franchises was interviewed on the Followtonians podcast last season.

He put together a three page document and sent it out to potential investors. On the podcast, he says that a would be investor would have to part with £75-100m to buy out the board.

http://www.followtonians.com/?p=613
Neil Humphreys
8   Posted 16/07/2011 at 08:37:14

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On any commercial basis, nothing. For a group who love the club, maybe 25m. The debt is crippling and to clear that debt you would need a Billionaire or a group with zero commercial acumen. My fear is that the club defaults on its debts, the business goes under and the assets are bought out by an interested party or group who would re-develop rather than re-build.
If the debt really is in the order of £80m, then we are the footballing equivalent of Greece, not credit worthy and surely teetering on the brink...
Andy Riley
9   Posted 16/07/2011 at 09:04:02

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Tom #5 and others have hit the nail on the head. In any commercial terms the value of Everton Football Club is probably close to zero. Any acquiring of a shareholding in a football club (even my one share) is not made for any sound financial reason. This is why I think the first stage must be to ascertain the exact price being sought by the current regime as this will to an extent show if they are really serious about selling or are simply treading water until they can come up with DK part two in whatever form that takes and then sell at a decent profit as Trevor #6 highlights.
It seems to me that they will not state the price publicly because they will then be asked to explain why they put that value on it.
Neil Mulhearn
10   Posted 16/07/2011 at 09:07:45

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This nonsense keeps appearing about our 'crippling' debts. As of the last set of accounts, we owe approximately £45million, which is one of the lowest in the pl, especially when you look at debt to income ratios.

This debt is mostly on long term deals, and although costing the club £5mill a year, is hardly holding the club back. To say the club is worthless is just another way of having a go at Blue Bill etc. If the club was of an inkling, we could pay off the debt with two or three player sales - take your pick from Baines, Rodwell, the big Fella, Jags etc. A wholesale player clear out could probably raise close to £100mill, and Blue Bill would still own the club.

The club would probably be sold for around £100mill (to answer the original question), £100mill of player investment (50% transfer fees/50% increased wages over the next 4/5 years) and at least £100mill to redevelop Goodison - considerably more if a new stadium is to be built. So any purchaser is going to need £300 - 400 mill to buy the club and move it forward.

Russian/Arabs seem thin on the ground, so the only way forward would be a chancer who hocks the club to massive debts (aka the clowns across the park - including the new Yanks who the RS haven't seen through yet)
Thankfully Blue Bill is avoiding all 'investors' who don't have the cash, and in my view that is no bad thing.
Neil Mulhearn
11   Posted 16/07/2011 at 09:07:45

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This nonsense keeps appearing about our 'crippling' debts. As of the last set of accounts, we owe approximately £45million, which is one of the lowest in the pl, especially when you look at debt to income ratios.

This debt is mostly on long term deals, and although costing the club £5mill a year, is hardly holding the club back. To say the club is worthless is just another way of having a go at Blue Bill etc. If the club was of an inkling, we could pay off the debt with two or three player sales - take your pick from Baines, Rodwell, the big Fella, Jags etc. A wholesale player clear out could probably raise close to £100mill, and Blue Bill would still own the club.

The club would probably be sold for around £100mill (to answer the original question), £100mill of player investment (50% transfer fees/50% increased wages over the next 4/5 years) and at least £100mill to redevelop Goodison - considerably more if a new stadium is to be built. So any purchaser is going to need £300 - 400 mill to buy the club and move it forward.

Russian/Arabs seem thin on the ground, so the only way forward would be a chancer who hocks the club to massive debts (aka the clowns across the park - including the new Yanks who the RS haven't seen through yet)
Thankfully Blue Bill is avoiding all 'investors' who don't have the cash, and in my view that is no bad thing.
Neil Mulhearn
12   Posted 16/07/2011 at 09:07:45

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This nonsense keeps appearing about our 'crippling' debts. As of the last set of accounts, we owe approximately £45million, which is one of the lowest in the pl, especially when you look at debt to income ratios.

This debt is mostly on long term deals, and although costing the club £5mill a year, is hardly holding the club back. To say the club is worthless is just another way of having a go at Blue Bill etc. If the club was of an inkling, we could pay off the debt with two or three player sales - take your pick from Baines, Rodwell, the big Fella, Jags etc. A wholesale player clear out could probably raise close to £100mill, and Blue Bill would still own the club.

The club would probably be sold for around £100mill (to answer the original question), £100mill of player investment (50% transfer fees/50% increased wages over the next 4/5 years) and at least £100mill to redevelop Goodison - considerably more if a new stadium is to be built. So any purchaser is going to need £300 - 400 mill to buy the club and move it forward.

Russian/Arabs seem thin on the ground, so the only way forward would be a chancer who hocks the club to massive debts (aka the clowns across the park - including the new Yanks who the RS haven't seen through yet)
Thankfully Blue Bill is avoiding all 'investors' who don't have the cash, and in my view that is no bad thing.
Brian Waring
13   Posted 16/07/2011 at 10:30:01

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We got your point the first time Neil!

Joke by the way.
Tom Brown
14   Posted 16/07/2011 at 10:24:52

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Hi Neil,

You talk of a total 'investment' of 300m+. Investors in real commercial businesses in leisure currently look for a return of 15% plus on their investments, lets be charitable and say that you could satisfy a hard nosed businessmen with a 10% return. So for a 300m investment, they would be looking for a 30m per annum profit. PROFIT. Not sales, PROFIT after tax . How on earth would you propose Everton could make 30m per year profit?

Any suggestion that this would be an 'investment' is absurd.

If someone puts this sort of money in it will be for fun, vanity or politics, not as a sound business decision.

Tom Brown
15   Posted 16/07/2011 at 10:36:39

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Sorry, Neil, Just re-read your post and I don't think you were actually suggesting the money would come from an investor.

I stand by my post, put please don't take it as being aimed at you!

Eric Myles
16   Posted 16/07/2011 at 10:41:11

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If it were a company being taken over (which it is) then the offer would be the share price plus a little bit more to make it more attractive to the 'sentimental' shareholders.

No way would it be double or triple. So if the shares issued give a value of 45 million then probably 50 million is a fair price and the purchaser takes over the debts.
Gavin Ramejkis
17   Posted 16/07/2011 at 10:52:26

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Neil, the level of debt at Everton in terms of ability to service it are pretty crippling. The club can't afford to strengthen the squad despite having lost 3 players since last summer in Gosling, Pienaar and Vaughan. The responses will no doubt include how many games did Vaughan play, well he didn't but was in the squad and given at the Bury match last night the team finished with ten men having run out of subs it's pretty plain to see EVERY player on the books is pretty much a squad player.

Selling the squad to pay the servicing fees then provides a short term stop gap keeping the creditors from the door but again those sales aren't replenished, debt servicing comes around again and you sell another player and they are not replaced. Eventually, and not that long given the paucity in the squad, that impacts on league placing which is also affected by your peers renewing/replenishing their squads you slide down the league at an impact of £700-800k per place which means you have less to service your debts, if you drop out of the league you are left with short term parachute payments which will service the debt for a short time and you will also lose players will they be replaced with no money and do you get where this heads Neil?
Brian Waring
18   Posted 16/07/2011 at 11:41:20

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Didn't Keith Harris say on radio city that the club was for sale for £125m ?
David Holroyd
19   Posted 16/07/2011 at 12:28:08

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125 mill minus the debt 50 mill
James I'Anson
20   Posted 16/07/2011 at 12:46:22

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I don't get this view about not making money buying a football club.
Bill paid 20m and wants 125m after 10 years. Thats more than 10m a year profit for doing fuck all.
Neil Mulhearn
21   Posted 16/07/2011 at 14:21:12

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Tom - you are spot on. The figures don't stack up for an investor, and finding a fan with a spare couple of hundred million isn't going to be easy!!

This is the true reason why we haven't been bought out despite Bill looking 24/7, and I don't think that's the worst thing for fans.

OK, we struggle in the transfer market, but we're not the only ones. Sunderland are buying like crazy, but they sold their top two assets to fund 10 average purchases. Aston Villa are in a similar boat.

The only way forward is a new stadium built with an enabling partner. The deal City have just done with Etihad should offer hope to us all. Companies are out there with serious money, and if we can pre-sell naming rights then a new stadium is not out of our reach. As much as I'd hate to leave Goodison, you just can't sell naming rights to existing stadium.
Roberto Birquet
22   Posted 16/07/2011 at 15:30:42

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Someone said that, if the debts were called in, we wouldn't be able to pay.

That's wrong: we have well over the debts in player contract values. We're solvent.

We have a board with no money and seemingly cannot find anyone else. Conspiracy theorists say Bill just won't sell. "I don't know," is the honest response to that, but our price is low compared with some due to intangibles: brand.

The Everton brand is only of note in the UK, and even then by middle-aged people on.

Look at the other lot, our neighbours. Unfortunately they have a brand like Pepsi Cola. The bloody whole world knows of them, and have buyers queuing up with cash to splash.

Our other problem is shared with Liverpool. The real estate value in L4 is just about the lowest in the entire country. Check out : Propertysnake.co.uk

We need to up the brand somehow, and what a pity, cos how much would it cost Moyes to make Everton top 5 again? I suspect £10 million in net transfer costs would do it.
Gavin Ramejkis
23   Posted 16/07/2011 at 15:55:30

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Neil, the Etihad deal is a backdoor way to avoid the new Fifa rules. It isn't a kosher deal, a relative of Man City's owner is paying over the odds and the deal could well be investigated because of it.

During the DK hearings, the club made some cock-and-bull story about naming rights and the sale of GP with outlandish figures too.

James Stewart
24   Posted 16/07/2011 at 18:12:07

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Let's get one thing straight first off. Everton ARE NOT FOR SALE! BK has been quite clear he is looking for investment so he can keep his job. Not surprisingly, no-one wants to give him their money!

If the club were for sale though, Gavin is spot on. The debts far outweigh the assets. Therefore we are worth fuck-all! The only assets we have left are on the pitch anyway ? everything else has been silently sold off!
Ste Traverse
25   Posted 16/07/2011 at 18:20:05

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A few months ago Mr Rent-A-Quote 'professor' Tom Cannon was on Radio Merseyside claiming we are worth a hilarious £180m!!
James Martin
26   Posted 16/07/2011 at 23:17:47

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Gavin, please elaborate on which players are being sold to pay the servicing fees? Gosling left because he got greedy and Vaughan left because, in all honesty, he wasn't good enough. Pienaar left because he wanted to, we offered him a new deal so therefore obviously didn't have to sell him to service the fees.

Vaughan and Gosling were such bit-part players anyway that even nominal arrivals such as Gueye and Vellios could largely take their place in the squad.

I just don't understand this 'crippling debt' argument... everyone in the Premier League has a debt, the size of which is at a level that can be successfully serviced by the club's income.

Neil Mulhearn is right: we could sell a few top players and wipe off that debt immediately. If the board are as fiscally tight as we are meant to believe then surely they'd be taking the most economicailly convenient route. Obviously the greater league position that players like Jagielka, Baines and Arteta bring outweighs the cost of servicing the debt.

No-one invests in a football club for a sound business decision. The only succesful examples are Abramovich and the sheikh at Man City and they clearly have so much money that it is a plaything for them. Almost everyone else has got burnt financially by investing in football clubs, most notably Gillete and Hicks.

Eric Myles
27   Posted 17/07/2011 at 04:55:11

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Neil #21, there's no rules that say you can't sell naming rights of an existing stadium. Newcastle did it.
Phil Roberts
28   Posted 17/07/2011 at 08:46:52

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£161 million should be enough
Gavin Ramejkis
29   Posted 17/07/2011 at 10:25:53

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James care to explain:

salary saved from Gosling's departure went where?

fee and salary saved from Pienaar went where?

loan fee and saved wages from Yakubu loan went where?

any loan fee and saved salary from Yobo went where?

saved wages during loan and subsequent fee and saved wages from Vaughan went where?

a quick check would say we've signed some kids for nominals which will get nowhere near the first team and of course the glamour loan of Eric Dier again nowhere near the first team.

Explain again James - several players from the squad down, lots of money saved, fuck all spent and no sign of that changing, so I'll put it in really easy terms - servicing the debts or fraud, which do YOU think?

Again, explain to me how Everton's debt in comparison to it's peers isn't crippling as it can't or won't replace players it loses or strengthens it's squad as all the other teams are?
Eric Myles
30   Posted 18/07/2011 at 03:42:03

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Roberto #22, so we sell the players (assets) to pay off the debt. Who goes out onto the pitch each week then? A team of invisible men?

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