Colm's Corner
Columnist: Colm Kavanagh

There but for the grace of God
17 May 2005

Paul Gregg: unappreciated?

It is with a wry smile, noting the irony, that I observe the barometer of Evertonian glee towards the recent takeover of Manchester United by that lifelong follower of all things Man Utd and avid fan, Malcolm Glazer.  This is the man, one presumes, who will saddle United with so much debt and in the process turn one of the game’s very few plc successes into one man’s plaything.  His deafening silence since placing United alongside Tampa Bay Buccaneers upon his mantelpiece continues to infuriate passionate Mancunians — a predicament which brings out a smile, or two, on most Evertonian faces.

I also imagine there’s a fair percentage of Evertonians out there who hope and pray that Malcolm Glazer (the Devil Incarnate apparently) realises his ambition and attains the necessary 90% acquisition of grubby Manchester United plc shares, taking United out of the public domain and very much into his already ample-sized back pocket, a compulsory purchase of the last remaining 10% of shares now looming on the horizon.  United fans (and shareholders) may protest all they like, parading some rather fetching “Not For Sale!” banners, a declaration ‘from the heart’ that ‘their’ club — floated now for the past fourteen years on the PUBLIC Stock Exchange — cannot possibly fall into the hands of some God damn crazy Yank without interest or love of the game.  Sorry, United fans and shareholders — it can!  And it has.  Most Evertonians will look on with great amusement and laugh at United’s potential nightmare in waiting.  Serves them right, yeah?

However, could it not be argued that Everton Football Club falls quite nicely into the “There but for the grace of God go we” category?  It’s less than one year now since chairman Bill Kenwright first announced the imminent arrival of the Fortress Sports Fund, and their many millions of pounds.  The Fortress Sports Fund, “an absolute possibility” according to the Chairman, would see Everton’s coffers swelled with the kind of investment previously unheard of at Goodison Park.  “Well there’s two tranches…there’s an original 29.9% and then possibly some more.  So, you know, thirteen to fourteen million and then another fifteen million down the line.  So there’s a possible twenty eight, twenty nine million.” the Chairman gleefully declared, live on BBC Radio 5Live, in an interview with Jonathan Pearce.  It was music to the ears of Evertonians everywhere.  We could now shop at Harrods instead of trawling the bargain bins at KwikSave. 

Most Evertonians don’t care a jot about who owns the Club — that’s a long-standing fact of life.  So long as we’ve got a manager with funds in place and we’re flying high in the League, no-one’s bothered to ask questions over the origins of this “investment”.  When the Chairman spoke of impending investment, amounting to many millions, most Evertonians were not concerned about the implications — simply, show us the money, get it spent, and let’s see some of those galactico-type players donning the famous Royal Blue jersey.  Oh, and can we have fashionable Nike shirts please? 

What didn’t concern most was the imminent arrival of Fortress Sports Fund (whoever they may be) actually gaining an initial 29.9% ownership of the Club — “our” Club; the supposed “People’s Club”.  All we read over the weeks, which became months, were tales of finding investment — particularly to support David Moyes in his quest to strengthen an already weakened squad.  This Fortress investment would then, over time, become a 50.1% interest in the Club.  Now I am not the greatest mathematician in the world but 50.1% in my book is a controlling interest.  It begs questions, of such a great Evertonian, the Chairman – why flog the family silver to parties unknown (overseas division)?  What benefits Everton Football Club from selling control of the Club to these people? 

What was to be gained by placing Everton FC, an established football institution since 1878, in the hands of — and at the mercy of — a collection of “investors” hiding behind this moniker, the Fortress Sports Fund?  Mr Samuelson, wheeled out to perform before the shareholders at the last AGM, tried to convince those present on the night (failing miserably) that Fortress did not want a return on their investment in Everton FC.  And pigs may fly, Mr Samuelson!  You want to “invest” an initial £12.8M, then over time increasing that amount, acquiring over 50% of the Club into the bargain yet gain no return?  Almost too good to be true! 

Explaining Fortress’ position, Mr. Samuelson said,

“We originally were asked, would we buy out True Blue Holdings' shareholding of 72% and we responded to that by saying ‘No’, having looked at the financials and everything else we felt the club needed the money — NEW money going INTO the club, and that was our whole basis on which we negotiated — to put new money in.  And in fact, the share price, which had been used, was exactly the same share price as True Blue had paid originally for the shares. 

“So, no change in that at all, we just used that as the arbitrary value, then it was a question of how MUCH money, well, we cannot go beyond 29.9% because of the fact that the club falls under what we call the Blue Book, which regulates people, organisations or businesses which have raised money from the general public, even although they are not listed on any Stock Exchange.  So, we were limited to that amount, and that so, sort of led us to the fact that, that equated to £12.8 million pounds and that was exactly what we then agreed to raise, which we have raised by the way — we are just waiting on the last regulatory approval for the money to go into the fund, and I'll explain a little bit about the structure of the fund — the fund is an umbrella fund, we call it, technically, in technical terms, a protected-cell fund, and the only reason it in Brunei, is that it's the best jurisdiction and the right laws to use for this kind of structure. 

“It is also a place where I happen to have one of my offices, so it is easy or relatively easy for us to do.  Brunei is a new financial services centre in the world; they've spent a huge amount of money putting the infrastructure into place.  In fact, the Fortress Sports Fund is the FIRST fund, and the first protected-cell fund ever set up in Brunei, which is one of the reasons this has taken slightly longer than one had expected.  We have drawn on investors from my side and from Kevin Neal's side, who we know well, to put the money into the fund. Yes, we have an option to put more money in, the club has an option to accept it or not, but we're not looking, in any way for control of Everton Football Club.”

So there you have it, the intentions of Mr Samuelson and his band of unnamed investors (all lifelong followers of Everton?).  They simply wanted to invest whatever 29.9% of Everton Football Club would cost them — regulations in accordance with the Blue Book preventing them from making a greater initial bid.  Interesting though to hear Mr Samuelson state that True Blue Holdings had made initial contact with regards to selling the entire 72% controlling interest of a club riddled with debt — a comment immediately refuted by chairman Bill Kenwright.  Someone somewhere being rather economical with the truth – be that the Chairman or his would-be investor, Mr Samuelson and Messrs Unknown. 

With an initial 29.9% chunk of “our” (sic) Club tucked away nicely and two seats on our Board, what’s to say that Fortress Sports Fund would not then, as promised, further pump money into the Club — their investment bulldozing their way to a 50.1% stake in “our” Club.  The Chairman, using the Official Website, stated “The Fortress Sports Fund deal is great because the deal is very simple. Let’s get on with it. I hope we’re all convinced.”  Interviewed only last week in the London Evening Standard, he once again confirmed that talks with Fortress “and other parties” remain “on-going”. 

Like many other shareholders at Everton, I remain anything but convinced that the Fortress Sports Fund is good for the Club.  I also don’t see it as being very simple.  And most important of all I do not see it being beneficial to Everton Football Club.  Is it unreasonable therefore to ask what’s the difference between this Fortress Sports Fund wrestling eventual control of “our” Club and Glazer’s acquisition of Manchester United?  Would Evertonians readily embrace the notion of Malcolm Glazer swapping a Superbowl for a comfy seat in Goodison’s Main Stand?  I doubt it very much so why should we be so apathetic to the potential for Fortress to acquire “our” Club for relative small change? 

We joyfully look on at Manchester United’s current woes, them being a club suddenly plunged into a debt beyond their wildest dreams, fear arising from not fully knowing the motives of their new owner(s).  Laugh all you like but one day, if Bill Kenwright was to succeed in pushing through the Fortress “investment”, who knows what future lies in waiting for “our” Club.  Could we hold Messrs Samuelson, Neal and Unknown accountable from afar in the event of problems arising at Everton?  I doubt it.

Oddly enough, and somewhat perverse for those who avail of every opportunity to deride the man, it’s the figure of “non-Evertonian” Paul Gregg who has put the brakes on this would-be “investment” coming into Everton Football Club.  That’s right, the man who supposedly has ne’er a drop of Everton blood coursing through his veins is the one man inside our Boardroom who has thus far prevented a “Malcolm Glazer” style gradual takeover of “our” Club. 

I do hope that this fact earns appreciation amongst the Evertonian community who currently mock our rivals at United yet see Mr Gregg as the bad guy at Goodison — albeit the bad guy who backed Mr Kenwright financially and otherwise when extracting the Club from Johnson’s grasp, back in the days before the machinations of True Blue Holdings saw Mr Gregg reduced to being an increasingly frustrated director unable to challenge the Kenwright/Woods axis.  How many shareholders, small or otherwise, have we at Everton Football Club who are aware of the threat posed by accepting anything from Fortress Sports Fund? 

If we were to take Fortress at face value (“Every fund invests ultimately for some gain, but one of the reasons my investors are investing, is exactly the same reason YOU have invested — we want to see a highly successful club — we're not looking to realise a huge sum of money at all, we're just simply there to stand behind and watch the club grow and be successful.” — Christopher Samuelson, AGM, December 7, 2004) and unequivocally support the Chairman in his desire to push this through, how then would we then feel if faced with a possible scenario, seeing Fortress, in compliance with company law, making compulsory purchases of the remaining shares in the Club? 

As far-fetched as that may sound to some Evertonians, it remains a possibility.  If True Blue Holdings had remained intact, it’s quite likely we’d be on the road already to a position not too dissimilar to what’s now happening at Old (Sold?) Trafford.  The dissolution of True Blue Holdings afforded Paul Gregg an opportunity to look after number one, so to speak, to ensure his own shareholding in Everton Football Club remained undiluted.  That stance has thus far prevented Everton from becoming the plaything for overseas investors.  Irony is it not for those who place “Blue Bill” up on high?

Only last December did we hear the Chairman, again using the Official Website, state “I hope that with the investment of Fortress Sports Fund more peaceful times are in the offing. We’ve got to have investment because we need to generate as many income streams as possible."  I concur wholeheartedly, Mr. Chairman.  Everton Football Club does need to generate as many income streams as possible.  Instead of forever targeting those people who follow the Club both home and away with increased season ticket prices (the dramatic increase, 70%, for kids renewing a good example) why not target the wider Everton fan base, scattered globally?  We are, after all, supposedly “The People’s Club”.

Does it not make more sense, even through the most Blue tinted of glasses, to afford Evertonians the opportunity to invest in “our” Club instead of attempting to pawn off the Club to overseas investors and collectively Messrs Unknown?

There but for the grace of God.  Or Paul Gregg…

Colm Kavanagh

©2005 ToffeeWeb