The Liverpool Echo
 

Business expert figures out the reasons behind Everton power struggle
By Paddy Shennan, 26 July 2004

MONEY doesn't talk at Everton Football Club - it turns the air blue.

The sums do add up. They add up to misery. For Goodison Park has the one thing money can't buy: poverty.

You can call it a securitisation loan with an additional overdraft facility. You can call it a mortgage with an additional overdraft facility.

But, says football finance expert and Everton shareholder Professor Tom Cannon, a debt is a debt.

Prof Cannon, the chief executive of Ideopolis International, a research and development company based in Rodney Street, Liverpool, says the club undoubtedly has a debt.

All it needs now, he adds, is a plan.

THE FINANCIAL SITUATION
Everton took out a securitisation loan three years ago - effectively a 25-year mortgage, which costs £2.8m a year in repayments. It raised £30m, which cleared the club's overdraft.

In addition, the club has a £5m over-draft facility, which it is believed to be up to its limit on.

"It IS a debt - like the mortage on your house is a debt," says Professor Cannon, the former director of the Manchester Business School.

"But the club probably had no choice in taking it out, because its overdraft was so large."

And, in the short term at least, it has made the club's plight less precarious ...

"Just as it is in the interests of a building society that you can keep on paying your mortgage, it is in the interests of the company which Everton arranged their loan with to see the club continue trading."

Things, it seems, could be much worse - Everton could be megabucks Chelsea!

"Chelsea, by far, is the club in the country with the most debts. If Roman Abramovich walked away, it would be bankrupt and the Premier League would be forced to relegate the club."

Football, it is always stressed, is a business like no other. So, although its books might send hard-headed accountants in other fields running for the smelling salts, is Everton merely in a similar messy situation to many other clubs?

THE SCALE OF THE PROBLEMS

"We're probably not the worst," says Prof Cannon. "But there probably isn't a mistake we have avoided.

"We have wasted money in a whole host of areas, not least the saga involving plans to build a stadium at Kings Dock which cost more than £1m. And we've lost money on so many players."

There are, as the fans know, too many to mention - although Prof Cannon does mention injury-plagued Slaven Bilic and Danny Williamson, glamour signings David Ginola and Paul Gascoigne, Alex Nyarko and Duncan Ferguson.

He describes the decision to buy back Ferguson from Newcastle - which happened during Walter Smith's reign and was sanctioned by owners True Blue Holdings - a "sentimental purchase," adding: "It's like going back out with an ex-girlfriend - it just shouldn't happen!"

Ferguson is reported to have recently rejected a £500,000 pay-off from the Blues. He is therefore set to see out the remaining year of his contract, picking up around £2m in wages in the process.

Everton, the money man points out, has also suffered from the instability associated with three changes of ownership in its recent history.

"We've had the Moores family, Peter Johnson and now True Blue Holdings. No other club in the Premiership, not even Chelsea, has seen that speed and regularity of change.

"Other clubs have either had one change of ownership in that time - like Manchester United, Chelsea and Newcastle - or none, like Arsenal and Liverpool.

"And towards the end of the Moores family's ownership, after the club had enjoyed its incredibly successful spell of the mid-1980s, the policy was 'minimise, minimise, minimise,' when the board should have been redeveloping the stadium and refinancing the club.

"The club has also suffered, over the same recent period, from the additional shifting sands of regular changes in management."

"The first thing Everton needs is clear and decisive leadership, whether that's from Bill Kenwright or Paul Gregg," says Prof Cannon.

"We need a stablising force and someone to come out and say 'I'm in charge. This is where we are going and this is what we are going to do.'

"What we need is a plan, because we haven't had one! There is no strategic plan in place. No business can survive going from A to B if you don't know where B is. And that's the problem at Everton.

"Everyone likes Everton, but does everyone respect Everton? Even the fans don't respect their club at the moment. The most common words you hear now are 'shame' and 'embarrassment.' We've got to wipe that out."

"There also has to be a major attempt to bring in new money, and I think we should have a share issue for the supporters."

And following the apparently illfated ground share proposal, he says: "What is Plan B? Every efficient, well-run organisation should have a Plan B.

"The club needs to be open and honest with the most important people - the fans. It needs to demonstrate strong leadership, outstanding customer care and professionalism and inspire respect."

BEST CASE SCENARIO
"Wayne Rooney signs and the club uses that fact as a platform to attract more finance to the club. The board doubles in size and brings in outside expertise."

WORST CASE SCENARIO
"The Wayne Rooney saga drags on and the current situation with the board drags on, with acrimonious exchanges, more splits and complete turmoil - reflected in a dreadful period for the team out on the pitch."

Two things are crystal clear: there are more questions than answers and, while it can be frustrating, depressing and heartbreaking, it's never dull as a Blue.

72 fans x £490 = Big Dunc (that's £35,000 a week)

WHERE does a fan's hard-earned money go? I hope you're sitting comfortably ...

A Main Stand season ticket at Goodison Park costs £490.

Ageing and injury-prone high-earners Duncan Ferguson and Kevin Campbell are each paid in the region of £35,000 a week.

Here, then, is the painful equation: 72 season ticket holders paying £490 for a year's football equals 35,280 - or about a week's wages for Ferguson or Campbell.

And they could very well be spending that week in the treatment room, on the bench, in the stands, at home with their family etc.

Shortly before he left the club, to be replaced by Trevor (Five Year Plan) Birch, former chief executive Michael Dunford gave the ECHO the gospel according to the Blues' bookkeeper..

And the word was ... not very good.

MONEY IN

* Prize money and Sky money: £20m
* Gate revenue: £13.5m - 14m
* Souvenir sales profit: £500,000
* Total £34.5m.

MONEY OUT

* Wages (football, management, coaching staff) : £26.5m
* Non-football staff wages: £5m
* Upkeep of stadium: £3m
* Total £34.5m

The difference between one Premier League position is £500,000 in prize money. The season before last, Everton finished seventh. Last season, they finished 17th - thereby waving goodbye to £5m of prize money and potential transfer funds.

The club has stressed that every advertising board, every box and every corporate seat is sold - and that there's a waiting list. Commercial income, therefore, could only increase if the stadium was redeveloped - or Everton moved to a new home.

Here's how the club compares in the money-spinning executive box stakes:

* Everton: 13 executive boxes
* Liverpool: 31
* Southampton: 47
* Leeds: 54
* Manchester City: 68
* Aston Villa: 105
* Tottenham: 120

Winning trophies. Moving to a new stadium. Attracting a fairy godfather or godmother with billions in the bank ...

These are said to be the three ways cash-strapped Everton could dig themselves out of the deepest of deep holes. And each one currently seems highly unlikely.

"I don't think there is any quick return to the glory days," said Trevor Birch - before he made his sharp exit.

Michael Dunford and Trevor Birch both believed a shared stadium with Liverpool FC was the way forward - Dunford went as far as describing it as a "no-brainer" in commercial terms - but the Reds have said it's a non-starter.

And a new stadium could cost in the region of £100m, which seems to make THAT a non-starter.

Sustained success on the pitch which would bring its own financial rewards? Without the club investing in a new team? Tricky.

Which leaves a fairy godfather or godmother ...

If you're reading this, please send your cheque, made payable to The Everton Football Club Company Ltd, to Goodison Park, Liverpool L4 4EL.

[The above is unedited and provided within ToffeeWeb for archival purposes.