Season 2011-12 Fan Articles

Mentioned in Dispatches

By Matt   Traynor  ::  25/07/2011   43 Comments (»Last) Reactions to the progamme ?How to Buy a Football Club? that was shown on Channel Four a few nights ago have been appearing in numerous threads, and have mainly been a mix of shock, surprise and fear about what could happen to Everton, and how lucky we are to have one of us as Chairman.

The only thing that shocked me is the reaction to a piece of investigative journalism that was, frankly, big on hyperbole as the hype around the programme. There were a few points that were made that were not reinforced, as it didn?t suit the programme maker's aims, and I?d like to draw those out here, and see what others think.

Firstly, there are a lot of these companies like London Nominees that operate. I have worked for one such firm as an advisor, and they all operate perfectly legally, because there is nothing illegal in what they are doing.

The key to understanding why the revelations in Dispatches are nothing to worry about from our perspective is the clubs that were mentioned as being for sale. All of them were Championship or League 1 clubs. That?s probably why they didn?t bother trying to interview Richard Scudamore, who would normally be only to happy to promote the Premier League as being the cleanest there is in terms of its governance ? compared to some leagues in Europe, and around the world, it is.

What London Nominees were offering was the chance to buy a club, and make a killing on it by getting promotion to the Premier League, and the riches therein. Where London Nominees over-stepped their mark was in saying that they would be willing to help the eventual owner have a controlling stake in more than one club, which is clearly against the rules. The way that looked to me was of a couple of guys who would say anything to get a deal going, and would at some point down the line, try to encourage the investors to focus on one club. If that didn?t transpire, I?d still expect due diligence from both the selling club and the Football League to flush out any conflict of interest issues.

The other thing to consider, was the prices quoted for the clubs were around £15M. I believe that all the clubs mentioned are majority or solely owned by the sellers, not like the Everton situation where a substantial number of shares are held by individuals.

London Nominees stated that their payment would be 5% of the sale price in cash, and 20% in shares of the club. Simple mathematics tells us that only 3 teams can get promotion to the EPL each year. Therefore what London Nominees are trying to do is have a 20% stake in as many clubs as possible, which they can then sell themselves for a tidy profit if the club makes it, and let go to rot if they don?t. Many Private Equity companies do this ? the company I worked for raised funds for new start-ups in a technology sector, and the 5% in cash, and 20% in shares is fairly standard in doing that. One company going to IPO makes the $$$ for all of us; others won?t make it... but if on balance you get a couple of successes, you?re doing well. If a company looked like it was struggling, we?d break it up and put the best bits into other companies.

I don?t believe that under current regulations there would be anything wrong with a company (or individual) having a 20% interest in more than one team. That is one area that maybe the regulators should look at. The Culture Media, and Sports Select Committee, having witnessed their ?grilling? of the Murdoch media moguls last week, do not fill me with confidence that they will actually publish anything meaningful in their final report into Football in the UK. Almost everyone I know in the game is expecting an endorsement of the Football League and The Premier League, and a criticism of the governing body globally. I can almost see Blatter quaking in his boots...

So overall, my view of the programme was ?move along, nothing to see here?. I personally doubt that a company like that would ever see Everton as a viable target, and would hope that any such approach would be given the short-shrift it deserved. If Everton is to be sold, one would hope that the buyers would be in it for the long-haul and, as long as we can remain in the top tier, it?s unlikely we?d attract the attention of such carpet baggers.

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