Season 2011-12 Fan Articles

Will Everton Learn From Their Mistakes? Part I

Part One: Desperation Kirkby Revisited

The questions surrounding the long term future of Everton FC always come back to one subject, the future of Goodison Park. Goodison remains the spiritual home of Everton Football Club, but the inability of the Grand Old Lady of English Football to generate the level of match day and non-match day revenue, to enable Everton to compete with its peers, remains the key subject that has been debated since the present incumbents came to power.

The stance of the board and the executive team is clear and was delivered by CEO Robert Elstone recently at the Global Entrepreneurship Congress. Mr Elstone stated: "I genuinely believe that the redevelopment of Goodison is not a realistic option".

To say that the statement was disappointing would be an understatement; but not as disappointing as his later assertion that "We have to look for a new site and use the Kirkby funding model which involved 40% to 45% of the capital cost coming from retail uplift subsidy."

Apart from ridiculously seeking synergy with Chelsea's £600m redevelopment forecast, the major flaw in Mr Elstone's statement was that there was no funding model in relation to Destination Kirkby, at least not the one that Everton FC led it's supporters to believe. It's probably a good time to refresh Mr Elstone's convenient short term memory and go over just why a similar model to Kirkby will not work.

The move to Kirkby was presented as the answer to Everton's long standing stadium and revenue problems. Fans were told that Tesco were acting as an enabler who was providing £52m towards the cost of a £130m world class stadium that would provide £10m a season to the manager.

Everton actually told their shareholders that they were receiving £52m, from Tesco, towards the cost of a new stadium; this isn't the Blue Union's version of events, here's what they club actually said:

"Normally when a club has to look for a new stadium, it has to look at financing the whole depth of the new stadium itself. In this case we have been able to work with Tesco and Knowsley to create a situation where Tesco will make a contribution of £50m towards the cost of a new stadium. That is a huge contribution and we believe that with stadium naming rights and proceeds from the sale of Goodison and with some additional debt that we will be able to deliver a world class stadium that will be up there with anything in the Premiership."

The reality was there was no money, not a single penny, it was nothing but semantics. There was no subsidy for use towards the cost of the stadium, there was no £130m world class stadium and the manager never was going to receive a £10m transfer budget every season.

What Everton were receiving was completely different to £52m, it was a £52m VALUE derived from the increased value of the land once planning permission was granted, a value that would have eventually appeared on the Everton balance sheet and was revealed in the report to the SECRETARY OF STATE by the Government planning inspector; the financing of the stadium was described thus, "being funded by the council through Tesco by the uplift in the value of its land to facilitate an increase in the value of the club for the benefit of its present owners and no doubt the value of the club to its owners would increase if a new stadium could be provided at a subsidised cost."

There it is in black and white... "for the benefit of its present owners". Quite simply, Bill Kenwright and his board are guilty of misleading the club's fans and once again, four years later, four years after nothing has happened, quite disgracefully, the CEO is once again perpetuating the lie.

The question is why and The Blue Union will tell you exactly why he has said this and, as usual, with Everton, the devil is in the detail.

At the Global Entrepreneurship Congress fringe meeting Mr Elstone stated that the redevelopment of Goodison was unaffordable and as far as it goes this statement is truthful. What he omitted to say is that the redevelopment of Goodison is unaffordable for the current owners. This board has no desire to invest a single penny into the club, they never have and they never will; even the redecorating of the Dixie Dean suite this season was an insurance job after the pipes burst last year.

Stating that redevelopment isn't achievable and that increased revenue streams will only be brought about by a new stadium, funded through an unrealistic and undeliverable funding mechanism, ensures that the board can continue to do nothing as the possibility of any enabling development within the city is non-existent.

The enabler in the Kirkby proposal wasn't Tesco; it was Everton. Regional and national planning regulations, and indeed Knowsley Council's own Unitary Development Plan, restricted the size of any retail development, at Kirkby, to one suitable to service the needs of its 40,000 population without damaging the offer at the regional centre, Liverpool. Tesco disagreed with this, Tesco wanted to exceed this restriction by 250% and to achieve this they required the cooperation of Knowsley Council and Everton Football Club.

Tesco's plan was to build a stadium alongside their development; the stadium brought prestige and jobs to Kirkby and allegedly addressed cash strapped Everton's desperate need to upgrade their old stadium. Tesco gave the planners an ultimatum, "no stadium no development, no development, no stadium". It was an all or nothing gamble by Tesco but Government Inspectors discovered the inappropriateness and the dubious relationship between Council and developer. But for Evertonians, the greatest revelation was that there was no £52m subsidy from Tesco and that the strictly to be enforced regulations meant no additional income, free usage of the facility by the council and Europe's most strictly enforced no parking zone without public transport to match. In short Everton were being dumped in a white elephant of a stadium "for the benefit of its present owners".

It was nothing but a value and as such it could not have been used as a contribution towards the cost of the stadium. In reality Everton were building a £78m stadium. When completed, the value on Everton's balance sheet would have been £130m which would have been realised when the club was sold. Who would have bought the club is a mystery; it's debateable that any legitimate owner would want a club with a stadium nine miles from the city centre with questionable transport links except somebody living in a one bedroom flat in Singapore. So why did Bill Kenwright's board advocate such a blatant dereliction of their duty as directors which is looking after the best interests of the club?

The answer lies if the murky financing behind the shares "owned" by Kenwright and Earl. The majority of this finance came from Philip Green; his security is the ticket sales of Kenwright's shows, meaning that his money is safe and he'll be paid back when the club is sold, hence the obsession with wanting to improve the value of the business in favour of ensuring the long-term viability of the club. Nobody can supply any factual evidence that Everton need to move to a 50,000 seat stadium; they can provide a desire but no quantitative evidence whatsoever.

Kenwright is up to his neck in debt and needs the opportunity of getting a sizable return to pay off his debt — not Everton's debt, his debt. Staying at Goodison and doing the most cost-effective and sensible thing, that is best for the future of the club, isn't being pursued by the board. Kenwright is acting in his interests and not that of Everton or Evertonians. He is willing to look at anything which will offer the ability to pay back Philip Green and therein lies the danger for all genuine Evertonians.

Kirkby would have added value to the club's balance sheet at a rate redevelopment will never do, hence Kenwright, through his poodle Elstone, persistently promoting the need to find a scheme with the highest yield and that type of scheme is an enabling development. Kirkby was £78m in and, potentially, £130m out. It would have improved the chances of Everton being sold for a decent price but at what cost to the club?

If you think the possibility of Everton moving away from the city is over think again. In the last few weeks the leader of Knowsley Council, Ronnie Round, when being attacked in the council chamber over a policy decision on Kirkby's civic facilities, mocked his attacker by saying "and don't think Everton won't be back on the agenda soon" . Knowsley, as a borough, is vastly semi-rural and has lots of land which they're not embarrassed to hand over to private companies and flaunt the best value rules. They did it with Liverpool's Academy. Everton has a presence in Halewood, not far away they will soon be opening their Free School and it is known that certain people have long since talked about Everton's presence in South Knowsley as can be seen here.

Kirkby will go down as the greatest fiasco to befall Everton in its 134 year history. The facts, once known, reveal a litany of lies and deceit that formed the basis of mistrust between loyal Evertonians and a board who placed self-interest before that of the club and whose track record confirms them as the most incompetent in Everton's history.

So once again, the question has to be asked, where was Everton FC getting the money from to fund the last stadium, and where does Mr Elstone plan to get the money from to finance a new one? A very prudent question given the fact that at the moment Everton FC are so cash strapped they have sold almost £40m of assets in the past eighteen months, of which the manager of the football team, essentially our business, has seen just 5% for strengthening the smallest squad in the premiership.

Some may be tempted to dismiss these actions as prudent financial measures in harsh economic times but they will be ignoring the reason why we're in such dire straits in the first place and the real elephant in the room being you can't keep selling assets for ever.

In part two of this article we will examine what the future holds for Everton and how a solution can be found for Everton's financial problems that have become a symbol of Bill Kenwright's reign at Goodison.

Simon Magner is Secretary of The Blue Union

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