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Season 2011-12
The Mail Bag

So just what IS the value of EFC?

 71 Comments: First  |  Last

The latest Forbes Rich List, published today, shows Manchester United as the richest club on the planet with Liverpool in 8th spot, Spurs at 11th and Manchester City at 13th.

Not altogether surprising, perhaps... but, unlike Deloittes, who use only turnover in compiling their lists, Forbes also factor in fixed assets, debts, and a whole bag of other criteria to determine a club's 'richness'.

It's the figures attributed to the clubs' value that surprise me. Man Utd are deemed to be worth £1,396M; Liverpool £385M; Spurs £351M; and Man City a mere £275M.

On that basis, it seems to me that the value of EFC must be very much a minus figure, so how could Kenwright & Co possibly hope to get 'their' money back?

Any views on this one?

Richard Dodd, Freshfield     Posted 19/04/2012 at 18:30:39

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Paul David
619   Posted 19/04/2012 at 21:14:37

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Do we even have any fixed assets any more?
Dean Adams
622   Posted 19/04/2012 at 21:17:56

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We have a fixed ass, his name is Bill. Infact I reckon we have lots of them.

So would Hampton & Richmond be higher than us?
Paul David
623   Posted 19/04/2012 at 21:22:36

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My corner shop would be higher than us
Paul Doyle
625   Posted 19/04/2012 at 21:28:18

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The only assets Kenwright has left are a set of Betty Turpin's hot pot pans .
Mike Jones
629   Posted 19/04/2012 at 21:31:55

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Looks like Bill could get his hands on the "Rovers returns". Will he splash the cash in the summer transfer ???
Paul David
631   Posted 19/04/2012 at 21:36:00

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He will have Anichebe working behind the bar during the summer so he can finally earn his wages.
Kevin Tully
640   Posted 19/04/2012 at 21:46:52

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Roman Abromovich is flying round the world closing deals. John Henry is sacking all the under-performers. Mike Ashley has invested millions and finally got it right. Daniel Levy is making a fortune from commercial revenues. Dave Whelan has invested tens of millions year upon year.

The list is endless of PL chairmen with who bring commercial expertise, money to the table, and a vision for the future.

We have got a ham actor, who bums money off any soft fucker he can find to keep his seat at the top table. Kenwright & his cronies refuse to invest a penny into the club they own. Why is that? Because they have made it into a basket case, they know all too well the club is not worth investing in, there is nothing left to pawn.

They are all still looking for a massive payday though, with new TV deals due, they may make millions for each other and their silent partners if they find a sucker.

Meanwhile, we are left in limbo, with no funds for player transfers or stadium investment. Most blues believe the board have the club's best interests at heart, I say you have fallen for the best con-man in football since Michael Knightley was doing keepy-uppies in front of the Stretford End.

We are all being taken for mugs, and we are lapping it up, every time he appears on TV with his stories and interested parties line.

David Gee
644   Posted 19/04/2012 at 22:20:59

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This report values Everton at £90m and is used as the starting point for the Forbes list.

Ed's Note! No it doesn't!!! See #675 below
Dick Fearon
645   Posted 19/04/2012 at 22:20:13

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Richard, in answer to the question of how rich are we. How long is a piece of string?
Paul David
647   Posted 19/04/2012 at 22:25:14

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Twice as long as it is from the end to the middle
Paul David
648   Posted 19/04/2012 at 22:27:50

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Sorry cudnt help it
Matt Traynor
649   Posted 19/04/2012 at 22:27:57

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The last time we appeared in this list was, if I recall, 2009, and we were placed around 24th and valued at something like £270m. Debt was estimated at 49% of value.

I haven't looked into how Forbes calculate it as I'm sure it's arbitrary, but they do place a lot of the value in terms of income, and for the English clubs a lot of that is in broadcast revenue, hence why English clubs tend to dominate.

In Spain, Real and Barca negotiate their own deals via MediaPro, and they're worth about 20 x more what the rest of the Primera Liga get.

In Germany, clubs depend a lot more on commercial sponsorship, to the point were matchday revenue is less important and as such tickets can be had for around £15-20.

I think Germany is going for a higher value TV model, so expect the list to include the top 4-5 German clubs in the next couple of years.
Phil Walling
650   Posted 19/04/2012 at 22:25:19

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I guess that £90M valuation by Deloitte is before debts are taken into account,though it would be difficult to come to that figure if Man City are only worth £275M.

Really, any football club is only worth what some sucker will pay for it and BK ain`t found a sucker yet!
Richard Dodd
651   Posted 19/04/2012 at 22:40:36

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Phil, I seem to recall that our last published turnover was in the order of ?90M. The Forbes article does not give enough information on how they come to their valuations and only extends to the `richest` 13 clubs.
Christopher Kelly
656   Posted 19/04/2012 at 23:15:11

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Hear, hear Kevin Tully!! ...Even though it's tough to complain when the team is playing better, the truth is still there. Nothing has changed.
Christopher Kelly
657   Posted 19/04/2012 at 23:20:06

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Everyone should read up on the Los Angeles Dodgers sale recently to Magic Johnson. The guy before him bankrupted the team essentially and ended up selling and pocketing some $200 million while barely being able to pay his players...
Roberto Birquet
659   Posted 19/04/2012 at 23:17:57

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Phil Gailing
why do uou guess that? Why would Delloite not take into account debt?

Any figure that is arrived at includes debt. Only a dope would not include debt in any deal; and we don't want dopes.

We may have a mental block when nearing glory or playing Liverpool, re the shambles of last week, but Everton is to go anywhere, I'm afraid we need them. I'm talking shared ground, cos Everton alone have failed three times in 15 years.

FFS, how much did we need for KD? It was pathetic, and the biggest nail in our coffin in decades.
Matt Traynor
661   Posted 19/04/2012 at 23:25:38

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Roberto, I doubt the Forbes figures include debt, as Man U's debt is somewhere around £750m, and in a "normal" season (Prem top 2, last 4 of Champs League, neutral player trading) they are just managing to service the debt out of profit.

I don't know how either Forbes or Deloittes arrive at their figures, but I think both would be easy to argue with.

Further to my post above, just looked it up, and Forbes figure for us in 2009 was £207m (not £270m) but we were ranked 24th.

Now I'm an economist, and can make assumptions with the best of them, but I'd like some of what they were smoking.
Mark Riding
663   Posted 19/04/2012 at 23:40:50

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Kevin Tully #640 - Bang on.

And if Jelavic got injured for a few months.. Not worth a sausage !
James Flynn
669   Posted 20/04/2012 at 00:08:54

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Keep in mind with ManU that their owners also own an NFL team free and clear and collect every bit of revenue, including parking lot fees. No bank is coming in to foreclose.
Ste Traverse
672   Posted 20/04/2012 at 00:14:45

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Kevin Tully #640. Spot on.

"Being taken for mugs and lapping it up" is the most bang-on line ever said about Kenwright's Everton.
Michael Kenrick
675   Posted 20/04/2012 at 00:52:54

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Talk about apples and apples!!!

Phil (#650) Deloitte's number is NOT a valuation and it is NOT £90M, FFS!!!

It clearly states Everton's REVENUE = ?90.8M (That's Euros)

Forbes use this as a starting point but then do their our own research, "which includes reviewing financial documents and speaking to sports bankers, to derive operating income, debt and values for each team".

Anyone able to use these numbers to come up with anything close to their methodology?
Anto Byrne
686   Posted 20/04/2012 at 06:20:29

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The word "administration" has been bandied around. What would that mean? Instant relegation and sell off of realisable assets? Or would a buyer come along and get it on the cheap? Probably pick it up for less than £20mil and would appease the banks in the short term. The new owner then injects capital in and appoints a new chairman/board and give Moyes a season to get it right.
Matt Traynor
691   Posted 20/04/2012 at 07:40:25

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Anto, if you believe the comments made by former senior employees, including an ex-manager, the club has been close to administration on at least 2 occasions.

The speculation (emphasise) is that during Trevor Birch's 6 week stint as CEO he felt that the finances were such that Rooney should be sacrificed immediately. He left, word leaked about his recommendations, and Blues celebrated. Meanwhile 6 weeks later Rooney was in fact sold.

Rumours and speculation have it that Kenwright is looking for anything from £100m-£180m for the sale of the club, many think it is only worth the value of the debt.

Whatever the true story, the fact that no serious buyer has emerged would suggest that any serious enquiries are not getting beyond the price being asked. Why such a high price is being allegedly sought is anyone's guess ? trying to make a massive profit, or to pay off loans to well known figures in the background that weren't secured on the club, or maybe both.

Last figures suggest that Everton as a business are losing £5-10m per annum net of player trading, and therefore in future will have to continue to sell players and/or reduce costs (few players, lower average wage) to keep the banks happy ? ASSUMING the banks are happy to maintain current debt levels.

So, if Administration did happen, the best time to do it would be towards the end of a season when safety is certain allowing for a 10 point deduction ? the FA can apply that to the following season (as happened with Leeds) but there must be a cut off point. Second best time to face it is before the season, but this never happens as clubs have season ticket money, first tranche of broadcast money etc).

If many believe that Everton is not worth anything now, I can only imagine that administration would mean it really was offered for £0 to someone who had the funds to take over the operation. That would be a personal disaster for BK, and risky for us as it may attract a carpet-bagger investor looking to shore up the club and sell on in a year for a profit ? though the experience of Hicks and Gillette suggests that it would be too risky, even for a risk-taker. For these reasons, and the fact that BK would never be able to pay back any loans that are rumoured to exist, I doubt the decision to enter administration would be on our agenda anytime soon.
Richard Dodd
707   Posted 20/04/2012 at 09:14:49

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Matt,if,as you suggest,Moyes has personally secured loans from mystery backers and is unwilling/unable to repay them on demand,he has the very greatest incentive to cling on to the status quo for as long as possible.
I can`t believe that his liability is much beyond £30M which,when added to published Club debt would need a bidder to come up with something like £100M to see him set free.As for making a profit,he seems to have no hope whatsoever.
Administration would obviously be a tradegy for the Club but an absolute disaster for him personally!
Chris Matheson
709   Posted 20/04/2012 at 09:35:45

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Doddy?s question s central to everything at Everton at the moment. We know that Kenwright avoids it, with his infamous ?I am bored of that question? comment at an AGM before he abolished them.

We also know that the man he appointed to find a buyer, Keith Harris, has quoted ((I believe) a figure in the region of £150 million, presumably for Kenwright?s shares, which he bought (using someone else?s money) for £20 million about 12 years ago.

So how much is the club worth? Well the value of a business can take several forms. The book value is the total of all the assets minus to the total of the liabilities. Players are assets, the ground is an asset (even if it is in an area with the lowest property values in the UK). However we no longer own many of these assets: as the debacle of the Park End development showed, much of our property is mortgaged to the hilt and cannot be counted as an asset; we sold off our training ground and we sold off season ticket money to Bear Stearns at one point. In addition we know we have loans out to various finances houses such as Barclays and someone in the British Virgin Islands. Player contracts are also a liability. On the plus side we have an income from tv money.

Then we have market capitalisation: the total number of shares multiplied by the value of a share. Now share value will reflect book value but many other intangible factors too, and the difference between basic book value and the total market capitalisation, goodwill, can have several drivers. In our case there will be an emotional cost for shareholders wanting to own a small part of the club. Critically there will also be a premium in the value of the club because of the prestige of it being an established brand and a member of the English Premier League. This is one of the few aces Kenwright holds. Value can be driven up because other businesses in the same sector are doing well.

Enterprise value is the total cost of the club, plus any debt liabilities: in other words, if I were to buy the business how much would I actually need to purchase and put it right again? My guess is that this value is heavily skewed towards the debt end.

Finally, when buying a business, a deal will often be struck on the basis of a multiple the turnover or profit of the business, ie, it makes £20 million a year so I will pay three times that amount ? the actual sale cost is therefore £60 million. Everton does make money but our costs outweigh this turnover and our debt liabilities drag us down even further so this would not, in my view, be a realistic valuation basis.

None of these factors lead me ? as an amateur I add ? to understand how a valuation of £150 million could be reached. If my view is correct then it will by shared by other people with more money than me who have considered buying the club and have been deterred by the price. So that leads to the next question of how and why the club is priced over value.
Matt Traynor
712   Posted 20/04/2012 at 09:34:25

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Richard, I assume you mean BK, not Moyes. As powerful as DM is within the club, I don't think it extends to the financing.

As I stressed in the posting - it is subjective, conjecture, rumour, supposition - call it what you will - that has been expressed by many different sources over time.

You know the story, signings backed by someone like Earl or Green, with the expectation that they would get their earner from the DK proposal. Consider also the theory that has been put forward that when BK et al took over, the debt of the club jumped by around the same amount as the buyout, leading to suggestions from some quarters that it was a leveraged buy-out (not on the same scale as Man U or RS, but leveraged all the same).

If you think of it laterally, if BK really wants shot of the club and there is a buyer willing to pony up the required investment in the club (big if I know), why would he be holding out for a high price and ultimately a big pay day? By his own admission he's not put any money in (doesn't take any out), so why not just cut his "losses" and get out and go back to being a celebrity fan?
Matt Traynor
713   Posted 20/04/2012 at 09:39:32

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Chris (#709) the "players are assets" argument is bust in the modern era due to the sky high wages.

You sign a player for £15m on a 5 year, £3m a year contract. What's his asset value? The wages now see players as liabilities as much as assets. (Cue snarky comments about certain players in particular).
Chris Matheson
719   Posted 20/04/2012 at 10:13:17

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Matt you are right. The players are assets as they have a value we can realise, but their contracts are liabilities. Just adds to my view that we really have very few assets left.
Richard Dodd
720   Posted 20/04/2012 at 10:03:26

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Yes,of course I meant BK-must have Moyes on my brain!
I saw yesterday that Sir John Madejeski values his newly promoted Reading at £40M-and it comes free of debt and includes a modern stadium.
The Car Mart magnate considers he has insufficient funds to bankroll the club further but I find his valuation modest in the extreme.
And as for his choice of buyers.....apparently the Football League are finding it difficult to see the infamous Samuelson amd Zingarevichs as `fit and proper persons`!
Now there`s a surprise!
Eric Myles
723   Posted 20/04/2012 at 10:29:11

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Richard #707 you say "if,as you suggest, (Kenwright) has personally secured loans from mystery backers and is unwilling/unable to repay them on demand,he has the very greatest incentive to cling on to the status quo for as long as possible."

Well isn't that the scenario we've had for the last 10 years, BK clinging on to the status quo? And all the soundbites that come out of the Club PR machine are all along the same lines of maintaining the status quo.
Peter Laing
724   Posted 20/04/2012 at 10:38:36

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The bottom line in all of this is what is the price that the Club is for sale ? That is the true elephant in the room and the one that Kenwright continually evades, dodges and refuses to answer whenever he has been questioned. If he was as good as his word as the 'greatest Evertonian', and 'the best man to sell his beloved Everton' then he would come clean as to the value - warts and all. We all know though that he has now become the puppet to his masters who continue to linger in the shadows,
Eric Myles
727   Posted 20/04/2012 at 10:49:45

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Peter, 'the best man to sell his beloved Everton' puts out a sales prospectus to potential buyers that states Goodison has "inadequate capacity, limited and low quality hospitality facilities, poor sightlines and limited accessibility".

And wonders why nobody wants to give him £180 million for his shares???
Paul David
728   Posted 20/04/2012 at 10:49:25

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I agree Peter,am sure selling a club is a complicated business and prices will change over time but wrongs with saying "the club is worth £85m,give or take".
Peter Laing
734   Posted 20/04/2012 at 10:54:43

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Thats the difference between Madejeski and Kenwright, one has the best interests of his Club at heart and is the master of its destiny, whereas in Kenwright we have a man that demonstrated the integrity of Judas Iscariot in selling Everton's soul for the equivalent of thirty pieces of silver to maintain control. Kenwright is no longer in control of Everton's destiny, the more pertinent question that now requires answering is 'who is Robert Earl and what are his intentions' ?
Richard Dodd
744   Posted 20/04/2012 at 11:19:33

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Well Peter,we`re going over old ground but Wikipedia tells us `Robert Earl is a leading figure in the hospitality and food and beverage industries.He is the founder and CEO of Planet Hollywood International Inc.and the chairman of PH Resort & Casino in Las Vegas,Nevada.
In October,2006,Earl became a partner of a British Premier League soccer club and as a shareholder in Everton FC,he is turning his love of sport INTO A BUSINESS VENTURE.
BCR Sports is an investment vehicle for Robert Earl.The company is registered in the British Virgin Islands AND OWNS 23% OF EVERTON FOOTBALL CLUB. (my caps).
So now you know!
Eric Myles
747   Posted 20/04/2012 at 11:43:15

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Richard, don't forget that those shares that BCR Sports holds were purchased from the Greggs.

And who was it that Paul Gregg said paid him for the shares?
Eric Myles
748   Posted 20/04/2012 at 11:46:18

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oh, and wasn't Bill in debt to Anita Gregg for the loan she gave him to buy his shares. So I wonder who paid Bill's debt to her? and who Bill is now indebted to?
Eric Myles
750   Posted 20/04/2012 at 11:48:33

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so Richard we are back to your previous statement

"if,as you suggest, (Kenwright) has personally secured loans from mystery backers and is unwilling/unable to repay them on demand,he has the very greatest incentive to cling on to the status quo for as long as possible."
James Stewart
756   Posted 20/04/2012 at 11:59:37

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Whatever price bullshit bill plucks from thin air on that given day.
Trevor Lynes
759   Posted 20/04/2012 at 11:46:03

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What I really cannot understand is WHY do we stop the likes of Pienaar earn parity wages with Arteta....then waste the amount saved by bringing back Weir and MacFadden....neither are positive moves and keeping Pienaar was much more important !
I would love to see the actual wage bill as it is today with what it was when we had Arteta, Yak, Beckford Yobo and Vaughan.
By my reckoning our wage bill must be considerably less now and yet we still cry poverty ???????
Each season we lend out far more players than we loan in and yet we still cry poverty ????
None of our youngsters seem to be coming through otherwise we would not have Macfadden on the bench ???? So why do we strengthen our backroom staff ie; Weir ???????
We are a very poorly run business and the football club in reality consists of loyal thousands of fans who are taken the P..S out of and fobbed off with stories of trying to get investment without any substance.
With our present squad we are shortly going into decine as at least five need speedy replacement due to age and injury and NONE of our kids are deemed good enough by our manager.
NEV, CAHILL, DISTIN, MACFADDEN, OSMAN AND HIBBO are all in their twilight years.
The only assets playerwise at the club are indispensable in the present climate eg; BAINES,JAGS AND RODDERS...I take a bit back on my previous comments about Heitinga, he has improved a lot but Fellaini has never been fully worth the money spent on him. He is definitely not top class.
Drenthe and Pienaar are both on loan so cannot be counted for the future....Now BAINES is out for the rest of the season and he has never really had adequate cover in his position since Lescott left and NEVILLE is certainly not adequate cover except defensively.
DM said he will bring down the average age of the team and has failed due to lack of funds and poor development of our youngsters.
We are back to all the old familiar faces who every club in the league know what to expect from.
We are without doubt awful to watch on a regular basis and I just hope we can stave off relegation next season as money for new decent players seems to be off the agenda.
Paul Watson
773   Posted 20/04/2012 at 12:25:06

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We are forced to speculate on the nitty gritty of Everton's finances because the board have managed to lay a massive smokescreen to disguise the truth, Everton's only major selling point is the fact that they are members of the EPL and the benefits that come with it. Celtic and Rangers regularly play in front of huge crowds but are bankrupt paupers because of the buttons available through the SPL.
When the Premier League was established we were assured it was gong to be based on the American NFL but the reality is that its role model has increasingly been F1. Worldwide tv coverage, sponsorships, advertising pushed along by a media machine with an insatiable appetite for glamour, scandal and gossip have rocketed the value of a few clubs but left the majority clutching at tv money and the corporate scraps. Everton are not on this gravy train and it seems highly unlikely that they ever will be. In order to just stay in the EPL the club has had to borrow and mortgage itself to the hilt. There is no money to be made by buying the club - even for £1. There is the carrot of a new tv deal on the horizon with heavy involvement from the middle and far east, hence the cash input from Fenway for the RS. All this will do is fuel the 'arms race' that is players wages and the club will have their credit limit raised by their creditors and the extra cash will flow into the offshore accounts of players. What would I value Everton at - nothing.
Richard Dodd
774   Posted 20/04/2012 at 12:39:52

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So,to sum it all up. `Can`t sell,won`t sell !`
And that`s why I keep saying regretably, NOW is as good as it`s gonna get!
Peter Foy
795   Posted 20/04/2012 at 13:38:05

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'Can't sell wont sell', totally agree.

'Now is as good as it's gonna get' doesn't have to be.

I'd take administration if it meant getting rid of Bill and his board. The club would then be sold for its true value as the decision would no longer be his.

Fucking depressing, but at least it's progress. Anything that removes him is progress.

Even if it means taken a backward step first.
Pete Bibby
815   Posted 20/04/2012 at 14:54:40

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I'm so sick of people getting annoyed at BK & board for not putting there own ££ into the club.


Now let me be clear on my views... they are a useless sack of shitheads and should be potted as soon as possible.

They have made mistake after mistake with the assets of the club so by all means slate them for that... but not to put their own money into a black hole? Do me a favour.. very few chairman do that... I know I wouldn't.
Paul Mackie
818   Posted 20/04/2012 at 14:58:30

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Anyone fancy setting up a fake company and seeing if we can get far enough through the "sale" process to actually get the price?

If BK has almost sold the club to someone operating out of their bedroom before it can't be that hard!
Paul David
820   Posted 20/04/2012 at 15:04:57

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Paul you could probably do what the yanks did to buy utd,not actually use your own money and borrow off the bank against the club. At least someone else would have it.
Peter Laing
822   Posted 20/04/2012 at 15:09:00

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Richard, I know who Robert Earl is, I also know that he in name owns a 23% stake in Everton Football Club and is allegedly the man behind BCR sports in the BVI. The question that I am asking is: "What does he bring to Everton?" Other than the brief appearance of Sly Stallone and the latest securitisation of the loan from BVI, why else is he interested in / connected with Everton?
Kevin Tully
824   Posted 20/04/2012 at 15:19:58

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Wow Pete #815,

I think you have got that one arse about face.

I don't think you could could find a P.L. chairman or company who has NOT invested in their club through one vehicle or another.

That may be investment into the infrastructure, loans, right issues, etc.
Henry Weindling
856   Posted 20/04/2012 at 16:38:04

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For me, the issue of attracting investment all comes down to one thing ? the stadium.
I don?t believe Man City would be in the lofty position they find themselves in now if they hadn?t had the good fortune of the City of Manchester Stadium falling into their laps after the Commonwealth Games. Investors are looking for teams where an infrastructure and strong commercial value is already in place and can be built on, not to start from scratch. In my opinion, if West Ham get their act together with the Olympic Stadium, they will be the next club to have billions poured into them by wealthy investors looking to play the real life version of fantasy football. I even see Southampton becoming a big club in the years to come due to their financial backing. Again this is another example of investors pouring money into a club where a new stadium was in place in St Mary?s.

Unfortunately all this really highlights is what a grave, grave error the club made with regards to Kings Dock. A depressing tale of what might have been.
Paul Watson
925   Posted 20/04/2012 at 18:28:29

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Man City pay rent for the COM stadium and the proportion of income paid increases with attendance. What attracted the Prince was the fact that there was only one shareholder to deal with, the fact that the stadium was surrounded by readily available land for development and the lure of a big fanbase in a wealthy city. Everton have none of this.

I agree that investors are circling clubs that have potential regarding commercial potential and ready built infrastructure, but West Ham and the Olympic Stadium? Can you trust the motives of pornographers and a convicted brothel keeper?
Peter Foy
973   Posted 20/04/2012 at 21:31:33

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Consider this,

All of the assets at Everton have been re mortgaged.

Season tickets, the ground, the land.

Does anyone on here know if it is possible for Bill or any of the other major shareholders to re mortgage the value of their shares.

If this can be done, it could be possible that the major shareholders don't actually own the club.

If so, who does? I don't think anyone on Toffeeweb has mentioned this possibility before. It may also explain why there hasn't been a sale.
Paul Watson
976   Posted 20/04/2012 at 21:47:22

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I don't think anyone really knows who has first call on the majority of Everton's shares. When Peter Johnson was looking to sell his majority holding Kenwright was negotiating a loan with HSBC. Kenwright wanted to use the value of the shares as the collateral for the loan ie a leveraged buy-out. However, HSBC examined Everton's books and said no. They were under the impression that Johnson would sell the shares for a nominal sum and the loan was investment for the club - players and ground improvements.

A similar situation was in place at Chelsea when Abramovitch took over. Chelsea were valued at around £200m but Abramovitch actually paid around £30m - but took over the outstanding debt.

It would be wonderful if someone could blow the smoke away from this so we could actually see how the land lies. Can't see it happening though.
Michael Kenrick
982   Posted 20/04/2012 at 21:56:03

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Peter Foy; interesting question.

If it has happened ? and there seems every likelihood that Green may have lent money to Kenwright and/or Earl to facilitate their share ownership, I can't see a "re-mortgaging" rather than simply taking a loan.

I guess there could be motivation for a mortgager to presumably charge a fixed interest rate on the money loaned to the shareholder... presumably without assuming the risk that comes with ownership of shares that could fall in value ? but at the same time missing out (presumably) on the upside if the shares do increase in value.
James Flynn
021   Posted 21/04/2012 at 02:17:32

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Henry (856) - This very day, LFC's owners are in Boston celebrating the 100 year anniversary of Fenway Park, the "Cathedral of Boston", for their baseball Red Sox. Over the last dozen years, they've spent under 200 mil American improving the place, now a cash cow beyond all cash cows.

A new stadium for Everton within the city limits would be cool. Could happen in the future, since the city seems to favor new construction. We all know this will not happen under current ownership for the now obvious reasons.

But Henry and them have proven beyond a doubt that an old structure can be given appropriate improvements right where it stands.

Nothing wrong with the Old Girl. She's more pretty and attractive as Fenway Park will ever be. We just need the ownership to spruce her up.

Kenwright OUT!

Chris Jones [Burton]
023   Posted 21/04/2012 at 02:36:24

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The EPL is in demand worldwide (via TV etc.) and as a permanent (to date) member of that league, with a massive and loyal following, ownership of the club's 'share' in the EPL is worth a great deal.

I've seen all the business valuations based on turnover etc., but there's also a valuation to be placed on potential. Look at it like this, imagine we're not talking about a football club but an old an well established gold mine. OK so the thing is producing just enough of the precious metal required to keep it ticking over, and the infrastructure is run down and in need of fresh investment, and there are debts around the company's neck too, but there's a skilled workforce and willing helpers, and who knows, as long as the mine stays open there's every chance another rich seam will be struck some time, and riches will flow.

As long as we're in the Prem (and there's every reason to think we can hang on in for another 20 years) then there's potential. There are big debts but we're worth a punt. Some clubs splurge £100m on players in a single season (and that's without wages), so is finding someone with £100m to buy and £100m to invest in the short term so outlandish a prospect? I don't rule it out.

FFS, if someone's willing to pay £35m for Andy Carroll, we have to be 'worth' a lot more!
Eric Myles
026   Posted 21/04/2012 at 04:43:43

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Chris, a more apt comparison would be a coal mine.......with Maggie Thatcher making the decisions on its future.
Richard Dodd
048   Posted 21/04/2012 at 10:56:02

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My 18-year-old nephew, who has just completed his A-level in Economics (and gains 'first class work experience' behind the bar at the Freshy) said to me last night, "That's a daft question you've posted on TW. Any fool knows that the price of a 'good' is the price someone is prepared to pay for it."

Now, if the lad has got the textbook right, that means the lack of would-be purchasers of EFC (although nine were showing interest as season tickets went early bird!) is either because no-one thinks it`s worth a light or that there is no real desire to sell.

Which can it be, I wonder?
Phil Walling
056   Posted 21/04/2012 at 11:42:35

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I`m not sure you should be taking economics lessons from kids who work in the Freshy,Doddy! My nephew used to put time in there,too,and he has trouble counting!
Not saying your kid has got it wrong but surely the price also has something to do with the figure at which you can afford to let it go.
After all,if the best offer I get for my pad is £100K and I`m mortgaged for £150K, I`m not going to rush through the sale ,am I?
Perhaps Matt Traynor can enlighten us?
Peter Foy
058   Posted 21/04/2012 at 11:53:40

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So if Green lent him the money based on the value of the shares and this value drops to zero. Green still wants his money.

Bill hasn't got it unless he sells the club at an inflated price. Hence no sale.

For Green it's like, heads I win tails you lose. Although I suspect 'our friend' Green is more interested in his retail development than the value of the shares.
Matt Traynor
069   Posted 21/04/2012 at 11:56:29

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Not sure comparing with being in negative equity is quite the same thing putting a value on a football club. Although Phil, earlier my career (London) I was introduced to a meeting as the "resident Scouse Communist" rather than economist...

I saw elsewhere that someone stated that as EFC has the potential to be a cash cow, that should be reflected in the price. This is utter shite, to use the technical term, suggesting someone should pay a premium for the incumbents failure.

As it happens, I do think that the right owners could turn it around, and it's all about the opportunities that the overseas TV deal brought in. I have looked at sponsorship deals for 2 EPL clubs, both mid-table. One would be compared with us, one would be seen as a lesser club. Both are now pulling in substantially more for shirt sponsorship than we are.

I know the RS, Man U have £20m p/a deals, and Man U get £4m p/a for their training kit, and I'm not suggesting that we should be at the same level, but I am saying we should be higher. Asia and Middle East corporates are only after success. Those that are more global will appreciate history/tradition more, and if you are a "safe" EPL team they will pay. It used to be more about how many times you were on TV in UK for the domestic sponsor (10/11 - Man U 26, EFC 14) but a lot of overseas territories are now moving towards broadcast of all EPL games across multiple channels, as the deal allows them to.

I don't know what Sky/ESPN have in UK in terms of subscribers, but in Asia alone, ESPN (just one regional broadcaster) counts 310m subscribers in 26 countries.

I've seen the monitoring reports for sponsors, and in terms of media exposure etc. a main sponsor can get up to £300k back in just one game for the UK broadcast, and multiples of that on overseas. Whether you "believe" in the value of brand exposure or not is irrelevant, the VP Communications in his budget shows a positive return on marketing investment, and that's all that matters to these guys.

To my mind EFC would represent an opportunity (with risk) for the right investors, the main areas to focus on being
- Stadium development (redevelop or relocate). Personally I think an integrated development at Central Docks in partnership with Peel, LCC etc would offer the chance to get a stadium fit for the next 100 years. I just don't think that Goodison can be developed to maximise the revenue streams

- Sort out the commercial operations, particularly overseas. Employ or appoint a representative in overseas markets like Asia (missed the chance to benefit from Cahill at his prime down under), include India, North America

- Cost control. We don't compete for the top players anyway, but a club should always now "own" the image rights for players, and these could be "sold back" to a lot of them for their own marketing deals given some of these are now celebrities in their own right, to partly offset their wage-take.

- Matchday revenue. The new stadium would allow for greater matchday revenue, and with better corporate facilities would dovetail with the increased focus on corporate sponsors. I'd also use increased capacity with a strategy of reduced match tickets for the "ordinary fan", in part offset by the increased yield/seat from corporates.

I've not talked about investment in the team, as I'm only looking at the general infrastructure and commercial side. But if an investor had a plan for that, with the stadium and commercial development, I reckon they could make a case for a 5 year investment plan to turn Everton from the toxic asset is now to the trophy asset Kenwright claims it is. (I love the irony he used the word trophy).

But no buyer with such a plan will darken his door if the asking price is too much, or the terms too onerous (seat on board etc) so it's not going to happen.
Phil Walling
079   Posted 21/04/2012 at 13:37:48

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Thanks for that, Matt. At least it shows there is some attraction in bidding for the club but it begs the question as to why the present Board and their highly paid advisers haven't put such a masterplan in place before now. Have they got a plan at all other than to survive in office?

By the bye, I've just been reading a Rangers focussed site and see that their American 'bidder of the day' is suggesting that if he 'does a CVA', he can get rid of Ticketus to whom the season ticket income is mortgaged for a few pence in the pound and the rights to the ST proceeds will then revert to his New Rangers.

It can`t be as easy as that to screw your creditors, surely?
Richard Dodd
080   Posted 21/04/2012 at 14:05:04

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I think it is that easy, Phil!

At Portsmouth, I understand that the only people to get their money were the Chairman, other 'secured football creditors' and the CEO who was retained by the Administrators as 'a special adviser'!

The Revenue got pence in the pound, as did the local suppliers, eg, printers, coach companies, laundry, caterers, some of whom went bust. Even St John's Ambulance had to get their recompence from the Football League.

I just so hope that our great club never sinks to those depths!
Richard Reeves
086   Posted 21/04/2012 at 15:12:34

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Not only is the club overpriced by Kenwright but I'm sure he's down on record as saying he wants to remain on the board. I think most new owners want their own board and want recognition for success planted firmly with themselves.

This obsesive idiot will not completely let go which makes an almost impossible selling job probably impossible.
Jay Harris
191   Posted 21/04/2012 at 20:25:22

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The problem is the club has a number of Fixed Liabilities... namely: Kenwright, Earl, Green, Elstone and Moyes.

Let's be honest, would you buy anything this lot had been running for 10 years?
James Flynn
239   Posted 22/04/2012 at 03:38:25

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Jay - I think many would buy a club with Moyes as manager.

As far as, "The problem is the club has a number of Fixed Liabilities... namely: Kenwright, Earl, Green, Elstone"?

Spot on.
Derek Arrowsmith
739   Posted 23/04/2012 at 05:28:59

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Review the Comments section where Mike Ozanian from Forbes Staff answers questions.

There is one from a chap called Michael Kenrick that has an interesting answer.
Michael Kenrick
740   Posted 23/04/2012 at 05:36:58

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Haha... thanks, Derek ? I'd forgotten about posting that question.

So the conversion from Revenue to Valuation is a multiplier... and Everton gets 1.8. Interesting that further down the thread, the range of multiplier values used is from 1.7 to 4.0. Everton's 1.8 multiplier is right near the bottom of the range.

So there we have it: in the Queen's money, Everton Football Club is valued at ($237M =) £148M. But no mention of the debt which would surely be subtracted from that...???
Peter Foy
863   Posted 23/04/2012 at 15:56:09

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'Our friend' Philip Green will not be happy about being made unwelcome at number 10 for aggressive tax avoidance.
Matt Traynor
868   Posted 23/04/2012 at 16:21:33

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Michael, that methodology is so subjective it's unreal, but you know that BK will go with that valuation. Given the difficulty in accessing information, you can see why the author pays a visit to the land of unrealistic assumptions. We only have so much information about Everton due to the sterling efforts of a number of contributors over the last couple of years.

Sadly, back in the real world, what with the debt, and how effed up the whole financing "model" is, others may put forward a different valuation of an exact integer somewhere between +1 and -1.
Richard Larnder
031   Posted 24/04/2012 at 08:45:23

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As stated by a number of people above, there is a huge level of subjectivity when looking at these valuations, especially ones built on multiples of earnings/revenues. Revenue multipliers can be particularly misleading as they often assign unusually large values to companies that don't generate any cash; which is surely the raison d'etre of any normal business.

Revenue multiples are normally used on young tech companies which might have a sound business idea but haven't generated profits due to their infancy and the level of up-front cost.

As I've said before, ultimately the value of any asset is going to be the present value of its future cash flows i.e., how much money am I going to win (or lose) by investing in this asset?

With that in mind, any sensible acquirer is going to adjust the gross valuation (enterprise value) for: the level of debt and the historical underpsend on capex i.e., the amount that should have been invested in the squad and stadium that has been absent.

All this leads me to believe that any positive valuation ascribed to Everton's shares is purely goodwill i.e., an acquirer is paying a premium for the benefit of having a ready-made Premier league member and founder of the Football league.

How much is someone willing to pay for this? Well, that's anyone's guess but I'd be surprised if it was more than £50m.

The fact that Everton's shares have been for sale for 10 years and counting without being sold suggests that the market agrees with me.

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