Questions for the Three Wise Men of Everton

First of all I?d like to thank everyone who took time to read the recent ?Fortune Favours the Brave? article and secondly I?d like to thank Toffeeweb for their pursuit of balance and fairness in constantly giving the opportunity to all parties to air their views. A few of you have pointed out several typos for which I apologise, but by way of explanation I had meant to send the article at the beginning of last week but the file became corrupted so what you see is a hastily reconstructed version, which also explains, as observed by several astute commentators, the rushed appearance of the final summing up.

The replies confirm, to me, the level of importance that the fans are attaching to the issue of a ground move.  Reading through these replies, I was astonished by the lucidity and intellect demonstrated by fellow Evertonians? on reflection, should I really be astonished?  I?m sorry that I don?t have the time at the moment to answer the many questions specifically asked but I?d like to thank people like Art Greeth, for an astoundingly rapid and professional critique, Graeme Morrison, Les Smith and Bruce Wayne (!)  

Perhaps the most poignant reply was that from John Taylor who reflected with some regret on his Yes vote.  The whole reason for putting the article in the public domain was to provide a balanced view and analysis of the information supplied to date.  Unfortunately I didn?t have nine months and the combined resources of EFC, Tesco, KBC and the local press, so to those people who accuse me of producing a flawed and subjective argument, they are in fact hoisted by their own petard.  Of course the article is flawed and subjective, it?s based on the very information that has been given to the fans and that they themselves have used to make a Yes decision!  However, no matter what they?re confronted with, they?re right ? they always are!  The more open-minded of you have correctly identified that the article lends credence to both sides of the argument.

Some people have asked if I had the benefit of reading Sir Terry Leahy?s Open Letter to the fans before I submitted my article; no I didn?t.  And some have referred to his letter as a source for clarification after the initial confused statements from Everton?s CEO and Tesco, specifically the statement on the £50M contribution.  The letter in question has been well published in the local press, the official club site and the many unofficial sites; the complete article can be seen here:  

www.evertonfc.com/news/archive/sir-terry-leahy-open-letter.html

The main paragraph on the financial issue is paragraph four which I reproduce here:

?If Everton built a new stadium alone, rather than as part of an overall development, the cost would be huge.  In the case of the Kirkby proposal, if you allocated a share of the traffic, infrastructure and land costs to the stadium, a very conservative figure would be £25 million.  The construction of the stadium itself would cost around £110 million.  Barr Construction have an integrated design, steel manufacture and construction operation which makes huge savings on that figure.  Tesco as the developer is forgoing the normal development profit on the construction of around £15 million, in addition to the contribution it is making directly.  So if you went out to buy this stadium it would cost you £150 million.?

Frankly, in light of the previous figures presented by Everton, if this were submitted to the plain English society they?d have had a field day.  There?s no specific mention of the Tesco £50M contribution that was previously part of the ?Deal of the Century? scenario.  Now we have, in sequence, a land and infrastructure cost of £25M coupled to a waiving of a £15M cost (Tesco?s margin as a developer).  A revelation that the stadium cost alone this has now increased by 10% to £110M, followed by a somewhat vague and unsupported reference to the construction company, Barr, being able to offer ?huge? savings, this from a construction company who measure their profits in single million figures and operates in an industry with acknowledged tight profit margins.  If the saving was specific, the £10M increase for instance, and was added to the other figures mentioned, £25M and £15M, you indeed come up with the magical £50M contribution that perhaps, embarrassingly for Mr Wyness, is the ?value derived from the project? mentioned in Tesco?s clarification statement to Radio Merseyside.  I?m still a bit lost on where the other £100M is coming from, save for the sale of Goodison and the prospective naming rights deal.

Conversely if the statement was written in plain English and said:

?The total cost of delivering a world class stadium is £150M.  Tesco, in addition to waiving their developers? profit margin, are absorbing the land and infrastructure costs into the project as a whole.  The total contribution from Tesco will therefore be £50M.  By taking advantage of Tesco?s immense purchasing power and contacts within the construction industry Everton will benefit from a negotiated £50M discount on the construction cost, the remaining cost, £50M, being covered by the £15M sale of their current ground, a £25M naming rights deal with a partner willing to pay the 10-year fee up front, and the balance being funded by some long-term debt amounting to no more than £10m.? 

If the statement was as clear as that, I?d be partially on board, save the commercial issue of being in a town over a major city.  Whilst the above statement makes sense you?re unlikely to hear it from Sir Terry, as it?s clearly ridiculous to expect a discount of that magnitude or funding from Everton at those levels.  So what is the true cost? Well I don?t know, plenty of fans appear not to know and it also appears that Everton / Tesco, after nine months of working on this, don?t know either.  If they did I?m certain they?d tell you in a crystal-clear precise manner.

Everyone seems to be terrified about debt. Many people have intimated that the prospect of Everton acquiring a £150M asset for little additional debt will improve the balance sheet, which is admittedly exceptionally light, and thereby attract potential buyers with potential investment for the team.  Unfortunately these same people are conveniently ignoring another potential, potential debt.  Liverpool and Manchester Utd have both incurred massive debts, structured differently, upon their takeovers, as will no doubt Arsenal next year.  In both these cases the concept of ?why use your own money when you can borrow and get the club to service the debt? prevailed. 

When a company is set-up to be sold or is made an offer it can?t logically refuse then the shareholders are the beneficiaries, unless you have a scenario like the recent Wolves sale when the club was sold for £10 by a quintessential philanthropist.  And why shouldn?t the shareholders benefit? They?ve invested their time and money and the main shareholders on the board will have steered the ship, had the sleepless nights and taken all the flak.  I personally have no problem with this whatsoever, in fact I?d love to have 5,000 shares in Everton right now, it looks to me like an excellent prospect.  Everton are the 21^st richest club in football, and they are currently top of the richest football league on the planet: http://www.forbes.com/lists/2007/34/biz_07soccer_Soccer-Team-Valuations_Value.html    http://www.deloitte.com/dtt/cda/doc/content/UK_ARFF_2007_Highlights.pdf .       If you look at the Forbes list you will realise that indebtedness is no deterrent to investors ? look at Manchester City, one of the Premierships most indebted clubs. But look at who came in for them and there lies another problem: better the devil you know, as the saying goes? 

In answer to those who have accused me of being just another NO propagandist, what I actually said in relation to Kirkby was that my vote is No; I never said that I?d voted No.  I, like many other people, have waited to hear all sides of the argument; I was expecting further clarification from Everton with regard to the apparent holes in the financial statements and exploitation of commercial activities but all that seems to have been done is an excellent public relations campaign ? perhaps all style and no substance would be a fair assessment. Also, I must admit that I?m disappointed once again in LCC and Bestway not providing more information with regard to the their proposal.  Maybe, in regard to this, Mr Wyness is perhaps justified in his apparent frustration in dealing with LCC; who knows what the truth is?

So, in the end, I?m still confused: the simple reality is if you want my vote Everton then answer these questions:

1. Based on an assumed project cost for the stadium of £150M, and in plain English, what specific individual and itemised monetary contributions are being made by:

a)    Tesco

b) Knowsley Council

2. Taking into account the discount to the stated £110M construction cost of the stadium, what will be, in one simple figure, the net cost of the stadium?

3. In relation to the £150M project cost, are there any other sources of project funding available?

4. Subtracting the above contributions from the total £150M cost will leave the figure that Everton will have to fund; with regard to this figure please list Everton?s itemised sources for finance?

5. The 2006 accounts list Goodison Park as having a value of £ 13,097,550 ? what is the value of the land?

6. What would be the direct monetary contribution to the club in the first year of a £20M stadium naming rights agreement? 

7. Regarding the complete Kirkby construction project are there any Compulsory Purchase Orders required to secure any of the land?

8. Do the residents of Kirkby have the right under local government regulations to demand a referendum on the redevelopment of their town centre?

9. What, if any, are the regulations specifying compliance that large developments contain specific sports and leisure facilities?

10. Have LCC / Bestway been in touch with any updated proposals on alternative developments?

11. Have Everton conducted or commissioned a study on the impact of moving the club from a city to a town in relation to the clubs prospective commercial activities?

12. If so what are the findings and what strategies are to be adopted, if no, why?

Let?s not have ?Jimmy from the County Crew? or anyone else attempting to answer these questions, only Messer?s Kenwright, Wyness and Leahy know the answers, let?s hear them.

Colin Fitz

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