The Mail Bag
Investment...
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Some things to consider when speculating (or dreaming) as to whether or not a Russian or Arabian knight in shining armour will come and rescue us from our current financial plight. I will not waste time going over the facts that have been laid bare over the past few months and more specifically since the EGM. We are heavily in debt, and it would appear that we have come to a point where we are no longer able to borrow and therefore unable to strengthen the squad without selling first.
What is needed is someone with an awful lot of financial clout to steer the club into a healthier position, over the course of say ten years. The problem that we face is that, even if we manage to find a suitable investor, the person in question will inevitably want some sort of return on their investment (euro million winning Everton season ticket holders excluded!)
For the purpose of this article, let's say an initial outlay of £250 million is injected into the club:
Current debt: £80 million?
Redevelopment of Goodison / Kirkby money: £80 million
Squad strengthening: £40 million (January)
Squad strengthening: £50 million (Summer 09)
I hate to be a bit of a scrooge or party proper but even in the unlikely case that we attract someone to invest this hypothetical £250 million and the money is spent on the areas mentioned, how do we then go about creating a sustainable future and repaying the £250 million injection?
Even if we fill Kirby or a newly developed Goodison with 50,000 fans every week and continue to produce top-six finishes, will this be enough to keep up repayments on the original investment, and have enough money left over to develop the squad year on year?
The only sure fire way to generate masses of income is regular, I repeat that word, REGULAR qualification for the Champions League proper. With the big four now having been joined by a fifth member, and with the steady, if not spectacular, rebuilding going on Villa Park, I think that regular Champions League qualification will be a very tall order for Everton.
I guess what I am saying is, even if we do mange to attract large scale investment, that it is not necessarily the quick fix answer to all our problems. Look no further than West Ham United for a club that have tried to take the quick fix route and have ended up with an astronomical wage bill, a top ten side at best, no manger, and debt probably somewhere an a par with our good selves.
Peter Laverty, Posted 05/09/2008 at 14:17:56
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I think to sum up what your saying and add my thoughts i’ll list it in Q & A points below:
Q) How can we get £250m and then pay it back over x years
A) We can’t. Simple as that. We need someone who is willing to sink that kind of money in to the club, and not want any return.
Q) How do we obtain a substainable future?
A) Again we can’t. If someone comes in and invests £250m wanting no return, what are they going to get out of it? It would be a toy to them. They wouldn’t listen to Moyes and his 5 year plans... they would interfere with transfers, team selection, and all other matters that didnt concern them. We’d swap managers every year and have a team of overpaid pre-maddona’s. Then when the owner gets bored and withdraws his backing for the club we’d have a wage bill we couldn’t pay and end up in god knows what state.
The only other option though is to keep Kenwright at the helm and have no money to spend every year, and be surpassed by all our rich rivals. Its a no win situation.
Q) Could we qualify for the CL every year?
A) As you stated probably not. There’s going to be 5 teams as you rightly pointed out now competing for those slots, plus us, villa and spurs. Thats 4 teams from 8 each year who will qualify. There’s a danger the way things are going that a team could spend £100m a season on transfers and not even qualify for the Eufa Cup!
What happens then? The owner sacks the manager, buys another £100m worth of players... no stability, no growth, no chance of sucess.
What we need is someone who understands football, has money to burn but doesn’t want a toy to play with. That doesn’t exist to my knowledge, so what do we do?
Option 1. Sell to a billionaire who buys us a new stadium, sells all our favourite players for peanuts, brings in overrated, over paid mercenaries and tries to buy sucess... probably ditching Moyes in the process.
Or
Option 2. Keep Kenwright, sell our favourite players each year to buy 2 new players for the same price, try to progress but be overtaken by our rivals who have spent vast sums of money?
Were pretty much damned if we do and damned if we dont.
I think the premier league need to step in and do something before its too late. Salary caps could be the way forward, but my idea would be to have a limit on how much you can spend on transfers a year. If it was £30m that would at least help stop the ridiculous spending thats happening.
It all depends on how the £250m is raised. If it comes from a Russian or Arabian knight in shining armour as you suggest then an investment of that level might just work. See below. If on the other hand the £250m is borrowed (like Hicks and Co across the park) then we could find ourselves in worse position then we are now as you would be at the mercy of the banks in a very uncertain economic climate - this is well illistrated by the recent delay in the red shites stadium. I personally think they are in a worse position than us (unless they bought out by the Dubai lot).
If however, the money comes from a billionaire striaght out of there pocket then £250m could be enough to really transform this club just like Chelsea and City. The £80m to clear our debt would save us circa £8m a year based upon paying interest on our current debt at 10%.
The other £80m to invest in redevloping Goodison or DK would if you believe the Board at Wednesday’s EGM generate an extra £10m profit from match day and related uses.
If the further £90m to be invested in the team enabled us to break into the top 4 and the Champions league (hopefully at the expense of the red shite) then we could expect a further revenue £25m per annum.
All in all this would increase our profit by £43m a year and would repay the initial £250m outlay in 6 years.
This is obviously a simplistic overview, and I’m sure most of you will be able to pick holes in the figures, but what it does show is that debt is a massive issue and I for one would only welcome inward investment if it was debt free - but how many billionaires are out there?
I’ll never get the hang of this footie lark
What is more likely is that he’ll either a) put the club in more debt but have himself - (cant be the club as per the shite as ours is already fully maxed out) as a guarantor
or b) Pay off the current loans that have interest to be paid and loan the money himself interest free.
He can then continue to do this, putting the club (not himself) in to further debt by buying more and more players, but in essence making the club worth more, due to CL money, global marketing higher TV income etc etc, he can then sell the club on at a higher price than he paid and leave the debts behind.
Football is no longer about making annual profits, but more increasing the value of the club to sell on.
I just thing the premier league is built on a pack of cards, that one day although it will be many years in the future is going to come horribly tumbling down.
If I had lashings of money, surely the best time to take over a club is when its at its lowest, which in evertons case would be now.
Why couldnt someone come in, build a new top class stadium, loan that against the value of the new stadium, and take loans out to buy new players.
We then have wealthy owner, a new ground, massive debts but a good squad. As i mentioned in my last article the club will then be worth massively more than it is now, the owner then sells up, leaves the debts with the club and walks away with a big smile on his face.
Im not saying this is good for everton FC, but this is why i think we ARE in a great position to be taken over because the cheaper you buy something the more money you can make from it!
Thoughts??
I think the only danger we have is what Man City will experience in a couple of seasons; we will lose control and identity overnight and could end up playing anywhere.
Man City have the world at their feet right now but that will all change when they are based in Dubai. Full time!
The other thing I can’t fathom is this all or nothing approach to investment. Why can’t Kenwright just find someone to come on board rather than sell the club to a rich Arab? Why doen’t he sell some of his shares to help raise funds? Think about it, Kenwright is in this for himself, if he mortgaged his house to buy this club, he wants to make sure he buys a bloody big house for himself when he comes to sell up.
If a club has a player worth £50 million, how could a team buy him?!!
but why oh why would BK sell up now and let the next ’owner’ make all the profits, when he can make a killing himself and walk away with a big smile on his face, please answer me that one?
All he has to do is keep up this 24/7 bullshit and many of us will continue to believe him!
As expected, Chairman Bill kept his promise re transfer funding and Davey was ONCE AGAIN able to tie down a record signing. All the other newcomers look good quality and would have numbered the full six had Newcastle not got greedy at the death.
As we all knew, there really is no alternative to DK but if it can be achieved, our club will be in a healthy position without having to sell its soul to the Arabs or Russians.
Like most reasonable Evertonians, I continue to be amazed at the naivity of Mailbaggers who seem to believe there is a queue of would-be purchasers just aching to relieve BB of his burden. All I can say is that when the day does come for our guardian angel to give up the reins, I will personally lead a campaign for him to follow in the tradition of Everton chairmen to recieve the knighthood he so richly deserves!
If a salary cap came in at £60m (ours is currently £40m) then it would be higher than all but about 10 teams in Europe currently pay out as it is.
Also teams like Chelsea with £120m wage bills would have to halve their squads which would mean 20 quality players would be released onto the market improving all the teams below.
Has Moyes signed his contract yet? What’s the hold up? I couldn’t wait to hear your positive spin on our crap summer. You’ve made me laugh anyway.
Oh yeah, I forgot. It?s all about instant success and instant payback to shareholders.
Oh fuck it, were doomed.
Your back of the fag packet accounting is a very typical example of the financial expertise available to the Club via this site. Perhaps you are just the genius the club is looking for to follow the estimable Keith Wyness!
We may as well stick with useless Bill as bring someone like Mike Ashley in. I have to laugh at some of the tripe people recycle about catchment areas and increased corporate revenues etc. The way the game is now, even sizeable increases in these areas won't even scratch the surface of what needs to be done. We need to find our sugar daddy and we need to find him fast, thats all there is to it.
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1 Posted 05/09/2008 at 15:49:32
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I say we get back Sly Stallone surely any club with him aroung is attractive to new buyers!!