The Slumbering Giant: Part 3 - Treading Water
With lagging commercial revenue relative to our peers, a new stadium is cited by the Board as the key to Everton's longer-term success. Is it the best option, how long dare we wait and what of the ownership issue in the interim?
28 April 2015
Football, like sport in general – and practically everything else in this complex world we have built for ourselves, for that matter – has always been cyclical. Two-plus decades of the Premier League, where the power, the money and the trophies have been pooling around a small band of rich clubs, may speak to the establishment of an unshakeable status quo but change is a constant.
What the consolidation of power in the modern top flight has done, however, is alter the dynamics of that change. Chelsea and Manchester City have both been relegated and promoted back to the top division since the Blues lifted their last League title but, short of something cataclysmic, it’s hard to see either club ever going down again.
The end of Sir Alex Ferguson’s reign at Manchester United and the failure of David Moyes’s succession would, under the old order of things, likely have seen that club go through years of rebuilding and relative under-performance but, like Liverpool FC, they have been able to buy their way back into the Champions League places in fairly short order.
Everton’s complacency and then near implosion in the 1990s means that we have essentially missed the boat we helped launch and with the ever-increasing disparity in resources between the new “big five” and the rest, we’re still treading water in their wake trying to catch up. However, to torture the metaphor somewhat, the unprecedented influx of broadcast revenue is a rising tide that is lifting all boats in the top flight and where there is opportunity – not to mention money and human fallibility – there is hope.
For the time being at least, the gap to the monied elite is sufficiently bridgeable for those clubs that can find the right managerial hire, assemble the right scouting network to find hidden gems for small outlays, push enough genuine talent through their academy, keep wages sufficiently capped to prevent costs spiralling out of control and – crucially – maximise income from their commercial activities.
As Part I and Part II explored, it’s a difficult strategy that Everton are still trying to implement and while it could work – and nearly did last season – it’s an inherently slow process and this season has had many Evertonians wondering if we had taken too many steps backwards for us to be able to get back to challenging the top four in the short term. The revival of form that we’re currently enjoying is allowing a little hope to creep back in, but cracking the hegemony of that top five still feels some way off.
That is why so many supporters are looking at the forthcoming transfer window as the opportunity for Roberto Martinez to effect an overhaul of his squad, to clear out the older heads and make way for younger, fitter and hungrier players that can lay a foundation for consistent challenges for Europe.
Past experience and the manager’s own rhetoric suggest this isn’t likely to happen, at least not on the scale many think it should. Due largely to our shortfall on one of the key performance indicators highlighted by Joe Beardwood the other night – non-media revenue – Martinez’s budget is likely to remain constrained. With some of the television money likely to be channeled into reducing some of Everton’s debt, it is extra income from commercial activities that should be either the key difference-maker between ourselves and the likes of Stoke, Southampton, Newcastle, Swansea and Aston Villa or the mechanism by which we can specifically rival Tottenham Hotspur as the biggest threat to that big five.
No surprise then that the criticism bubbling up on social media, fan sites, podcasts and the like is centred around the current regime’s perceived failings when it comes to Everton’s commercial performance. Though the club aspires to at least finish in that best-of-the-rest spot of fifth in the Premier League, both our kit sponsorship and manufacturer deals are ranked firmly mid-table – we’ll receive £20m less from our five-year deal with Umbro than Spurs will from Under Armor, while they pull in three times as much per season from AJA as we do under the new deal with Chang. It translated to a £60m difference in turnover in the two clubs’ respective 2014 accounts, with £43.5m of that from commercial (non-matchday) activities alone.
That may be partly reflective of the socio-economic and geographical advantages that Tottenham enjoy from being in the more attractive market of London and the wealthier catchment area of the south east – not to mention a more consistent presence in European competition over the last few years – but it underlines the challenge that Everton must face in bridging the gap with more imaginative and lucrative commercial arrangements. The incremental growth in the recently-signed Umbro and Chang deals indicate movement in the right direction but to the regime’s biggest critics and those who feel as though the Blues are rapidly falling behind, it’s not moving fast enough.
Disappointments on the pitch this season, particularly the manner of our exit from the Europa League, has fostered a growing feeling among supporters that from the playing side to the Boardroom, the club as a whole is being held back by a simple lack of conviction needed to push Everton forward through force of will. Sterling efforts on the marketing and PR side are driving engagement, a healthy demand for season tickets and maximising merchandising revenue from the existing fanbase but it’s on the macro commercial scale, where the real margins are at play, that the club still lags behind its peers.
That speaks both to Bill Kenwright’s role as Everton’s "custodian" and owner in absentia rather than its entrepreneurial driving force and the apparent lack of an over-arching vision for the club other than an as-yet unrealised proposal to relocate to a new stadium. Indeed, inertia at Boardroom level, where the anonymity of Robert Earl and the opaque nature of Sir Phillip Green’s involvement in the club breed scepticism and uneasiness, presents little evidence of the necessary energy being invested to take the club forward.
New stadium a "silver bullet"?
While his pledge to attract either the investment or the buyer that could bring the funds capable of vaulting Everton onto Europe’s gravy train remains unfulfilled, the Chairman and his Chief Executive Robert Elstone hold true to their belief that relocation is the key to Everton’s future. Without a new ground, the Board argue, sustained success will never be achievable. But without sustained success that would grow the club’s profile and boost its attractiveness to corporate sponsorship, matchday hospitality and other key sources of significant revenue, those afore-mentioned socio-economic factors will likely continue to limit the financial benefits of any new stadium. Everton’s apparent “Catch-22” in a nutshell.
At best, the proposed stadium in Kirkby was projected by former CEO Keith Wyness to bring in an extra £5m to £6m per season – small beer now in an environment eight years on where the club’s broadcast revenue alone has mushroomed by £33m per season.
And if Beardwood is correct in his assessment that Everton have limited potential when it comes to earnings from corporate boxes, sponsorships and the like without the global exposure that comes from the Champions League, the club’s reliance on maximising commercial revenue from the existing match-going and merchandise-buying fanbase will surely persist. That, combined with the very open questions of how much a new development would cost and how it would be funded, hugely increases the risks of relocating.
Even if it were the silver bullet that Kenwright paints it out to be, any resolution of the stadium issue remains many years away. In the interim, unless a huge cash infusion from a takeover at the club comes out of the blue, finding a way to push the envelope on the commercial side and breaking into the Champions League remain our best hope of progress in the medium term.
It’s a frustrating situation heightened by the passage of 13 years since the proposing of the Kings Dock and the collapse in between of Destination Kirkby. Time that, in retrospect, many feel could have been spent making incremental upgrades to Goodison Park and diverting funds over a period of years towards buying up property around the existing ground.
That strategy is one bearing fruit for our neighbours who, having given up on their own grandiose plans for a new development on Stanley Park, gradually acquired the land necessary to expand the footprint of Anfield and are now in a position to push ahead with construction. With Everton still only in the exploratory phase of a potential development at Walton Hall Park – one that, like the two projects before it, may never come to fruition – supporters can be forgiven for wondering if we shouldn’t start looking at redevelopment ourselves rather than sit around year after year waiting for a mythical white knight with an over-flowing bank account.
Questioning the hierarchy
And the more time that passes, the more restless the fanbase is going to become. Questioning of the Goodison hierarchy on the level undertaken by the Blue Union in the wake of Kirkby has naturally been dampened by the passage of enough water under the bridge since the collapse of the project and progress on the field in the interim. But the unwanted milestone marking 20 years without silverware and stalled progress on the playing side has revived questions over the motives and the plans of the Board’s more peripheral figures.
If they’re not using their considerable wealth and connections to fund a new stadium project for Everton or transform the business into a 21st-century operation with a global brand, what exactly are the likes of Earl and perhaps Green still doing in the picture? Having facilitated the ouster of Paul Gregg and then push the Kirkby project, are they merely in place now to prolong Bill’s tenure, or are they simply waiting around to profit from the club’s eventual sale?
And what of Kenwright himself who told the Blue Union four years ago that he couldn’t see himself still in charge at Everton in five years’ time, all the while providing assurances that he would put his energies into finding a “billionnaire” to succeed him? His “24/7 search” goes on but a takeover at Goodison feels as far off as a new stadium. Whether it’s in a year or, health permitting, another 20, the Kenwright era will eventually come to an end. But what replaces it?
That, of all things, could be the question that keeps Bill up at night the most. Having achieved the dream of owning the club he has supported since childhood, how do you let go and whom can you trust with your beloved Blues? Only he and those close enough to him might know if that momentous dilemma is what has kept him from selling Everton to this point, but unless he can find the solutions to the problems holding Everton back from truly competing again, something is going to have to give sooner or later.
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