ToffeeWeb - Season 2006-07

The Mail Bag

Foreign investment

Just picking up on Tony Marsh's point of us needing foreign investment. I for one am not the biggest of Kenwright fans but I don't think having a corrupt ex-Thai PM in charge would help take our club forward. The big thing that I'm sure most people ask is why does an Icelandic biscuit maker want to take over West Ham? Or why do two Americans (one has been declared bankrupt in the past) want to take over Liverpool?

These foreign investors have absolutely no links with these clubs and they are business men so what motivates them is making money. What they're doing is releasing equity by securing debt against the football club maybe using their own wealth to act as guarantor. I'm in no doubt that Hicks and Gillette and the Glazers will not be putting a penny of their own money into their respective teams. If their club is successful then the money the club makes pays off the debt, they then sell their succesful club at a tidy profit collecting the money for themselves. This works well if the club is successful but only one team wins the Premier League and only four teams qualify for the lucrative Champions League.

So what happens to the other teams? I think in a few years time there won't be much change at the top of the table and clubs like Aston Villa, West Ham, Portsmouth, Man City and Newcastle will be struggling with crippling debts because the "investment" has not payed off. These "investors" will not make a loss on these deals so ultimitely it will be the clubs who pay. It will be then that we might just be thanking Kenwright for his slow and steady approach.

Or he might build us a new stadium on the cheap and sell us to the most corrupt man going!
Alan Clarke, Manchester Posted 10/06/2007 at 07:50:17

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Michael

I think a lot of fans have been blinded by the so-called "investment" Abramovich made in Chelsea, catapulting them into the stratosphere. Their huge losses show such a financial model is untenable in the medium- to long-term, whereas the need to balance the books (on average) is very real at Goodison Road.

But funnily enough, someone mentioned yesterday Bill Kenwright, a major investor in Everton shares, wasn't in it for the money. Let's examine that for a moment. Paul Gregg invested in Everton shares at the same time, and sold them on to a new investor, for a tidy profit of around £2M, representing an APR of around 5%. Not too shabby...

Let's suggest that Bill Kenwright will be able to sell on his shares to a new investor in 2010, once the burden of the stadium issue has been resolved, and Everton are valued at, let's say a modest £120M.

Bill Kenwright's shares will be worth £30M for a profit oover 10 years of £22½M, and an APR of 30%!!! Aye right... he's not in it for the money!

Mike Kay
1 Posted 10/06/2007 at 15:17:18

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Whats this? Valued at a modest £120m!? Where the hell did you get this valuation from, EFC does not make a profit and that is the biggest driver of share value. We are currently valued at aroound £50m. To go to the ?modest? valuation, you mention would require an annual profit of £5m - £10m p.a.and thats after player trading, dream on!!

David Barks
2 Posted 10/06/2007 at 15:11:14

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Michael, if Kenwright sells us in 2010 with the new stadium ready and makes that type of profit on us, I would have no problem with that. It would mean that he must have kept the budget reasonably balanced and that Everton were looking like a successful club.
Everyone wishes that Kenwright had more money to buy the biggest names, but he doesn?t. But he is not the demon that some make him out to be. He took over this club when it was in financial ruin due to terrible management, and has completely turned us around. We are now qualifying for Europe, have the foundation of a very good, young team, and have done it without taking on huge debts.

Michael
3 Posted 10/06/2007 at 15:28:04

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I agree the current valuation is around £50M. However, that?s already an increase of more than 50% over where we were just two or three years ago... and resolving the stadium issue, by getting into bed with Tesco, will have a massive impact on the value of the club, IMHO. Compared to Spurs and Newcastle, we are way under-valued. I?m assuming the reason is the burden of Goodison Park...

Sean Rothwell
4 Posted 10/06/2007 at 18:35:44

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A good post there by Alan. I, too, am somewhat amazed by the number of fans who would rather have a shady and corrupt Thai with no links to the Club as our Chairman than a man who has supported the Club all of his life and who has undoubtedly steadied the ship during his time in control.
All of these foreign investors will grow tired very quickly if their investments don?t bear fruit and Clubs like West Ham, Portsmouth, Chelsea and hopefully Liverpool will all be left in particularly precarious positions when that time comes. We can at least be content in the knowledge that Bill Kenwright will fight tooth and nail for this Club regardless of how things are going and that he will never be prepared to hand over the Club to someone who could jeopardise our future in the long run.

Everton68
5 Posted 10/06/2007 at 19:10:09

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No financial analysis or projection just a reflection. RememberWimbledon, remember Coventry, remember Will Smith, not Kenwright days (he did take too long to sack Smith granted). I saw Ball Kendall Harvey, but the am still grateful that our man has made us secure finacially and in league position instead of facing the abyss. The game has changed too much to expect that we will compete for the league in the near future, but we need to build and be there or there abouts when the pendulum swings back and the Glazers etc go back home and leave the game to those who love it. Kenwright has been part of that process. Will Smith..??? When did Will Smith ever manage Everton? ? Michael

John Holmes
6 Posted 11/06/2007 at 08:13:34

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Whilst I follow the thrust of your first response Michael, I’m not sure about your last piece of logic.

You’re suggesting that because Kenwright’s shares are worth more than when he bought them he’s only in it for the money. What would you prefer? He devalue the club so as to maintain his integrity?

Michael
7 Posted 11/06/2007 at 15:54:12

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John, that is a ridiculous non sequitor. One true purpose of investment is to make money. I have no arguement with that (altough I do have some personal reservations about rampant capitalism... but I digress).

The comment was spawned for me by someone claiming BK wasn’t in it for the money, which I sought to show was equally unlikely. And to raise awareness that the Kirkby move may have some interesting side-effects on the value of the club that have not been expressed.

I’m not making a moral judgement here, just trying to look forward a little and see how much of a factor this could be in his thinking, if he was contemplating taking the club away from its traditional roots, against the wishes of a large portion of the local fanbase.

Nick Whitham
8 Posted 12/06/2007 at 09:19:08

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With ex Thailand Prime Minister having his bank account frozen by the Thai government it show that a new investor is not all that, what would have happened to City if he had purchased the club. Would we want such a character involved in Everton I think not.