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I read the banter about grinding around the stadium situation and would like to add my 2-cents (pennies). Being a native Texan who has adopted EFC as my soccer club of choice, I can?t be expected to understand the passion and politics involved in such a move away from Goodison. Thanks to Greg Murphy for the synopsis of the recent stadium foibles (Too Late to Cry). That was very helpful in gaining some of the relevant background.
One thought that has smacked me in the face about the seemingly hell-bent focus on the Kirkby location is centered on the availability of corporate partners. I think it was either Kenwright or Wyness that recently made a claim that ?we will never get another deal like this? (paraphrase). That I disagree with.
From the basics of economics, there has be other corporate suitors out there willing to ante up just as much as Tesco. I don?t know what Tesco?s portion of the project is but for illustration let?s say that Tesco is in for £50M. I assume that they expect a long-term benefit that will exceed that figure. Why would they put in £50M if the expected return would be less? Let?s assume £70M.
But here?s the bigger point, why do they help fund it at all? If there truly are no other corporate options, Tesco would be bidding against themselves. Why not pony-up something significantly less just for good faith. Why not £10M? EFC?s only leverage has to be that we can take the project elsewhere. That would imply the threat of other options. Tesco isn?t being benevolent here. It?s an investment. If there is no competition, Tesco would be much happier to return 70 on 10 instead of 70 on 50.
So to me, there is no doubt that there are other corporate options out there that we don?t know about. The question becomes, have these options been thoroughly explored? I don?t know but I can say that no one on TW seems comfortable with that prospect. Perhaps we are just being left in the dark but the lack of light and the exclusivity thing surely drives the conspiracy theory doesn?t it? There are other options.
Toffee Texan, Posted 26/07/2007 at 19:37:45
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2 Posted 26/07/2007 at 20:56:23
The company I used to work for were only allowed to build an extension on their premisis if they ’bribed’ the local residents by building each of them a conservatory on their house, and paying off the police by buying them a speed camera, and only then could they expand. Tesco saw an opportunity in Everton, to get into Kirkby and provide Knowsley council with one over Liverpool Council.
That’s possibly why there will be nobody else willing to match the Tesco deal, can’t think of another company who would want the same out of the deal that Tesco do.
3 Posted 27/07/2007 at 11:13:35
Ofcourse Tesco are compeating/bidding against themselves.
They want a supermarket in kirkby as there aren’t any large ones. they need a reason to build on. make more than one use of the land. hey presto Everton. ofcourse they’re make a return on the money invested. I just don’t buy into the fact where in a one horse race .
4 Posted 27/07/2007 at 15:08:50
"Reports in a number of news outlets today have stated that Tesco will fund £50m towards the cost of a new stadium for Everton FC. Tesco wish to point out that the intention would be for the proposed stadium funding package to be derived from the value generated by the overall retail led development scheme not as a result of direct funding from Tesco."
5 Posted 27/07/2007 at 16:02:25
Whether it is 50M up-front, out of pocket or not I don’t know. But for the stadium to be built by 2010, it would seem that there are in for 50M. The bills have to be paid. Perhaps they are taking on debt and repaying with the development proceeds but they are still in for 50M and will have to generate a return greater than that (plus interest) to avoid a loss.
All - So is Tesco the only corporate player in the UK that can benefit from such a development? My gut says no and so do the economics.
Shaun - Your oil man comment, while off the cuff is ironic. I sent an email to our local NBA owner (high tech billionaire, not oil) to suggest his consideration of such ownership. Frankly though, I doubt BK is looking to sell and I think this stadium deal is evidence. I think the any possible deal to buy the club would be more valuable to the buyer if they were in on the development of the new grounds from the onset rather than buying it in progress or complete.
6 Posted 27/07/2007 at 22:07:17
7 Posted 28/07/2007 at 10:13:03
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1 Posted 26/07/2007 at 20:36:18
Secondly, well, I think you’re obviously right to some extent. Although: it might just be that to get the whole plan through including all the advantages for Tesco, Everton needs to be a partner and needs to move to Kirkby (a binding condition for Knowsley). Everton does not have the money at all to pay for its own stadium, so the only option for Tesco to get the whole deal working is to pay a big part of the stadium. If Tesco would offer 10 million, Everton would say something like "thank you very much, but we cannot come up with the additional 40 million or so, so we have to decline". That’s why they’re offering 50 millions, not 10 millions.
But anyhow, you’re mainly right. Simple economics suggest that in an open market, others should be willing to invest about the same sum of money. Thing is that seemingly these parties never managed to make a credible offer to the Everton-board. Or perhaps that BK and KW are having these partners as a secret back-up. Question is, are we willing to take that chance?