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In My Liverpool Home

By Jay Harris :  17/07/2009 :  Comments (44) :
A lot of nonsense has been written lately about Merseyside not being attractive to potential investors in Everton FC and that is one of the main reasons the club remains in the same hands... because the man who has been "looking for investment 24/7" for over 8 years and believes we need "a billionaire" to take the club forward.

I personally believe we do NOT need a billionaire, we just need a boardroom of capable businessmen with some marketing nouse and a sound business plan to support the most successful manager and squad for over 20 years. But that's beside the point I want to make.

Opportunities abound in life and having been born and bred in Liverpool I see the current City outlook as the most exciting it has been in my lifetime. Obviously big commercial investors like Grosvenor etc. do too because their investment is zillions more than it would take to buy EFC. So there is ample evidence that Merseyside is not the carbuncle some people like to make out. So obviously it is not the City deterring investors.

But "it is not London" I hear you say. Well neither is Villa, Portsmouth, Man City, Sunderland or Newcastle!! Secondly let's expose another myth put out by some eminent chairman of a famous football club that "Only Newcastle supporters buy shirts." Now if anybody has observed the naked fat bellied Geordies you might think the last thing they do is buy shirts!!

Fans buy kit (Including mugs, pens etc etc.) as an expression of their feeling for the club and according to Robert Elstone there are 19 million Evertonians out there so there's another attractive statistic for "potential" investors as it is evident our marketing has significant potential.

But "Liverpool are in the same City", I hear some say. Have any of you heard why there's a street full of restaurants or why Bees gather round the honeypot? Liverpool (the City) is a famous footballing capital and not just because of the Reds and the fact that a city has two teams certainly didn't deter buyers from investing in Villa and City. So why haven't we been snapped up?

Some say if they had been rebuffed by Kenwright and his buddies, we would have heard through the media... but It was only reported recently that Lerner was interested in buying EFC before he plumped for Villa — and that's taken about 5 years to hit the media!!

Having made some enquiries of my own, I can say without prejudiice the purchase of EFC is very complicated and is being managed by Earl and Green. So draw your own conclusions on why the 4th most successful club in the Premier League remains unsold after 8 years!!!

Reader Comments

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Derek Thomas
1   Posted 18/07/2009 at 07:48:34

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The World can be divided into two; those you don’t have to tell and those you can’t tell, be it not saying please and thank you, all the way up to and past murder, the facts surrounding EFC. being somewhere in the middle. Some people just don’t want to know.
Chad Schofield
2   Posted 18/07/2009 at 08:53:16

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Yes, but but but Portsmouth’s got a coastline to park yachts (WTF!) and the other’s have new stadiums or their stadium has had more maintenance, or they don’t play in blue or they don’t come out to the Z-Cars or have two players with afros... that’s the real reason.

Nice article.
Steve Hogan
3   Posted 18/07/2009 at 09:25:44

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Jay, I acknowlege your points but then you fail to say who or what are your sources are "having made some enquiries of your own"?

Can you please enlighten us as to who is your mole at boardroom level who told you that Earl and Green are really pulling the strings?
Jay Harris
4   Posted 18/07/2009 at 10:29:51

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Steve, can I just say that if you made an enquiry with the Broker’s office, it would enlighten you no end.
Kevy Quinn
5   Posted 18/07/2009 at 10:49:53

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Jay, 100% agree. I come from Belfast and travel over quite a lot with friends for home games. Liverpool has changed immensely over the last few years and is right up there as being one of the most vibrant cities in the UK. So much so that I hate when my missus tags along to the odd match as, every time she comes over, the city centre has more and more shopping developments. She goes crazy spending. So the argument that it's only Liverpool, that's why people won't invest doesn't wash with me, because people clearly are.

We have history, fan base, best team outside the top 4 and best manager arguably in the league. When clubs get bought like Pompey, Sunderland etc, I find it strange that no one has bid for us. Then we move on to City; they for me represent everything that is wrong with outside investment. I literally detest them with the way they are going about their transfer business.

I just read this morning that twat of a Chief Exec, Cook, has said Sparky has always loved Lescott. Really???? So much so that when he was manager of Blackburn he never tried to buy him from Wolves?

Now that he is one of the best defenders in the league and he has you and my money from oil to spend, he thinks he can just throw cash at people and they will bow to him. Whole thing stinks to me and hope they win nothing.

I agree wiyh you that all we need is people with brains and sense and not mega pots of gold. With the amount of money from Sky and some business nous and good advertising deals we could be right up there.

Dave Brierley
6   Posted 18/07/2009 at 13:45:29

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There’s some truth in what you say, Jay, but it appears that Earl and Green are pulling the strings here and that’s not going to change. Where I differ with you is that I think Kenwright was desperate when he engaged with these two and, even if he wanted to, there’s no way out until they execute a sale on their terms.

As for "we just need a boardroom of capable businessmen with some marketing nouse and a sound business plan", I think those days are long gone. To be in the top four, or even compete consistently to a high level in this league, you need much more than this. Earl & Green are both of the calibre you suggest, but wouldn’t buy EFC for a big clock. Where are the these businessmen you suggest?
Paul Gladwell
7   Posted 18/07/2009 at 14:00:30

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Great article, Jay, but it will make no difference to Bill's fans. You mention ring-fenced, Fortress etc and it just gets blanked out.

I don't like calling Evertonians but shouts about "rather finish second with Bill than sixth with a Russian billionaire" are daft. Say that to City fans now, would they rather have good ole City boys Swales and Franny Lee than what they have now?They are all running around like dogs with two dicks and who can blame them? They have had far more shit than us and if it was us we would be the same.

Get one thing straight: Bill is a businessman, end of. Can you blame him for wanting to wait 'til Kirkby comes before he sells as he will make a bigger profit? But his supporters just don't get it, but this coming season they may just when it’s too late.

Nathan Ward
8   Posted 18/07/2009 at 14:27:04

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Paul, I think you have a slight misconception.

I don’t think that there are actually any Kenwright fans around. There are those (myself included) who are grateful for him being part of the group that finally got rid of Agent Johnson and for his faith with Moyes during his darker days.

I think there are those (a fair amount on ToffeeWeb) who dispise/hate him for varying reasons... and then the rest who don’t really see the other options.

There are lots of reasons other clubs have been bought before us. Some are logical, ie based in London, have a nice shiny stadium, are a one city club etc. Some I don’t know. Why the Abu United Group bought City over us I don’t know. Yes they have a stadium but they don’t own it. They are far more overshadowed by rivals than we are, and showing by the £100m+ they have spent so far to try and get close to us, not even Utd, shows that they have to put a lot of money in which could have bought us a ground.

For my money if a major money man wants to buy the blues yet got biffed off by Kenwright, I believe it would be all over the media. A couple of sly stories in the Echo would put all sorts of pressure on the board to get Kenwright to sell.

So far, most of what people are using as facts in arguements are just hearsay. The only facts I know are that if Abramovich & the Abu United Group leave their clubs they will be far more serious problems than we are
Tony Marsh
9   Posted 18/07/2009 at 14:45:17

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Jay, I have been arguing this point all week in different threads. Liverpool has indeed changed beyond all recognition over the past few years. Every week there is a new project on the go somewhere in town. Money has been pouring in over the past ten years and the whole city has a feel good vibe.

There are some out there who think we are still in Maggie Thatchers 1980s and the Toxteth riots are still in progress. These very people are Evertonians and it worries me how so out of touch they are with reality.

Every major city has its blackspots and its share of social problems, London more than most, but these reasons don't seem to hold other clubs back from finding investment and redevolpment of thier stadia. I mean Hull is an absolute Khazi of a place but they have got a brand new state-of-the-art ground ...
HOW come?

Sunderland, Bolton, Wigan, Derby, Wolves — all these clubs have brand new modern stadiums and all are from cities/towns far more impoverished and less famous than Liverpool.

If this is the case then the investors won't come because of Liverpool's social problems is a load of bollocks and shame on the likes of Alan Kirwin and co for saying so.

The reason Everton lag behind every other club in the country in terms of redevelopment and finance is because of poor leadership over the years. Kenwright was a big part of the Johnson era and is still leaving a stench about the place all these years later...

Do us all a favour, Kenwright... PUT UP OR SHUT UP! Or better still... FUCK OFF!!!
Nathan Ward
10   Posted 18/07/2009 at 15:03:56

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Tony, you are right — Liverpool has changed a lot, although (and as someone who works out of the city, I feel I can make this comment) the city's image is still tarnished. However, that does not always prevent people from investing.

The problem that EFC have is, are we are decent investment? We don’t sell many games out. We pay very little (comparatively) to get into the games. We have very few corporate types who put the money in. We don’t sell a massive amount of merchandice.

In all truth, if you were not an Evertonian, would you recommend to Bill Gates et al to pump £500m+ into us?

And sorry but I would rather not have Pride Park, DW, Reebok or Molyneux as our ground. Undecided about the Stadium of Light though......
Paul Gladwell
11   Posted 18/07/2009 at 15:07:41

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Natahan, some good points but let's get it straight: Bill was part of the Peter Johnson era; he was also, if I am right, on the Dr Marsh board too. And I will tell you this, he will sell within months if Kirkby goes tits up.

He is a liar, end of. Why do you think we have had so many Chief Execs in his leadership?

So what do you want to do if you cannot trust anyone? because there are not many billionaire blues out there.

Also, as has been stated before, Randy Lerner looked into buying us and that was not in the Echo at the time, mate. People are just fed up of his lies and balls-ups — and just around the corner awaits his biggest one yet.

Paul Gladwell
12   Posted 18/07/2009 at 15:24:47

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Actually there is one billionaire blue out there, who has never given a flying fuck about us until he saw the possibility of spreading his world wide shopping cancer on Kirkby.
Nathan Ward
13   Posted 18/07/2009 at 15:23:00

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Paul - in fairness I’m not really trying to defend him! I agree he has to shoulder some of the blame in the years that he was a director and we were rudderless.

That said, as anyone in high management will tell you, minority shareholders (as he was) have no power and the man at the top is in control.

Again though, why we’ve gone through so many CEOs I have no idea (again though Dunford was an idiot as was Wyness, albeit appointed by Kenwright!!)

As for Lerner — at the time of his purchase, Villa would have been the better option for a non-Evertonian. Club sold on the cheap, ground perfect, little debt and by far the biggest club for 100 miles each way.

Assume the ’biggest one yet’ is a reference to DK?
Jay Harris
14   Posted 18/07/2009 at 15:34:25

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Nathan, I disagree on 2 points.

I. If we were serious sellers (RIGHT NOW) we would get the brokers to hard sell Merseyside (European Capital of culture... ring any bells?), the marketing potential (remember Elstone quoting 19 million Evertonians?).

2. We do not need £500 million pumping in. Assume the debt (around £75 million); buy out the majority shareholding (estimated between £30 and £50 million); get around the table with Dumb and Dumber from the RS and the City council and pressure them into supporting a groundshare arrangement because it makes total economic sense — particularly with the World Cup potentially coming to the UK.

Let's say we could build a truly world class stadium with 1/3 share with the council and the RS for a cost of £150 million.

Alternatively, as demonstrated by Toffees who know what they are talking about, redevelop GP for £100 to 150 million. Give Moyes £25 million for starters and before you know it we’re cooking with gas for around £400 million, most of which would be spread over the next 3 or 4 years.

Sold to the man with the big tin hat!!
Jay Harris
15   Posted 18/07/2009 at 15:49:22

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Sorry, Freudian slip... that should have been £300 million but hey, who would argue over giving Moyesy an extra £100 million to spend?
Nathan Ward
16   Posted 18/07/2009 at 15:49:37

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Jay - I like your thinking!

Couple of things though, unless there is a major shift in policy neither the RS or the council will seriously go into a ground share with us (as much as I would like it to happen).

Also giving Moyes £25m will barely keep up with Sunderland in the transfer market, let alone the (puke) Big 4 and the wannabes at Middle Eastlands.

For us to move on as a club/team we need to be able to splash £50m in a pre-season at least.
Nathan Ward
17   Posted 18/07/2009 at 15:55:25

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re Freudian slip - I guess Tony Marsh would have a word to say about that.......
Jay Harris
18   Posted 18/07/2009 at 16:47:15

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Nathan, I think Tony would want a Freudian slip for his missus. (Sorry, Marshy — couldn't resist that one.)
Dave Wilson
19   Posted 18/07/2009 at 20:37:12

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You're right of course, Jay, these people who run the city down have been watching too many Carla Lane and Alan Bleasdale re-runs on UK Gold. Half of them left the city over 20 years ago and can't imagine the place has made progress without them.

Paul Gladwell, That wouldnt be the real culprit your identifying there, would it?
Neil Pearse
20   Posted 19/07/2009 at 03:18:54

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Jay, you are being very mysterious about this ’Green and Earl are in control’ thing. Could you actually just spit it out and tell us what you know?

It actually wouldn’t surprise me or anyone else I assume if they have an important role here. After all, Earl is in fact a major shareholder and Board member, and there’s been no real secret that Green has been close to Kenwright and may even have guaranteed some loans for players.

So Jay — a bit less of the innuendo please, why not just tell us what you know?
Neil Pearse
21   Posted 19/07/2009 at 03:23:16

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By the way, I agree with you Jay and others that the state of Liverpool itself is unlikely to have much to do with Everton not being invested in so far.

Shares have prices. Sure, the absolute revenue potential from punters is less at Everton than say at Spurs (given the relative numbers of people and their relative wealth). But that’s why Everton would cost less to buy.

The attractiveness of an investment depends on the potential size and reliability of the upside (i.e. the difference between current price and potential future value), not on the absolute revenue of the business.

Everton should therefore be quite attractive if you believe that it is currently not fulfilling its commercial potential (and all the future potential will not be simply factored into the sales price). This means you can buy the club for £x today and increase its value to say £2x in a few years.

The rather obvious current deterrent for an investor is the new ground issue. Without knowing what the cost of this will be, any new investor simply does not reliably know the difference between current price (including necessary new ground investment) and future value. And, not knowing whether and when we will have a new ground or what it will be like, any new investor simply does not reliably know the extent to which they will be able to extract more commercially from the club.

Has there been a case of a new investor buying a club which obviously needed a new ground, just before knowing what that ground would be and how much it would cost? I can’t think of one, but maybe there has been. The endlessly cited new investor examples of Villa, Newcastle, Sunderland etc. are not strictly relevant because they do not have the new ground issue.
Jay Harris
22   Posted 19/07/2009 at 15:07:51

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Neil... I would love to say more but I can't. I am sure you will understand given your vocation. All I will say is look at my response to Steve Hogan and draw your own conclusions.
Neil Pearse
23   Posted 19/07/2009 at 15:40:15

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Fair enough Jay.

I assume then that the scenario you are suggesting is that Green / Earl have been bankrolling the club in various ways over the last few years (mainly in terms of overdraft and loan guarantees I assume, rather than direct investment), and that their return comes in some form if and when Kirkby comes through.

So the ’return’ on Kirkby will then come in two forms to Kenwright / Earl / Green. A ’direct’ return to Kenwright and Earl when they are able to sell their shares to a new owner (at a higher price because Kirkby will make the club more commercially attractive). And an ’indirect’ return to to Earl and Green somehow through the retail side of the Kirkby project. Is this it?

The mystery is in this last bit. Particularly for Green, one of the UK’s premier retailers, it is hard to see how he needs either Kenwright or Everton to get into any retail project - he can take his pick anyway, and certainly in the current economic environment his participation is likely to be welcomed with open arms.

Earl is of course a much smaller fish than Green. His comment on ’minority shareholders’ recently does suggest that he is anxious not to be bought out at this stage. Before Kirkby presumably. But in that case he could be just hoping to get a higher direct return on his equity holding.

Jay, you are at liberty of course to confirm or deny any of this based on what you know!
Eric Myles
24   Posted 19/07/2009 at 16:15:46

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"Why the Abu United Group bought City over us I don’t know."

Well Nathan, it’s just as simple that they were for sale and Everton aren’t.
Michael Kenrick
Editorial Team
25   Posted 19/07/2009 at 18:06:43

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Neil: A ’direct’ return to Kenwright and Earl when they are able to sell their shares to a new owner (at a higher price because Kirkby will make the club more commercially attractive).

Ah... the penny finally drops!

Neil Pearse
26   Posted 19/07/2009 at 18:12:26

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What Michael? Referring to yourself I assume?

"More commercially attractive" does not mean some nonsensical net asset value voodoo economics - it means that over time the club will generate more revenues over cost with Kirkby than without. That’s why someone will therefore pay Bill more for his shares.

Glad that you are at last on board with standard methods of company valuation! And presumably that you now think that Kirkby is likely to be good, at least commercially, for the club?
Jay Harris
27   Posted 19/07/2009 at 18:36:21

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I thought you’d got it until your reply to Michael.

Leaving EFC with over 200 million debt will not make the club’s income exceed expenses.

What will pay the extra interest on the loans let alone generate extra income?

Michael Kenrick
Editorial Team
28   Posted 19/07/2009 at 19:17:41

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Jay, I agree. That’s the amazing thing Neil just does not seem to grasp. We’re talking football clubs here and he keeps coming back with this "standard commercial business valuation model" garbage.

Did I not read that Man Utd, of all the incredibly successful clubs, actually made a LOSS last year??? How does that fit into your brilliant commercial model, Neil? Is that the future commercial success Everton’s new investors will be buying into?

While you’re being so educational, explain this to me: How does burdening the balance sheet of a company with the incredible cost (in interest payments) of financing said company’s owners’ "investment" (to enable share purchase in the club itself) actually contribute to said company’s bottom line? I’m still struggling with that one.
Neil Pearse
29   Posted 19/07/2009 at 19:17:44

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Jay, Michael - AAAAAAAAAAAARGHHHH!!!!!!!

My only point on this particular topic has ever been that IF someone pays more to Kenwright because of Kirkby they have paid more because they think that Kirkby makes Everton worth more as a club. That’s it. Two plus two really does still equal four!

I can actually VERY EASILY believe that no-one will pay more money for the club because of Kirkby. Maybe if you run the numbers in a certain way that is how it looks. It’s all about how you forecast a largely unknowable future. In this case Bill is making a mistake with Kirkby because he will make less money personally by moving the club there.

I happen to believe the club’s financial numbers will look better with Kirkby, but, hey, it’s hardly a 100% certainty. Totally agree with you Jay that the additional debt costs relative to projected increased revenues from Kirkby will be critical. Of course. Like any other investment decision: do the future revenues exceed the additional costs?

Of course there will be additional debt from transforming GP or groundsharing or any other option - so Kirkby is not unique on this score. All options will have a costs/revenue calculation. If transforming GP brought a big uptick in revenues relative to modest costs, then Bill would be better off doing that and then selling the club.

What I cannot believe is that some moderately intelligent football investor will run the numbers on the club with Kirkby, see (as you both believe) that Everton with Kirkby OBVIOUSLY makes the club WORSE off financially, and then decide to pay more for the club anyway, giving Bill his big payday.

And I can’t believe this because I can’t believe such things as black is white and 2+2=5.

It’s really very simple. Only idiots pay more for things which have just become less valuable.
Neil Pearse
30   Posted 19/07/2009 at 19:35:46

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Michael - You are again trying to have it both ways.

You want to maintain BOTH that Kenwright is going to make a killing out of Kirkby AND Kirkby will be financially disastrous for the club.

I say rather unsurprisingly: hmmm, seems a bit odd Michael!

You used to say: well, Neil, clubs are valued based on net tangible assets so the ’Kirkby subsidy’ will lead them to pay more. As far as I can tell, you seem to have given up this line, which is good because it would be laughed at by any financial investor.

So then you say: Neil, football is completely economically irrational! So my ’standard methods of valuation’ (i.e. looking at future costs and revenues, including debt payments, nothing exotic) are irrelevant.

Okay! First of all, I think you are pushing this a bit far. New potential investors are currently crawling all over Newcastle doing due diligence after all.

Secondly, if you are right: why on earth do you think that investors will pay more when or if Kirkby comes in? You believe they are completely irrational after all, and what they pay bears little if any relation to standard forms of financial valuation. So why will they pay more? Why does Kirkby make any difference at all to what an investor is prepared to pay for Everton Football Club?

I actually have some sympathy with your ’it’s all financially irrational’ argument. There’s certainly some evidence for it! But then Kirkby is neither here nor there. It’s a crap shoot and it’s not clear why Bill is going to all the trouble if he’s only trying to maximize his own return. He might as well sell now.
Neil Pearse
31   Posted 19/07/2009 at 19:50:03

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Your points about Man Utd’s debt Michael by the way are indeed pointing out the strangeness of modern football economics - but are irrelevant to the matter in hand.

In Man U’s case, what you are claiming is the equivalent of this.

Pre Glazers, based on standard valuation methods, Man U was worth let’s say £1x M. Man U decide to move to a new ground even further outside the city. On standard valuation methods this actually makes the club worth LESS - say £0.8x M (it’s as bad an idea as Kirkby). Nevertheless, the Glazers decide to pay MORE - say £1.5x M, ONLY IF the new ground is approved.

Do you think this is altogether likely Michael, even in the admittedly crazy world of modern football finances? This is what you are arguing.
Neil Pearse
32   Posted 19/07/2009 at 20:00:37

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None of any of this means that you guys need to admit that Kirkby is a great idea. Or indeed that I have in any way proven that Kirkby is a good idea. That is not at all the point at dispute here.

I just don’t understand why you don’t say something which is very simple and very clear and might even be true. Namely: Kirkby is a very bad idea (increased debt, awful transportation, falling attendances, no major increase in corporate revenues etc. etc.), and we definitely shouldn’t do it, and the club will be worth less if we do, and the club will be less attractive to new investors, and therefore will be a bad thing for Kenwright’s personal finances.

All makes sense, no? But to go through all this paragraph and then say at the end - "and therefore will enable Kenwright to make a financial killing".... Doesn’t quite add up does it?
Michael Kenrick
Editorial Team
33   Posted 19/07/2009 at 21:05:25

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Neil, you said:

"The attractiveness of an investment depends on the potential size and reliability of the upside (i.e. the difference between current price and potential future value), not on the absolute revenue of the business."

I thought you used to argue that projected excess revenue over costs was the SOLE determinant? Now you seem to be talking asset value, which you previously me was wrong. So which is it?

"... any new investor simply does not reliably know the extent to which they will be able to extract more commercially from the club."

So how does that work then? Let’s talk about Everton (’cos they are the only club I’m interested in) and the existing investors first (Kenwright, Woods, Earl). Explain to me please how they are extracting anything commercially from the club?

“My only point on this particular topic has ever been that IF someone pays more to Kenwright because of Kirkby they have paid more because they think that Kirkby makes Everton worth more as a club.”

Exactly: asset value. Good to see you finally accept that clubs are not massive revenue cash-cows for their current investors — only when said investors realize the long-term investment by cashing in the asset value, in the form of a sale of their shares for a higher value than purchased… Or do you know of another way that Kenwright, Earl and Woods are currently profiting from their investment in Everton FC? Profit-sharing, perhaps? Slim pickings there, I’m afraid, Neil.

“Like any other investment decision: do the future revenues exceed the additional costs?”

But why would it be about future revenues? It clearer doesn’t matter to the investors whether these clubs make a profit or not. They make a loss, debt increases… so what? Just more interest payments... What matters is a long-term increase in asset value. Unless I’m missing some mechanism by which daily revenue benefits the investors directly. Remember Bill’s boast: he takes NO MONEY out of the club. So what do you know that he doesn’t know?

“I happen to believe the club’s financial numbers will look better with Kirkby, but, hey, it’s hardly a 100% certainty.”

Which is a crucial point: Why argue over something we cannot possibly know? How can that really be a factor, when in fact it is a total gamble? And as I’ve said, has no direct bearing on an “investment” in the form of a share purchase at one price, that is then held until it is sold, perhaps years later, for hopefully a far greater price.

I contend that the simple maths expounded here is the main thing of concern to Bill (and probably his fellow Board members) right now. Forget about projected future revenue, either upside or downside — I really don’t believe it matters to investors in football clubs. It cannot, simply because it is all over the map and cannot be relied upon — even if you are Man Utd.

[What perhaps might make sense in United’s case would be if the loss came about primarily through the club having to finance and pay interest charges on the massive debt incurred by the new owners. I still struggle to see how this is even allowed as it makes absolutely no sense to me in terms of the profitability of the company. Have you ever explained the financial logic of that one to us, Neil? I can see however that it could easily be part of the upside for the owners, and indeed the way that they DO in fact extract money from the club (at least on their behalf) — to finance debts that are rightfully theirs and not the club’s, while they eventually reap the benefit when they do sell their shares for a big RoI… but I digress, as I do not see any sign of this at Everton FC Co Ltd… at least not yet!!!]

“You want to maintain BOTH that Kenwright is going to make a killing out of Kirkby AND Kirkby will be financially disastrous for the club.”

No, Neil, I have never maintained that Kirkby will be financially disastrous for the club. What I’m trying to understand is why Kenwright is not selling now, and why he may be very keen to sell once a decision is reached on Kirkby.

Simple logic suggests that the deal with Tesco is very sweet for Kenwright, and for the other directors who have backed it to the hilt. Maybe it’s a private deal, outside of the EFC Co Ltd books, and therefore well beyond the prying eyes of due diligence... That’s the only thing that makes any sense. Please tell me such a conspiracy is illegal/impossible.

“Why on earth do you think that investors will pay more when or if Kirkby comes in?”

I thought that had been explained to most people’s satisfaction. The uncertainty over the stadium is the one thing that makes Everton currently a tough sell. If that’s not true, then you have to believe that Bill is holding on for some other reason… (see above!).

“But then Kirkby is neither here nor there. It’s a crap shoot and it’s not clear why Bill is going to all the trouble if he’s only trying to maximize his own return. He might as well sell now.”

Yes… except that he clearly has no interest in selling now, and that yes, he is convinced DK will make Everton more saleable. You think Yes in terms of future revenue; I think Yes in terms of future asset value, after a sweet deal with Tesco, that just happens to see Bill and buddies doing just fine into their dotage.

“None of any of this means that you guys need to admit that Kirkby is a great idea. Or indeed that I have in any way proven that Kirkby is a good idea. That is not at all the point at dispute here.”

Exactly. So why keep bringing it up? Bill’s mouth says he’s ready to sell, has been for years. Bill’s actions and all the collateral evidence says otherwise. He’s invested a lot (non-monetarily) in Destination Kirkby. What exactly does he stand to gain from it?
Alan Williams
34   Posted 20/07/2009 at 07:55:07

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Jay, again all your views expressed are so subjective and lack serious business acumen. EFC are looking for investment so we give this job to a major shareholder who has contacts in the UK and across the pond, we then have a mysterious allies such as Philip Green who is a successful billionaire who came to public notice with his purchase of the Sears Group, which he then split down and sold for a nice profit, both for himself and is backers The Barclay Family. He does the same with Arcadia and pays back its loans within 24 months plus close to a billion pounds in dividend. Green may not be well liked in the industry but he certainly has pedigree.

So we have two very successful individuals looking to pass on/sell EFC (if your mole is true). Can I ask all reasonable people — is that not good business by EFC if true??? Or do you all think whoever does this should do it for free???

Seems to me yet again you don’t live in the real world. Your love of EFC is making you blinkered as it does Bill Kenwright. EFC as a business is second class, very low income per head on all aspects — entry, commercial and retail, its assets are very small and also not guaranteed (Bellefield). Its main home, GP, needs major investment to enhance the modern game and increase its commercialism, yet the demographics of its fan base don’t give evidence that this line will be a guaranteed success.

EFC the brand, has no innovative or generic presence. “The People's Club” is too insular, suggesting just a local support. “History” maybe adds a little bit of goodwill to the purchase price, but overall means very little. Liverpool FC have the City name and logo, so the brand outside the UK had no immediate identity.

All these aspects add to the commercial value and we have the whole pack whilst others like Man City and Villa only have parts. EFC needs to invest around £200/400 million both on buying the club, clearing the debt and investing in a stadium and players just to get on a level playing field with the other chasers, let alone the top 4.

As I have said before, supporting EFC is first class, as a business it's second class at best!! Last point, Sir Terry doesn’t own Tesco he is an employee (PAYE); he earns a good wage — around £6-8 million per year. As stated on several other posts, unless you bridge that major gap in hard cash then you can bleat as much as you wish but it doesn’t change the fact the EFC is not a good investment, the facts clearly show us this. COYB

Alan Kirwin
35   Posted 20/07/2009 at 10:30:44

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Neil P, Alan Williams — why bother wasting your time interjecting into this stream of self-congratulatory anti-Kenwright nudge-nudge, wink-wink crap.

How outrageous of you to mention the fact that Philip Green is a successful billionaire and one of Britain’s most business-savvy gentlemen. Have you lost your mind?

You and I are missing the point. All those people who know Kenwright personally and have dealt with him over years, if not decades, are totally wrong. It is Jay Harris, Ciaran McGlone, Michael K and Tony Marsh who really KNOW Kenwright (or whatever today’s unpleasant pseudonym is for him).

I mean, come on, how on earth can you talk about someone you’ve only known for 25 years, when someone can find out the true facts in a pub with a nudge and a wink and rattling the same pea around the same jar of destiny.

Kenwright may not be businessman of the year, or even chairman of the year. But some fans remember where we were 10 years ago and know that things go DOWN as well as up. For evidence just look at teams in the championship AND League 1 who were in the EPL very recently.

What a long stream of self-delusional nonsense.
Kevin Tully
36   Posted 20/07/2009 at 12:20:32

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The current owners of Man City have spent nearly £200m since taking control of the club last summer. Who would buy EFC and spend these amounts of cash, as well as funding a new stadium ?

World markets have crashed around our ears, and we are all hoping for a new investor to break into the top four. I don’t think this is going to happen anytime soon. We all look on enviously towards Man City, Chelsea and Real Madrid and wish we had just half of their purchasing power, and that’s probably why many posters want rid of BK.

If you have trouble flogging the Geordies for £100 mill (one-club city etc) then you would say EFC are not an attractive business proposition. As we all have blue-tinted specs, it is difficult not to believe someone should want to buy our club. Maybe the numbers just don’t add up?
Jamie Rowland
37   Posted 20/07/2009 at 15:26:53

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Eric Myles wrote:

"Why the Abu United Group bought City over us I don’t know."

Well Nathan, it’s just as simple that they were for sale and Everton aren’t.

I disagree somewhat with Eric’s response to Nathan.

The Abu Dhabi group didn’t look to purchase Everton because of several factors — one of which may (or may not) have been because we are not for sale.

Let's start with Mr Kenwright — he’s like marmite at the moment. BK put a lot of revenue into Everton to buy his shares. Understandably he wants a return on that risk. After all, he has worked hard to turn himself into a millionaire; why should he give it up for the sake of keeping others happy?

The fact that he is an investor is just one part of the puzzle, the second part is that he is also the Chairman of the Club... a director of decisions that affect all things Everton. That leads me to his personal assets that he borrowed against in the past to allow him to pump more money into the club. I would not imagine at this time that he would have been happy remortgaging his family home for Everton shares. All likelihood is that instead of buying a bigger stake in a debt riddled business, he probably added to that debt. A director’s loan.
In a business that turns over the amounts of money that Everton does, the director’s loan can be a curse. Let's say BK put in £2m as a director's loan (after all it is a limited company). He can, without any real challenge, charge that loan back at any amount of interest he sees fit. So I think that there are two things that a potential buyer has to overcome here.

1. BK’s investment cost (let's say it doubles) CLUB PRICE £40m
2. Any directors' loans outstanding on the business (all directors, not just BK). CLUB PRICE £50m (in total)
Then there are the other investors — again, all in it to win it... let's say it costs another £20m to buy them out of their seats. CLUB PRICE £70m

Now we move on another step. Apart from players, Everton has three assets. The stadium and two shops (currently).

The stadium, sadly, is mortgaged (and if I recollect, for a fee of £28m). I am assuming there is no cost for paying the mortgage early (but seeing as its tied to season ticket sales, there probably is). Straight away, any deal for the club, as it includes assets, will involve a banking institute. No doubt the bank(s) will rather see the loan repaid (in the current environment) than a swapping of loan owners... I have grossly estimated here — but lets say the price of the club increases to £130m with the mortgage. CLUB PRICE £130m.

Any other debts the club has at this point (Overdrafts,other loans) will involve other investors and other banks. I hear a figure in the region of £44m (exlcuding mortgage). Thus, the CLUB PRICE is now £174m. An estimate... perhaps I am massively incorrect.

Then there is the STADIUM debacle. Whatever happens here, the club will have to fork out something. If a new investor comes along, he/she may not be interested in any deal with Tesco. Thus I am going in large here and saying that it would costs £150m to £200m to service the cost of a new stadium. CLUB PRICE is now £374m (roughly).

The investor hasn’t even put aside money for rebuilding/growing the squad yet.

So, why did they buy Man City? — they don’t even own a stadium.

That's just the point. Man City are just a club. A collection of workers, players and members who run independently of many assets. They simply ’borrow’ a stadium at a cost roughly equal to season ticket sales. The club itself consists, financially, only as a group of players.

So on the upside, Man City was a much cheaper option. They paid somewhere closer to £100m to Shinawatra for the ownership rights. That, in my reckoning, leaves £274m to spend on whatever the ’club’ needs... Thus, its a much more attractive toy than Everton FC.
But as I have said, I could be wrong...

Jamie Rowland
38   Posted 20/07/2009 at 15:52:11

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Another much as I hate agreeing with Jay Harris...

The local environment is seldom something that an investor will consider. More to the point, he will look at the current finances and the finance model and see if it is viable. He will then calculate whether it can be manipulated to make more (or act as a tax dodge!). If the beneift outweighs the cost, the location becomes irrelevant — the business of football has a captive audience, it matters little that the stomping ground is in a ’not-so-affluent’ area.
Jay Harris
39   Posted 20/07/2009 at 15:57:47

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Alan Williams. If I lack serious business acumen I must have been a very lucky man over the last 38 years.

I am not questioning Green and Earl’s motivations nor qualifications I am simply saying they are not in the best interests of EFC.

Is it living in the real world to support a move that few can see any economic logic in for EFC and it’s future?

You question my business acumen but I defy you or any other posters to explain how Kirkby will improve EFC’s finances.
Richard Jones
40   Posted 20/07/2009 at 18:06:09

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A useful link of KEIOK, I see Bill is now just reusing to answer basic questions now. I think his silence on this question of how much tells us everything we need to know.,cntnt01,detail,0&cntnt01articleid=261&cntnt01returnid=15
John Roberts
41   Posted 20/07/2009 at 19:46:35

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Jay, Your first two paragraphs said it all, mate!! Only thing to add TO THEM is that Mr Kenwright and his gang don't want to sell!! Quicker thet go, the better for us and DM!!
Jay Harris
42   Posted 20/07/2009 at 23:26:31

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Can I correct one TOTAL falsehood that you and a few other posters still perpetrate.

Bill Kenwright has NOT put one penny of his own money into the club.

It is understood he remortgaged his house for about £1 million and got Gregg to buy £8 million worth of shares so Johnson could be bought out for £20 million.Not one penny of that or other investment went into the club.

Nobody has ever explained where the other £10 million plus came from to buy PJ out and some believe it had something to do with how the club debt jumped from £5 million to £19 million in Kenwright's first 1½ years of tenure. I am not saying it did but I am also not saying it didn't. I shall keep my own opinion on that one.
Alan Williams
43   Posted 21/07/2009 at 07:57:48

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Jay, I’m sorry when it comes to EFC you don’t have business logic. This is about the saleable asset which is EFC Co Ltd, you make it as a fan.

DK is completely irrelevant to my post, but sadly not yours. I state whether we redevelop GP or move to a new stadium (no matter where it is), EFC is not a good acquisition. DK is always in your slant when it comes to EFC. Let’s just ignore the location of the new stadium and look at it as “new build”.

EFC Co Ltd needs to increase its revenue streams drastically and it can't guarantee that long term on the pitch but the bank manager is prepared to listen to a solid business plan based on increased ticket revenue, sponsorship and merchandise. This is not practical at GP because it will leave a very large cash-flow hole due to reconstruction, so it's better value for re-financing to look at a new build.

This is a completely logical approach for any club to consider, especially when you look at the challenges GP holds for re-construction. That’s the simple reason why a new build is of interest to EFC, because it makes us generate more income and possibly makes us more attractive to a potential buyer.

BK, you chose to dissect every bit of information about his share capital and how much he has actually invested in to the club, why? If its his name is on the certificate then it his and his alone, even if you suggest the loan has been bounced back to the club then this too is acceptable in modern business as long as he has control of the company then he can get away with it. If he doesn’t then I can’t see other Directors allowing him to do it otherwise they would just do it themselves.

Before any company sign off the accounts to Companies House it has to be agreed by other main Board Directors way before so he wouldn’t be able to hide it as the Chairman because it’s the CEO and FD who run the company on a day-to-day basis.

I was offered between 10/15 shares 18 months ago and I was advised not to purchase them both by my FA and Blankstone Sington because they only hold sentimental value and are not considered good value for investment so if BK has a load and maybe makes a reasonable buck out of it then good luck to him. Nothing wrong with being anti-DK but you need to be realistic about our financial position, in credit card terms we are at the limit! COYB

Jay Harris
44   Posted 21/07/2009 at 14:06:13

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Alan, I’m afraid we will have to agree to disagree. I dont believe there is anything wrong with my business logic. To achieve improved income in the Premier League, you have to have continuous success on the pitch and from that exploit your marketing opportunities. Everton’s marketing efforts until recently have been nothing short of pathetic and I don't think anyone can question that.

Regarding a takeover, business logic must tell you that the ground issue has to be part of that consideration. As to the ground issue: The majority of clubs elect to develop their existing ground rather than new build because of the cost. Developing new grounds only became fashionable when the country wash awash with EEC grants hence why Kings Dock was such a unique opportunity. Now the grants have dried up, only Arsenal of the top clubs have developed a new build and look what that has done to them.

Many highly qualified posters, including Tom Hughes and Trevor Skempton, have posted on here about how GP can be developed cost-effectively over time to give anything from a 48,000-seater stadium to a 55,000-seater stadium of much higher quality tham Kirkby.

I also do not understand your business logic when you say redeveloping GP will leave a large cashflow hole... so are you saying Kirkby won't?

And as to the extra income you suggest Kirkby will generate, I would be interested to know how you come to that conclusion when we will start with an extra interest cost of between £6 and £10 million a year.

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