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Rights Issue

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With the news that the club has supposedly raised another £14 million via a loan, surely the time has come for the Board of Directors to at least explore an untapped source of funding via a share issue.

I am not well up on these matters but I am a small shareholder and would be willing to increase my investment in these times of almost zero interest on deposit accounts. I am sure others who are not shareholders would be willing to put up modest amounts for a stake in their club.

What do others think?


Andy Riley, Widnes     Posted 23/08/2010 at 21:16:00

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James I'Anson
1   Posted 23/08/2010 at 21:52:31

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Bill and the board will not dilute their shares. What they don't realise though is that the longer they're in charge, with zero investment, the weaker and less valuable the club will become. They will eventually inadvertantly devalue their own shares but not dilute them. Ultimately still in charge and train set still intact.
David Hallwood
2   Posted 23/08/2010 at 22:00:36

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It's got to be the way forward Andy, and if another premier team does a Portsmouth, UEFA will probably push for a German solution to stop Football clubs overspending and leveraged buy-outs
Christopher Brierley
3   Posted 23/08/2010 at 22:27:08

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Its another loan from Investec. £9M of it is going to pay off the last loan we had from them last year and the rest is apparently so ive heard from people ITK is going towards servicing the increased wages of the new contracts that have been negotiated with existing players.
Colin Gee
4   Posted 23/08/2010 at 22:58:25

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Sure I read it somewhere that the loan was to cover the SKY TV money that all Premier League clubs get, which is now paid in stages rather than in one lump sum.
Jay Harris
5   Posted 24/08/2010 at 00:26:33

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Andy
I myself have asked this question a thousand times.

A rights issue while theoretically diluting shareholder's holdings should yield sufficient benefit to more than increase the value given up on the rights issue.

This is why it is total bullshit for Kenwright to say he has been looking for investment 24/7 and yet will not consider a rights issue.

For a start the funds generated by a rights issue could reduce or eliminate our debt thus freeing us of the sizeable interst charges the club has to make every year and therefore generating income

I would consider making a sizeable investment in shares in the club but not while that lying halfwit is in charge.
Eric Myles
6   Posted 24/08/2010 at 02:11:07

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Jay, I don't think the issue is diluting the value of the shares but the percentages of ownership will be diluted, possibly leading to Bill no longer being able to play the role of The Fat Controller.
Ste Traverse
7   Posted 24/08/2010 at 02:36:09

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Eric, If Kenwright won't dilute his shares because it would mean him losing control it puts the argument to bed that he has the clubs best interests at heart, a line that gets trotted out regualry by his fans/supporters.
Matt Traynor
8   Posted 24/08/2010 at 04:29:26

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Colin (#5).

Sky Domestic Money (i.e. from UK subscriptions) is paid in 2 installments - August and January.

It is the Overseas revenue that is now paid monthly. That total amount is around 1.8bn over 3 years, the previous deal was 625m over 2.

Post-Portsmouth, that money is paid in installments to better allow clubs to mis-manage their finances. I think the increase per club was about 20m per season. All clubs get the same - there's no performance component of the overseas revenue (despite the obvious domination of the media whore teams).

Eric (7) Dilution of shares or value. The value of the share is based on the perceived value of the club, and the number of shares within. Everton recently had 35k shares (Johnson increased I think), which had a "nominal" value of around 1.5-2k each, depending on who you bought from! If you get money from a rights issue for an indebted entity, you may reduce your debts, or (if you spend more on transfers) increase your liabilities. Neither is unlikely to materially affect the value of the entity. Remember a lot of assets have been sold off, or sold on lease-back. Therefore a rights issue would materially affect the value of existing shareholdings, be you BK, or Joe Public.
Liam Reilly
9   Posted 24/08/2010 at 05:39:26

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I would certainly be interested in some shares, if the oppertunity arose.

I remember a while back on Toffeeweb a businessman supporter (whose name escapes me), asked for potential investors as he was contacting the club directly, anyone know the outcome of this move?
David Thomas
10   Posted 24/08/2010 at 08:54:55

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I think you will find that this is a very good idea in theory. However, when it comes to people actually handing over their hard earned money for this scheme it could be quite a different story. Also, this might be a short term answer for the club if a significant amount of people actually did participate however, i really can't see how it would raise enough money for the club to develop the stadium, build a new stadium and invest heavily in the first team squad etc which is what every seems to want and the club to break the "glass ceiling".
Karl Masters
11   Posted 24/08/2010 at 09:57:05

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This is a great idea, but....

Even if 10,000 fans paid £1000 that would 'only' raise £10m - hardly enough to dominate the world - in fact it would only pay Arteta's wages for 2 years!

And that, my friends, is the whole problem - PLAYERS WAGES.

Football Clubs have never had so much income. 10 years ago Everton FC's turnover was £25m. This year it could well hit £100m with that extra overseas TV money and yet we still hear the Club is 'skint'. It's virtually all going on players' wages - something like £65m this coming year by the look of it.

Until somebody steps in and stops the Chelseas, Man Citys, Real Madrids of this world from spiralling wages and transfer fees upwards this will never end.

We need something akin to some of the American sports i think, but getting it in will be very difficult as the biggest clubs have the biggest voices and want to maintain the staus quo.

I'd like to see Clubs limited to spending 40% of their income on wages and 40% on transfer fees. Then ticket prices could come down and stadia could be improved still further. It's a shocking indictment of football that in the last 10 years next to nothing has ben done to Goodison and yet the Club's income has been approaching HALF A BILLION QUID in that time.

Eric Myles
12   Posted 24/08/2010 at 10:18:56

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Matt (#8) I don?t dispute that the value of the shares will be diluted but I just don?t see that as the problem which is BKs percentage holding will be diluted giving him less power at shareholders meetings.
As Karl (#11) says the share issue would have to be a significant number to get in any reasonable amount of money. If the number of shares were doubled and their value halved as a result the club would get around 35 million Quid and BKs personal holding would fall to around 13%. Even with the shares his mates on the board own they would still total less than 50% of the total new issue, thus putting control of the club into the hands of the new shareholders, assuming of course existing board members don?t buy the new issues.
Ste (#7) I don?t think anyone beleives that line of BS about ?clubs best interests? do they, not after Kings Dock.
Roberto Birquet
13   Posted 24/08/2010 at 14:37:43

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With the news that the club has supposedly raised another £14 million via a loan,
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I understood that most of this was to pay for a previous loan. What do the TV ads say: "roll it all up into one manageable payment". Of course, that's cheery adland bollox, but I do not see how we can call this "another" £14 million.
Roberto Birquet
14   Posted 24/08/2010 at 14:39:52

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Otherwise, yes. A rights issue would certainly be good for the club, and as Jay says: the major owners would have a smaller share but of a bigger entity. We win (for a monetary price), but they don't lose too much.
Roberto Birquet
15   Posted 24/08/2010 at 14:42:06

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Ste Traverse
7 Posted 24/08/2010 at 02:36:09
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Eric, If Kenwright won't dilute his shares because it would mean him losing control it puts the argument to bed that he has the clubs best interests at heart, a line that gets trotted out regualry by his fans/supporters.
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If...
and it does not seem Eric is one of those supporters. So a moot point.
Ste Traverse
16   Posted 24/08/2010 at 17:03:29

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Roberto.

I wasn't suggesting Eric was one of his supporters. So a moot point.
Dan Brierley
17   Posted 24/08/2010 at 17:37:43

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"Eric, If Kenwright won't dilute his shares because it would mean him losing control it puts the argument to bed that he has the clubs best interests at heart, a line that gets trotted out regualry by his fans/supporters."

If Kenwright does dilute his shares, who exactly do you think will run the club? And how is that going to improve the situation? I prefer a total buyout by someone who can give us what we need. Dilution of shares is also very unattractive to potential buyers, as most want complete ownership.

We don't have billions in share value. A share issue could probably raise £10 million which will get us a £7 million pound player and his wages for a year. What happens next? Keep diluting? How is that a sustainable business model?

Now I understand that people dislike the guy, and it's well documented. And they are entitled to it. But is it really much interest to continually repeat the same things in every debate?
Ste Traverse
18   Posted 24/08/2010 at 18:21:41

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Dan, you were all for Kirkby if I remember rightly and kept repeating the same things in that debate. Usually the lies and bullshit that was coming out of the club.
Dan Brierley
19   Posted 24/08/2010 at 19:08:14

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I dont think it was lies or bullshit to be honest Ste. I knew this would be the situation if we do not move to another ground. Get 10 new chairman in, it makes no difference. A new chairman isn't magically going to double our turnover by staying in Goodison Park.
Ste Traverse
20   Posted 24/08/2010 at 19:34:38

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I would say the words "world class arena, effectivly free, and with the best transport links in the UK" were lies and bullshit, Dan. Particulary when the true facts came out at the inquiry.
Dan Brierley
21   Posted 24/08/2010 at 19:43:32

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Like I said Ste, you have your opinion and I respect that. Don't really need to get into that debate now. The fact is that today we have no money coming in as all our income is swallowed up buy paying our players more in wages. I don't see how a new chairman will change that without loading us with unmanageable debt.
Jay Harris
22   Posted 24/08/2010 at 20:04:21

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Dan I dont see how you can say that all the income is swallowed up in wages.

In the 2009 accounts total employee costs (includingall admin staff etc.) are 49 million (wages ans salaries are only 43.5 million) out of total operating costs of 86.5 million.

Almost 2 million and a similar amount last year went in costs associated with DK.

So to explode the myth wages and salaries are only HALF of operating costs.

The total wage bill including giverment cost is only just over 60% of total income of 80 million.
Eric Myles
23   Posted 25/08/2010 at 02:18:15

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If Kenwright does dilute his shares, who exactly do you think will run the club?
---------------------------------------------------

The person or group who buy the majority of the shares, the same as if the existing shares were sold.
But as we know this will not happen because the existing board members do not want that.
Darren Dempsey
24   Posted 26/08/2010 at 06:55:39

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What on earth is going on with our beloved club? What are the Everton Board doing to the club we LOVE? Borrowing £14M and not having a penny to spend on players!

I thought we were a massive club until this summer's transfer activity, getting freebies and unknowns! We are unable to complete with so-called lesser clubs in the transfer market!

The Gosling fiasco... we are becoming a Joke! It' s time for a new Board.

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