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A question of Value?

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Interesting article about Bernard Mullin trying to find potential buyers for the club. It suggest that the 75% stake of the top three shareholders could be acquired for between £75 and £100 million.

If this is correct, then a majority shareholding of 51% could technically be acquired for as little as £51 million and, if the debt at £44.9 million is covered by the group?s property assets, then (unless I am missing something) this would effectively mean the purchasing of a top 10 Premier League club for a net value of £6 million... that doesn?t include player valuations.

So if we do have these property assets (and that?s a big if), I fail to see why the club is not attractive to investors.

And please don?t give me "BK won't sell" nonsense. All assets in business have a selling price, it's just negotiating to that price that?s key.

Liam Reilly, Dublin     Posted 31/03/2011 at 09:25:52

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Eric Myles
1   Posted 31/03/2011 at 15:09:26

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Firstly, I don't believe the property assets are worth £44.9 mill; for starters, we don't own Finch Farm anymore, we sold it on a buy-back scheme.

The Bellefield money is already spent so that leaves Goodison and the figure I remember hearing during the Desperation Kirkby debate was £10 mill for that.

Secondly, Kenwright won't sell.
Tommy Coleman
2   Posted 31/03/2011 at 15:12:02

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Don't know how you work that out ? £6m? Don't you mean $44.9m + £51m = £95.9m. If you buy the club, you but it's debt.

Anyone selling would surely sell all of their holding, unless Bill hangs in there, so a buyer would have to spend £75m + the £44.9m debt. Around £130m.

Plus the stadium £380m, plus £50m - £100m (from a purchaser's point of view) player purchases if going for Champs League place.

Total = £450-£500m.

I think the asking price of £75m -£100m is too much really, if they want to sell the club they shouldn't be looking to make a profit because I can't see anyone buying us at these prices.
Liam Reilly
3   Posted 31/03/2011 at 15:24:52

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If the club is bought for £51 million and the property assets of £45 million effectively unwind the debt, then you have a net exposure of £6 million, before taking into account, player valuations.
Simon Jenkins
4   Posted 31/03/2011 at 15:31:21

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Eric, posting 'Kenwright won't sell' is a bit daft.

Everything is for sale at the right price.

He has publicly said he will sell. Many think he is lying, but he has actually said it.

Moyes would have walked by now if he didn't believe BK was genuinely trying to sell the club. And I for one don't believe Moyes is a liar.
Tommy Coleman
5   Posted 31/03/2011 at 15:53:02

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Liam ? You might be right but I read "if the debt at £44.9 million is covered by the group?s property assets" that the £44.9m of debt is 'secured' by our property assests.
Liam Reilly
6   Posted 31/03/2011 at 16:03:16

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"Everton?s debt, is covered by the group?s property assets ? includes the stadium, offices, training ground and retail outlet."

I take that to mean that the assets effectively are equal to or greater than the debt.

But like I said, I think "that's a big if". For example, I understood that the club doesn't own the training ground.
Joe McNicholas
7   Posted 31/03/2011 at 16:04:06

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Putting the numbers to one side, The Aspire Group have got very impressive credentials and this guy's record speaks for itself. However, and this is me in "cynical blue" mode, is this just another strategic piece of PR / spin aimed at those who have still yet to respond to the Early Bird reminders???
Eric Myles
8   Posted 31/03/2011 at 16:05:40

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Tommy, his calculation is £51 mill purchase minus £45 mill 'property assets' = £6 mill net, but he fails to take into account that the £51 mill is only buying 51% of the club so he would only own 51% of the assets (or rather debt).

And the article says that 75% of the club can be purchased for £75 to £100 mill, therefore the full sales value would be £100 to £125 mill.

IF Kenwright would sell.
Tony McNulty
9   Posted 31/03/2011 at 16:19:32

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I know an accountant might not, but I would always completely discount Everton?s property assets (unless a prospective purchaser were planning to hold the games on Crosby beach). Our current property holdings are inextricably entwined with our ability to function as a Premier League club. And it isn?t as if we own large tracts of land away from Goodison large enough to accommodate another ground.

In the case of a winding up of the club (I guess this would be the fall-back position for a prospective business purchaser), given their location, would our existing property assets be worth this amount in terms of their real estate value?
Liam Reilly
10   Posted 31/03/2011 at 16:44:42

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Actually Eric #8, I was talking about a controlling stake in the company, sorry for not being so specific, but I didn't want to dilute my point by focusing on the distribution of assets in the event of a firesale.
Michael Kenrick
11   Posted 31/03/2011 at 16:48:55

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Joe McNic... gotta wonder if ya just bashed the proverbial nail on the noggin with that observation.

Scrutinze the story and ask: what contemporary news value does this contain?

Is this a new initiative? ? No, he's been working on this for some years, it seems...

Are there now signs of progress? ? Er... No. His quest to date has been fruitless.

But the biggest question fro me: why is he not buying Everton for himself? Why does he need to get others on board???

Loved this brilliant comment in the Echo:
The bit about the debt (which is rumoured to be closer to £80 million than £40 million) being covered by property assets is rubbish. Goodison was mortgaged years ago to Barclays, Finch Farm was flogged off and is now leased back and the money for Bellefield was long spoken for (probably by one of the other banks to which the club owes money).

The only surprise is that this story wasn't released tomorrow.

Oh, and where the buggery bollocks has Jimmy Flynn gone, just when we need him??? Tell us all about this bloke and his US Sports persona, will ya please, Jimmy!!!
Eric Myles
12   Posted 31/03/2011 at 17:33:37

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^MK if us fans know this information about the property assets being in hock it makes you wonder how a successful businessman doesn't?

"The only surprise is this story wasn't released tomorrow" = Priceless!
John Keating
13   Posted 31/03/2011 at 17:51:11

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Isn't this guys real name actually Bernard Samuelson? ... You know Chris' brother?
Got to give Bill his due his timing is brilliant.
Maybe I'm just cynical.
Alan Williams
14   Posted 31/03/2011 at 17:57:14

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I know many won?t agree but I believe EFC will be sold before then end of the year. All these stories are now coming out showing just what is on offer and it?s obvious we have raised our game regarding the sale with pleas from Moyes and now EFC fans with big credentials.

Tim Cahill and Phil Neville have this week been in Qatar promoting the sports science and the place itself so much that Cahill said 'I feel privileged that everyone is so welcoming to me. I like to come here not only for treatments but also to bring my family for holidays. I will return to do more work in the pre-season and while I am here I want to give something back and help inspire Qataris to play football."

All this is part of us networking hard and I expect EFC to be in new hands before the year is out, it's April 1st tomorrow... but remember my prediction, your heard it on TW first!! COYB

Jeremy Benson
15   Posted 31/03/2011 at 19:05:33

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I think Michael has hit another nail on the head.

As the contribution eludes to - the banks own the goodison goodies. Not Everton FC. So the debt is only "covered" if they're sold (ie, the debt to the banks is raised against the ground, and selling the ground would pay the debt off. The debt has to be paid either way...). And that would surely mean the buyers would need to find another £200 million for a stadium?

So I'm afraid you can't discount the £44 million quoted debt unless you have a way of paying it off without selling the ground. So actually that means adding it on to the shareholder's payoffs. So you're 6 million really is more like £75-100 Million + £44 million...

And haven't we raised additional debt based on the the next X years worth of tickets sales?

Anyway, the maths is flawed. As it should be - did you really think you can buy a Premier League club for £6 million?

Wish you were my tax adviser...
Phil Martin
16   Posted 31/03/2011 at 21:23:01

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Believe it when Ii see it.

Just another game of smoke and mirrors from our wonderful leadership.

Perfect timing as always. I just hope there aren't too many poor suckers who go and renew their season ticket solely based on this (false) glimmer of hope.

10 years and counting Bill...
Steve Smith
17   Posted 31/03/2011 at 21:52:25

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This perfect timing to sell season tickets drivel baffles me...

Let's get this straight once and for all: I am a season ticket holder and have been for quite a long time... that, by definition, makes me fucking daft! If this type of marketing ploy is aimed at the likes of me, then the men behind it are fucking dafter than I am, it went zooming straight over my head.

Brian Waring
18   Posted 31/03/2011 at 23:56:00

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Steve, I think its more to do with the early bird drive, for some reason, we seem to have snippets like this.
Eric Myles
19   Posted 01/04/2011 at 02:11:12

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Steve, remember we're in debt to the tune of the next X years' season tickets sales. If each year those sales fall, the banks get a bit worried that we won't be able to pay the debt back.

So first thing to do is secure renewals (early bird drive) and try to encourage new purchases, hence the 'more jam tomorrow' press releases.

James Flynn
20   Posted 01/04/2011 at 01:26:52

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Michael (11) - How would I know?

But since you asked, I looked him up. He has the pedigree as an English soccer fan and an American businessman in the sports franchise field.

Three things stand out (For the handful of TWers who will give a shit and find a thread like this interesting. But for those who do...).

1. He was SVP in charge of Operations for MLB's Pittsburg Pirates in the mid/late 80s when they were stacked with talent and the fans were hyped (Pittsburg is a great sports-town, but you have to be winning). Ownership dumped players by the 90s, so he split. A good sign.

2. He was hired by the Colorado Rockies, a new MLB franchise; another great sports town with a long baseball history at the level in England of the Championship. The Rockies not only set new attendance records in baseball, but obliterated the old ones.

3. (The most important). He spent 5 years as the SVP of Marketing and Team Business Operations for the NBA. This can't be overstated. The NBA are the undisputed Heavy Weight Champions of global marketing and he led its efforts for 5 years. That alone makes him legit.

So, me guessing like everyone else in here, the company run by Mullin looking for American investors is a good bet for EFC. All the "Kenwright et al" just pretending doesn't make sense. Whatever he and his backers can do, they have over these years. They're done. There simply isn't anything in it for them but more loss financially. They want to sell because they're hemorrhaging cash. Plain and simple.

Mullin's for real.
Eric Myles
21   Posted 01/04/2011 at 05:37:04

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What financial loss have Kenwright and his backers experienced?

How are they haemorrhaging cash?

They haven't put in any cash from their own pocket besides buying their shares, unless the rumours of Green's bankrolling some player purchases are true, but that isn't in the accounts.
Stephen Kenny
22   Posted 01/04/2011 at 08:25:05

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The rumour was that Phillip Green lent Kenwright the money to pay Paul Gregg or his wife after they initially loaned him the money to buy his shares. Obviously he also had to re-mortgage his house.

I have also heard that he acted as guarantor for a number of player purchases, with the option to remove this guarentee as he saw fit. If he would have done this, the banks would have asked for owed money ASAP.

It's just a rumour but when you look at certain patterns of behaviour, it could make sense?

Either way you look at it, it shows that Bill Kenwright has never put his own money into Everton at any point, not even initial capital to buy his shares, yet at prices quoted he stands to make a significant amount back.

He's got his own best interests at heart and always has done. Anything for a free lunch.
Liam Reilly
23   Posted 01/04/2011 at 08:52:14

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Jeremy Benson (#15) ? "So I'm afraid you can't discount the £44 million quoted debt unless you have a way of paying it off without selling the ground."

A total bunch of horsehit.

If this statement is correct, then there should be no investment in any business that has any debts or any secured loans against its assets. That pretty much rules out every football club in the land.

Utter garbage. Assets are assets, whether they be illiquid or liquid, and all contribute to the corporation's balance sheet.
Eric Myles
24   Posted 01/04/2011 at 10:43:06

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^but Liam, what good is a football club without a ground to play on if it is sold off to repay the debt. So any purchaser would have to pay the value of the shares, 125 million plus the 45 million debt unless the banks agree to let the debt ride.

And as we all know GP is not worth 45 million Quid anyway and the Club don't own Finch Farm so there's no assets covering it in any case.

(MK/Lyndon sorry about the continuing need to edit the GBP sign but my computer doesn't have a key and ASCII code doesn't work)
Eric Myles
25   Posted 01/04/2011 at 10:50:31

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Duh! I just didn't turn the Num Lk on £ got it now.
Michael Stevenson
26   Posted 01/04/2011 at 11:12:12

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Liam, I think Eric is closer to the mark. You can't subtract a debt off the price you pay for a business you add it. If you pay £51m for the shares that's your initial outlay. If the assets equal the current debts (which I don't believe but lets just go with it) then they will cancel each other out. You will effectively have no net debt but you will have paid £51m still either way.

The only way you could get to £6m net outlay is if the assets were worth £45m more than the debt (if only) and you were to sell them, pay off the debt and withdraw the remaining cash.

In reality if you paid £51m for the shares you'd still have to pay £45m to pay off the debt (at some point). True cost £96m.

You're only £90m out though so dont worry.....
Liam Reilly
27   Posted 01/04/2011 at 11:19:07

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You missunderstand me. I'm not suggesting that the assests should be sold to pay off the debt, only that in a purely ecconomical sense, 'that they could be'.

So from a balance sheets perspective, the assets unwind the debt. Although in the event of a administration and a firsale, the likelyhood is that the assets would never generate this amount. That however is an assosicated risk with the purchase, because unless the club was bought with the intention of winding it up and selling all it's assets, it would make no sense.
Liam Reilly
28   Posted 01/04/2011 at 11:49:27

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Michael #26

Perhaps I didn't explain myself very well. I meant that the only additional debt that the initial investment would be taking on would be the 6 million, because the assets unwind the debt.

But then, a patronising twat like you wouldn't appreciate that.
Michael Stevenson
29   Posted 01/04/2011 at 11:58:16

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No, you didn't explain yourself very well cos if you had have said that you would have been correct. What you actually said was "this would effectively mean the purchasing of a top 10 Premier League club for a net value of £6 million."

So patronising or not I do appreciate that. No need to get abusive. I meant to be lighthearted. Sorry if it came out wrong.
Liam Reilly
30   Posted 01/04/2011 at 12:07:41

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"... cos if you had have said that you would have been correct." I know I would, I should have taken more care on my submission.

Also, your statement at #26:

"In reality if you paid £51m for the shares you'd still have to pay £45m to pay off the debt (at some point). True cost £96m"

No it is not. True cost is £57 million, (investment + the 6), because the Assets Unwind the Debt, so either the debt gets sold on (along with the assets), or the club gets wound up and the assets sold off. Either way, it's not £90 million.
Daniel A Johnson
31   Posted 01/04/2011 at 12:27:26

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At the end of the day, someone has to WANT to buy us.

Untill that day, we will be waiting plain and simple.

Given our current plight stadium/debt, that person has to be:

A. Mad
B. Insane
C. Flithy rich
D. Fucking stupid

It's gonna be a long wait.
Dave Wilson
32   Posted 01/04/2011 at 13:13:32

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Oh I dont know Daniel, a lot of us already tick 3 out of the 4 boxes
Peter Warren
33   Posted 01/04/2011 at 13:17:47

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Don't get why asking price is so high. The chief exec has confirmed that no shareholders have put their hands in their pockets - so why are 75% of shareholders, whoever they are, asking for £75-£100m.

Seems v. greedy to me. If they all love everton and doing their job because of this love (and we hear all the time how they don't take a salary etc) why not ask for anything other than the debt to be paid off and buyers got enough money to build or redevelop stadium and have a guarantee that they do.

£75m (min) FFS - what is that for ! Let's say, their time / devotion since havn't take a salary - say £15 - £25M still works out at something crazy for 3 shareholders getting between £300K to £500K each per year for their time.

I really don't get it, I can't understand why there's not uproar, we had assets when Bill and other took over and let's say £20m debt, we now have £60m debt, no assets (other than on the pitch) and it's admitted that they have never spent any money themselves and now they want £25m each - minimum !

Sorry, v.odd - and why people this is scam by Kenright and he has out it out there so people buy season tickets is beyond me - my own view is that it just shows there's no chance of us selling the club - v. depressing
Ray Roche
34   Posted 01/04/2011 at 15:11:11

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Dave Wilson

I think you'll find that some of us tick all four.
Ray Roche
35   Posted 01/04/2011 at 15:12:19

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Dave Wilson

Sorry, Dave, only three. I didn't see the "rich" bit.
David O'Keefe
36   Posted 01/04/2011 at 15:13:03

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I look forward to your chairmanship, Ray.

I'm already watching this space.
Col Noon
37   Posted 01/04/2011 at 22:14:13

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My head hurts :(
James Flynn
38   Posted 01/04/2011 at 23:22:16

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Eric (21) ? They're businessmen who've had success in business. As fans, they can profess love for EFC as the rest of us do. But they're businessmen in a losing situation financially, so are looking for an out. Whatever we read about selling, I believe.

After all, they can always remain EFC fans.
Eric Myles
39   Posted 02/04/2011 at 01:53:18

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Peter #33, £300~£500k a year is pocket money for "The Captain's of Industry" and bankers that these guys are in the same league as.

I bet Phil Green spends more than that on business lunches a year.
Ged Alexander
40   Posted 02/04/2011 at 02:04:22

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The BBC is confirming today [ ] that the Spurs turnover is £79 million this year after a successful Champions League run. They made a profit.

We, with that same turnover and no European football, made a loss. Please, whilst I think it ridiculous that people bang on about Bill Kenwright being rubbish (he isn't, look at his record), Everton also bang on about how well run the club is.... it isn't.

Eric Myles
41   Posted 02/04/2011 at 07:22:24

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Liam, I think you really don't understand that the debt has to be paid.

There's 3 scenarios for a buyer.

1. He buys all the shares and the shareholders pay off THEIR debt to the bank. Cost to buyer £125 Mill

2. He buys all the shares and HE pays the debt to the bank. Cost to buyer £125 Mill + £45 Mill.

3. He buys all the shares and the banks let the debt ride. Cost to buyer £125 Mill BUT he owes the banks £45 Mill which he is liable for.

Which do you think is the most likely scenario taking into acount that the only way the debt of £45 Mill is covered by 'assets' is if you include the value of the players.
Iain Fenwick
42   Posted 03/04/2011 at 07:51:54

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I'm sorry, but I think BK is a crook and I am sick of all the bullshit coming from the board.

We spend less cash than pretty much anyone else in the PL, we have a higher than average attendance. We have sold big in the last few years and we have had decent cup runs and top 8 finishes. Yet we still find ourselves in a worse financial situation than many other PL teams with a far less responsible (apparently) purchasing policy.

BK is a liar, and I am fed up with it. Moyes will walk soon if things do not change, believe me! BK, stop being such a greedy arsehole and piss off!!!

Anthony Hughes
43   Posted 04/04/2011 at 11:17:50

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Add to that, Ian, we have been ever-present in the Premier League and so received the vast sums of Sky money year on year. I know some will point to players' wages but it's only the past couple of years we've started to pay big wages to some of our players. We don't carry a big squad and we haven't had the expense of building a new stadium.

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