Diversification and our future growth strategy

Sometimes I think I'm better off being a mushroom, because that's what EFC has done to me over the last forty odd years, fed me shit and kept me in the dark. At least your articles inform and educate us, about the higher levels of finance within our club.

In football he's already made significant errors in expenditure. If he can recover, literally and figuratively, can he or we be confident in those he has in the boardroom? Hmm.

Chelsea would not be anywhere near where they are now without Abramovich's billions (they were incredibly close to going bust before he come in). City are owned and funded by a petro state and before that got a massive leg up being given a brand new stadium thanks to the 2002 commonwealth games as well as a few million from Shinawatra a few seasons later. Them across the park were a basket case for many years until their current ownership took over.

So I guess my point is, it's not necessarily sound management that has the top 6 where they are, most of them are there due to billionaire owners pumping shed loads of cash into them. This has allowed them to consistently attract the best players, win more trophies, gain more fans, get more TV money - repeat.

I'll admit the current management teams at these clubs puts ours to shame and god only knows what we can do to catch up. However, simply put, any club that didn't get a billionaire owner some time over the last 20 odd years (except Arsenal/Spurs) are nowhere near the top of the tree. Even Spurs are owned by Joe Lewis, himself a billionaire, and also have the advantage of having Levy in charge and not Kenwright.

We missed the boat over the last two decades by not getting in a loaded benefactor, athough, money alone won't get you there - look at the likes of Villa, Sunderland, 'Boro, QPR etc and half a dozen other clubs with wealthy owners who didn't amount to much. Their wealth was simply not enough compared to Russian or UAE billions.

Arsenal have punched above their weight recently having been saddled with the costs of the Emirates but its been many years since they seriously challenged for top honours. Utd are the only ones who've been consistently near the top without needing billions from a benefactor - but they did win the lottery with the class of '92 and never looked back. Also happened to have the best manager of all time.

As much as I admire your obvious acumen, knowledge and understanding of business investment, if that's what football has come to be then I think I want out.

This is a sport that has totally lost its way with regard to its values, history and integrity.

The FA should hang their heads in shame, they have sold out one of, if not the only true working class sport in this country, if not the world.

#2 Don, I share your views completely.
#3 Denis, whilst I agree with almost all your comments, I think it's fair to point out that Joe Lewis, Levy, Enic have only once (2011 from memory) put capital into Spurs, £15 million. Everything else they've achieved has come from their own resources.

#4 Dave, football sold it soul time and time again in the last 25 years. Whilst I dislike that intensely, I'd much prefer Everton to be competitive than not.

I hate it but it's the reality.

Despite Moshiri's millions, we are desperately short of income generated by the business and completely missed the Premier League boat in that respect.

If we are not to miss the second boat (so to speak), we have to innovate like our competitors are doing in income and capital creation.

And "human capital" (ugh!) is always the trump card, especially where creativity is required. Does DBB (or anybody else) give us that? Or will she be transactional rather than transformative – more of the same?

For a Club currently residing in a rundown district of a relatively poor City to compete financially with the elite, some remarkable things are needed.

We have one in Moshiri, but he won't be around forever sadly and the Club simply has to broaden its thinking to stay competitive. If we want to be in the top 3 or 4 clubs in the country and win things consistently there is no other way.

Just as Dave and Bobby own things now they could have only dreamed of when kids (and could any of us have had the foresight to dream about just the smartphone for starters in say 1975) the world of football is on another level. Embrace the change fellas, don't get left behind. We are all still humans, it's just new skills and thinking we have to learn to keep evolving.

Any further approaches to "the money" will by now inevitably, I suggest, incur very penetrating questions by the loaded one/s, whoever they may be, as to who precisely was responsible at Everton for the quarter billion pound expenditure fiasco on players and managers since our Farhad took over. Hmm.

Of course it might just be that the dazzling smile of DBB will make the money swoon I suppose, in the way that Kenwright did.

Here's hoping.

This report also spells out why all the best tactics in the world won't bring us anything without the big names. Reading this, those names seem further away again. The one plus is people starting to realise.

My question with your business acumen is the same as I post for the football side – how on earth do we get this message through to those in charge that we are surely slipping away from football's elite without this type of insight at Board level for business decisions?

I agree with your basic diagnosis. Traditional revenue streams are tailing off. I think there is pretty obvious scope for non-domestic broadcast growth; however, that will be offset by what I suspect might be a decline in domestic growth.

My impression is that Sky are realising they have put too many eggs in one basket and that they badly overpaid last time around. It used to be justified on the back of driving subscriber growth, but not any more, Sky are pretty much at critical mass already. Moreover, there is a risk any non-domestic revenue growth it is disproportionately corralled into the coffers of the so-called big 6. That is the other problem of mature markets, you tend to see cartels forming.

Your solution is, in essence, diversification. That makes sense when the markets you operate in become mature. But it is also highly risky and when you go outside the core area of your expertise- to the extent we can even claim that much for the core business! - then your outcome might just as easily be losing a lot of money, not making it.

You also have to factor in your diversification strategy. Are you choosing maybe a single option, ideally with some synergy to your business, or trying to spread your risk, probably across a broader range of activities mostly unrelated the core business, in a venture-capital type manner?

To do the former risks wipeout. To do the latter requires a willingness and capacity to play the long game. Here comparisons to Man City, Abu Dhabi are stretched. They can afford 'losers'. Look up the history of Masdar for example. I've worked in business for decades and how many times have I seen consultants propose expanding the offering, only for more consultants – even sometimes the same ones – arrive years later with a plan to sell non core business and re-focus on the main business.

That is not to say don't do it – your diagnosis makes sense- more a summary of the pitfalls. There is an alternative – do your core business more efficiently than anyone else, and though we are a long way from claiming that, it is possible.

The other traditional option is to expand geographically, though maybe that option is more limited by ownership rules in foreign leagues, plus you won't get that much in economies of scale. And you still have to figure out a way to break the cartel type environment I can see emerging in the Premier League.

Increased competition for what is still a fantastic offering in the Premier League will surely only force up the value rather than reduce it?

Will we see another massive hike in payments for the Premier League? I think what we will see is fragmentation of Premier League offerings of some sort, and the Premier League will come up with packages. Most obviously packages focussing on buying all the matches of a particular team and offering a 'season ticket' could be one way to do it - that way every match is sold twice.

One model is fading, another will become popular.

That said – the ridiculous situation whereby players' agents watch each successive deal and drive up prices & wages to suit is likely to go on too, so in real terms, clubs get no richer. Where then is the value for shareholders?

Despite all that, I have to agree with most of what Paul wrote – we have to develop new differential revenue streams in order to compete and that is going to need big partners in business. Cue USM?

I assume Moshiri is here to make the club into a brand USM can buy into in a much bigger way. Safe to assume there is some way to go yet. Over to you, Silva & Brands.

The issue of what happens to broadcasting revenues in the future is more acute for Everton than it is for any of the largest clubs in the Premier League for the simple reason that broadcasting revenues form a much greater percentage of our overall revenues than our larger competitors (69% as against 34.5% for Manchester United and 40% for Manchester City).

It could be argued that those 6 clubs have successfully diversified their income streams for many years, and that the activities I describe above are the second growth phase which is the natural response to maturing markets.

I'm aware that there are risks in looking at new areas and that we need fresh skill sets within the business to maximise their potential.

My hope is that the board commits to the above and plans the appropriate strategies and recruitment of individuals in the near future. I say hope as I'm not convinced we are anywhere near to doing so based on the discussions I've had with board members.

There is a bandwidth issue within the club, and it's possible they're running beyond current capacity with the cost challenges, their attempts to increase existing income streams and the issues surrounding Bramley-Moore Dock.

To answer your question on Sky, I personally believe it is fragmentation that will kill revenue growth. You don't need Sky so badly if you can get some football elsewhere.

It really only had mega value to Sky when 1) they had exclusivity, so basically a monopoly, which always helps with price setting; and 2) their main pre-occupation was adding customers, for which football was maybe the biggest driver, and the acquisition budget could be ample based on incremental revenue derived from that.

It is very much harder to justify the money when you are effectively mostly doing it to hold on to the customers you already have. There's never so much of a budget for retention.

Amazon are already getting into sport. From 2019, they will be showing some live Premier League games. It's a modest package of c 20 games but I suspect they paid buttons for it because, tellingly, the bid was undisclosed. They already have the rights to the ATP tennis tour.

I say all this as someone who is thinking of moving from Sky. For the first time, there are options and my experience is that, having blown their cash on footie, Sky are increasingly losing other sports because they have no remaining budget.

As a tennis fan, losing the ATP was a big issue for me. I now subscribe to Amazon and what I cannot do with fragmentation is buy everyone's offering, so I have to choose. I like footie – not so much this season! – but there will be some on BT and Amazon so it is now a viable option.

Your idea of 'season tickets' may well come to pass but if so, it will not be via Sky. If the customer demand model changes, so will the sales model. There won't be pooled broadacast rights of the type that attract broadcasters. The clubs will sell them individually. That is very much what the top 6 want.

It would be bad news for a club like Everton as it stands. Also bad news for the Premier League organisation; I wonder if that is why Scudamore has left and his replacement from Discovery subsequently decided in the end not to join – maybe they can read the runes...

My own view is that, even with the potential growth in overseas rights, this huge exponential revenue growth for clubs is coming to a close. Actually I can see a re-focussing on cost containment. So in the medium term, things will not I suspect look so rosy for agents who are an obvious cost area to cut that adds precious little value.

In fact, I can even envisage an end to transfer fees in the longer term. They don't apply anywhere else in life and it is only a matter of time before they are legally challenged. In a way, it's a form of trafficking, admittedly a high class one.

It follows from the above that a European league or even a world league is only a matter of time. Again that won't be good news for a club like ours.

I think all this only re-inforces the point Paul was making in his article but while inaction is dangerous, we are heading for some very risky times in taking action, because we are starting from a poor position with a lot of ground to make up. If Paul is correct in believing that our board lacks the vision even to see the evolving picture, then we will be an also-ran.

Everton have a lot of ground to recover, but times... "they are a changing"!

I was searching YouTube the other day and looking for highlights and I got vids of Fifa games instead that have massive number of views, so there is a market, and I suspect a big one.

The guys who created Football Manager have been mentioned as Evertonians, the Collyer bros; or something like that, and they created the Angry Birds games... can´t they help? Moshiri has spoken about this partnership several times, as sleeve sponsors, so I guess we aren't that behind and I hope he expands and endorses some investment.

Other thing that has always spring to my mind is the millions online bookies make of football, using clubs name and games to profit, like a leach.

Betway had a partnership with the hammers, and there a few clubs out there who have done so, but the sponsorship are peanuts to cover the millions they make.
the club should pursue creating their own online bookie, call it evertonia.com, goodison.com, with a special detail on Everton games and all things Everton.

It's time to stop all those bet-something people using EFC's name to profit and take legal action, I mean come on — Football Manager can´t use the logos or names for a guy to have fun and the bookies can have a profit?

one of the thing that bugs me is that Jorge Mendes (Fifa agent) makes a small fortune every summer transfer window, this greedy fucking bastard should be working for a living... Why can't Everton, probably not as EFC, but create a branch as a commercial partner that does exactly what agents do? Find and sign players, promote and develop footballers and get their profit.

Don't they do that with their own academy players, finding clubs for them to continue their career, loaning, to some extent that's what a DOF already does. Didn´t brand ship all those guys out on loan? We could get some world class footballers for peanuts if we detected them and managed their own careers.

I don't know if we could infringe some of the current rules, but I guess we could somehow find a way to bend them.

Someone wrote here a few days ago that Wenger once said that in the future transfer fees would end and the players would sing for whoever they want and clubs would only renew their contracts or not.

I always wondered what it would be like to find a Goose with a Golden Egg. Now I know, having seen the outcome at Everton over this past four years. I think you should be able to work out my view of the capability of Everton Management regarding future growth.