The news that Everton have appointed Elevate Sports Ventures “to support the delivery of its commercial strategy for the Club’s new waterfront stadium” barely raised a ripple of interest in the media or indeed most of the fan base.

Everton & USM

Yet it should for many reasons. It signifies the end of the Everton/USM relationship. Why do I say that? As is well known, USM signed and paid a £30 million option for naming rights to Bramley-Moore, and was seen as a key provider of funding, in addition to the near £20 million a year sponsorship package including USM Finch Farm, various USM brands on kit, women’s, and training apparel plus extensive advertising around Goodison Park.

The Russian invasion of Ukraine put paid to USM’s future involvement. Existing sponsorship arrangements were quickly dropped as the potential toxicity of funding from a company that derived much of its income from within the Russian State became apparent, as well as the association with its major shareholder, the Uzbek, Alisher Usmanov, sanctioned in the UK and Europe because of his close ties with Putin and the Kremlin.

Indeed, Farhad Moshiri, Everton’s 94% majority shareholder also quickly sought to distance himself from USM, ceasing to be Chairman, a board member and thought to have reduced his USM shareholding significantly prior to the Russian invasion.

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Whilst it was apparent to most observers that the relationship between USM and Everton could never be resurrected, Everton described it in more cautious wording by saying “suspend” rather than terminate (March 2022). There has been no additional comment from Everton on the relationship since this time. Nevertheless, the appointment of Elevate puts paid to any prospects of a return.

The ending of the USM relationship must have had a significant impact on Everton’s future funding plans. As mentioned above, regular pre Bramley-Moore sponsorship was worth £20 million and there was the prospect that a USM company may have taken the shirt front sponsorship once it became clear that the Cazoo relationship was to be terminated early in time for the beginning of the 2022/23 season.

None of the previous USM related sponsorships have been replaced other than by the extension of the main shirt sponsor package to include ancillary apparel.

Bramley-Moore Dock funding

However, the most significant impact is the loss of funding relating to naming rights. Farhad Moshiri, at least in the earlier part of his tenure, made it clear that there were three elements to the funding of Bramley-Moore – debt, sponsor partners and himself effectively underwriting the remaining capital required.

To date, there is no stadium specific debt provider and as we are now aware, no sponsor or naming rights partner. Moshiri’s role as financial underwriter has become much more significant at a time when perhaps his personal finances come under pressure from macro-economic events, not just the invasion of Ukraine.

Of course, all of this has been met with absolute silence from Farhad Moshiri and the club’s Board. Forced into communications by protests from the wider fan base at the beginning of the year and then a hastily prepared statement on the back of a leaked open letter from the 27 Campaign in June, Moshiri has since reverted to type.

As a fan base, let alone the multitude of commercial partners, we are supposed to take on trust that all will be fine, despite the silence, despite the attempt to sell the club in the early summer, and strong indications of further interest since. He has acknowledged the possibility of accepting “investment” from a minority partner. However this presents two major challenges – firstly the price he places upon the club – good sources in the US suggest he values the club at US$460 million – a figure that cannot in any way be justified on current financial performance, the current balance sheet, current revenues and the quality of leadership within the organisation. Secondly, how many investors would wish to hold a non-controlling stake in Everton given how it has been managed in the last six and a half years?

The decision to put Bramley-Moore’s future commercial strategy into the hands of Elevate is interesting for other reasons too.

Firstly it acknowledges, despite previous claims by the club, the lack of in-house capability to do such. I’m always a believer that the best sellers are principals not agents, yet here again we go down the outsourced model.

Elevate Sports Ventures

The choice of partners is interesting. Elevate Sports Ventures is a fine company, attracted industry leaders and has grown quickly with 185 clients globally and describes itself as a ”best-in-class sports and entertainment consulting firm”.

Elevate’s Chief Executive Officer is a gentleman called Al Guido. He also happens to be President of San Francisco 49ers Enterprises, the investment arm of Denise DeBartolo York and John York and 90% owners of the American Football team by the same name.

Elevate were formed in a 50/50 partnership between San Francisco 49ers and HBSE (Harris Blitzer Sports & Entertainment) in 2018. They’ve since gone on to attract investment from other investors including Ticketmaster, Oak View and most recently Arctos.

The 49ers investment company is significant – holding more than 40 investments and as per their own claim, comfortably within the top decile of venture capital funds.

One of their most interesting investments is, of course, Leeds United Football Club. Since buying an initial stake in 2018, the 49ers now own 44% (Radrizzani still owns the majority 56% holding). However it has been reported by The Athletic that the 49ers have an agreement to purchase Leeds United outright at a valuation of US$ 530 million by January 2024. Indeed Al Guido has been quoted regarding their interest in Leeds “ for us, our engagement level is off the charts”

Does this create a conflict of interests? Elevate would say, of course, that it doesn’t, that Everton are a fee paying client, there’s no direct management of Everton through this arrangement, however given the significance of Bramley-Moore to Everton’s future commercial and therefore sporting success, the question has to be raised, and one would hope answered?

Unanswered questions

There’s no doubt that some lessons have been learned in terms of Everton’s footballing operations since Benitez’s departure. The appointment of Thelwell as Director of Football seems to be moving the club in the right direction. Recruitment has improved since the chaotic days of the early Moshiri years.

The academy, at last is completely overhauled and the support services around the first team are now full of Thelwell and Lampard’s people. Even the biggest critics of Moshiri and the Board can see evidence of a better structure and decision making by the appropriately qualified footballing personnel.

However, the business of the club remains shrouded in silence with no apparent changes to the governance model, strengthening of the board, of the executive team and the continued reliance on outsourcing key aspects of the club’s operations. Whilst transfer activity will have improved this year’s profit & loss account the club still faces large operating losses as costs continue to outstrip income.

Communication remains very poor despite claims of greater engagement with fans through the Fan Advisory Board, the Fan’s Forum and the shareholder association EFCSA.

The appointment of Elevate may improve the future commercial performance of Bramley-Moore, I sincerely hope that it does, but the appointment leaves many questions unanswered – how will Bramley-Moore be funded? What are Moshiri’s intentions after a summer of possible ownership change and still potential for new minority investors?

As ever the answer to the questions lay in the hands of the owner and Directors, the lessons of the last 12 months or so suggest sharing with the fan base is a wiser strategy than ignoring reasonable requests for timely information from the custodians of our great club.

Reader Comments (13)

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David West
1 Posted 25/09/2022 at 21:52:08
Do get the feeling that this is Moshiri's only way of getting a return for his investment in Everton.
His only hope is to build the stadium.
I don't know the ins and outs of the whole project, but like a building a house yourself that cost 100k to build the value is greater once completed than the sum of its parts.
If its 500m to build what is the completed value of the stadium?
He must feel there is some profit somewhere in it ?
Hes already sounding out a sale, be it a share or the whole club.
Because I don't see him here for the long term 15- 20 years.
Paul Kossoff
2 Posted 25/09/2022 at 23:43:53
Dupont Koo
3 Posted 26/09/2022 at 04:51:46
Great to know about the background of Elevate, Paul, and thank you for pointing that out.

The potential conflict of interest with Leeds doesn't sit well with me, but their background with San Francisco 49ers, one of the better-run clubs in the NFL, does provide a bit of a calm.

Brokers & agents go through the walls whenever there is a large fee to be earned. So, as long as Everton remains a "Fee-paying client" of Elevate, I am confident that progress can be made. If we have to rely on the current personnel at the club, we wouldn't even be able to move a needle to be honest!

Alan J Thompson
4 Posted 26/09/2022 at 06:58:23
I get the feeling that the DoF has insisted that there is no internal interference in his duties and that the effect is now being seen and pursued by the majority shareholder in other issues.

The questions that remain may be, if this is the result of the internal review and what part if any the CEO and Chairman have had in this, or if it is a matter of their exclusion and if that may see steps to make that permanent?

I suppose that the success in these fields, whenever they may be seen, will determine the direction things are now taking.

John Pendleton
5 Posted 26/09/2022 at 09:21:59
Thanks, Paul. As ever, your post shines a light on the strategic direction of the club, its governance and finance health and its off-field activities.

Interesting times ahead. I wonder from which industry our stadium sponsor may emerge? Previous shirt sponsors include:

Photocopiers x 2
Mobile phone
Gambling x 2

Who has the readies to be a contender? Are we likely to get our first US sponsor as a result of ESV?

Don Alexander
6 Posted 26/09/2022 at 20:31:23
Sobering reading as ever, Paul the Esk!

I wonder if we've ever had an owner who's found himself so deep in the financial mire as quickly as Moshiri?

Maybe he should just phone Everton for advice because we allegedly always get it right – according to an unreliable source!

And Paul Kossoff (any relation to your much-missed guitarist namesake btw?), I wouldn't worry too much about the Tory-appointed council commissioners. Their head honcho is a Toffee and, unfortunately, a total pillock well known to me personally for the past 40 years despite his, ahem, glittering police career.

He couldn't detect a fart in a jar.

Jeff Armstrong
7 Posted 26/09/2022 at 20:43:26
What's his name, Don #6, save me searching...

Is it T Reeves?

Don Alexander
8 Posted 26/09/2022 at 21:04:03
Mick Cunningham.

Joined the police after training to be a priest but realised the priesthood wasn't for him when someone told him what an erection was genuinely for.

So, with his degree in Theology, he was sent on the speedy promotion course, becoming a superintendent (in name and pay only) in 5 years, despite the fact that a very experienced police officer at the time formally advised him to reconsider the priesthood as he was so utterly useless to the bizzies.

Mike Owen
9 Posted 27/09/2022 at 10:32:39
Paul, thanks for that analysis and for raising some important questions.

Regards some of your specific comments:

"To date, there is no stadium-specific debt provider"

Yes, I have been eagerly awaiting news of this.

"We are supposed to take on trust that all will be fine"

So it seems, and this worries me.

"How many investors would wish to hold a non-controlling stake in Everton, given..."

An interesting point.

"To put Bramley-Moore's future commercial strategy into the hands of Elevate"

Yep, I think there is considerable risk here that this is put in the hands of people who don't understand two things:

One – how EFC has fallen from being one of the Big Five to becoming an unfashionable club now somewhere near the nether regions of the Big Fifteen.

Second, the social dynamics of a two-club city in which the other one is more successful, more celebrated and financially stronger.

Ironically, this raises the possibility that they would be relying for guidance on people already at the club.

Of course, I could be wrong and they might be just the right people. Time may tell.

Tony Abrahams
10 Posted 27/09/2022 at 10:59:25
I used to think Everton was overpriced but then, when you look at the figures for Leeds United, I don't think is any longer the case.

I know we have bigger problems financially, especially with regards to FFP, but if you could purchase Everton for £1Billion, which would include a brand new stadium, on a very iconic waterfront site, then isn't it possible that Everton might actually be very good value at this price?

We are living in very uncertain times though, and not having anything like a proper financial package in place with regards the stadium is very worrying, considering the way the interest rates are starting to rapidly climb.

Paul [The Esk]
11 Posted 27/09/2022 at 12:49:02
Thanks for all the comments - (v) John, Elevate are building a large international practice, and have Shawn Doss setting up a London office currently - I'd hope this allows them an international perspective on naming rights, particularly if England is awarded the Euros in the not too distant future.

(VI) Don, never in my wildest dreams/nightmares did I envisage the degree of mismanagement under Moshiri which has cost him, and more importantly the club dear. (IX) Mike, all good points (X) Tony - investing £1 billion into Everton (which I agree is the absolute minimum required if Moshiri got the price he wants) doesn't look attractive against recent deals – Newcastle £350m and even Leeds at a prospective £500m plus the cost of redeveloping Elland Road.

This is Moshiri's biggest problem – no-one is prepared to pay for the equity at the level Moshiri desires.

Your final point on the cost of borrowing is spot on. Our failure to tie in funding at very low rates in benign conditions pre-Covid will prove extremely costly over the long term.

A 3% (if lucky) increase in interest costs on £300m of debt adds up to £180 million over 20 years. A 5% increase £300 million.

Tony Abrahams
12 Posted 27/09/2022 at 13:08:30
It even makes the deal to sell FinchFfarm and rent it back look like good business, compared to this dithering, Paul.

I heard more than one group were looking at Everton but, as you say, once due diligence is complete, Moshiri is not going to be getting his money back, so it's still a major worry where the rest of the money for our new stadium is going to come from.

I wonder if Kenwright is prepared to put his money back in and invest in Moshiri, although I'm aware that he needs a lot more money than what our now very, very rich chairman has in his bank account after never taking a penny out of Everton!

Peter Warren
13 Posted 29/09/2022 at 19:46:36
Apparently Premier League clubs are attractive to the States owing to potential TV revenue growth. Surely revenue is more attractive now given the drop in the value of the pound.

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