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It's Complicated

It's Complicated

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Published by: Keeping Everton In Our City on Jun 25, 2013
Copyright:Attribution Non-commercial


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ith EvertonFootballClub’s firstgeneralmeeting forfive years taking place on 26thJune, an extraordinary generalmeeting which perhaps the club’sdirectors would prefer not to betaking place, the catastropheswhich have beset the thirteen yearreign of Bill Kenwright’s boardshow little sign of abatement. Onlysince the end of last season,Everton has lost their manager,their captain, several players, theirbadge, their motto and last, butnot least, their director of communications. One could beexcused for thinking they’ve beenincredibly unlucky, but the list of the catastrophes that their loyalfans have had to endure is longerthan their beloved Dixie Dean’s349 goal record and as forunderstanding what’s happened,it would be easier his record scoresixty goals in a season!That an EGM is taking place at allis quite an achievement in itself;called by the club’s seventy fiveyear old ShareholdersAssociation, the oldest suchorganisation in world football, toquestion the financialperformance of the board, thepeople of the people’s club havehad to contend with changesmade to the club’s constitutionimmediately following the lastEGM, five years ago; changesdesigned with one thing in mind,to make their right much moredifficult to exercise. Yet in an ageof hollow sound bites and flakymeaningless straplines, Evertonare far from The People’s Club inname only; much to theannoyance of some, healthydissent and activism are truly inEvertonians DNA.In 1892 the original custodians of Goodison Park, fresh from their battlewith their former president, John Houlding, ensured that no individualheld power over the rest of the shareholders by distributing the shareswidely; even today almost 30% of the shares remain in the hands of fans so committed that they’ve purchased shares with a view to havinga say in the club’s operation, despite attempts by the current ownerswho would prefer them to remain as silent as a North Koreanopposition spokesman, a situation which has been demonstrablydetrimental to Everton Football Club in the past and, as some see it,detrimental in the future; they believe there’s a better way.The 2008 EGM was called due to concerns over the proposal torelocate the famous club to a supermarket car park. The fans wereultimately ignored, crushed by the voting power of the owners; but oneof the key questions directed at chairman Bill Kenwright that nightconcerned Everton’s claim that Tesco was providing a £52m subsidytowards the cost of building a stadium; “Where we misled MrChairman?”, a definitive “No” came the reply; yet only a few monthslater a government inquiry established that not a single penny wasbeing provided by Tesco nor anybody else.It transpired that the £52m was nothing more than an additional valuethat would have bolstered Everton’s decimated balance sheet;decimated due to the board’s inadequate financial policies and theirtotal lack of investment. The intricate business plan simple, it was tocash in on the windfall, through the envisaged sale of the club, leavingEverton’s loyal fanbase deceived and high and dry in a white elephantof a stadium nine miles from the city centre.It had all been so very different in 1999 when there was at least adegree of optimism over the newly appointed board. With a plan, andvery little else, Bill Kenwright’s consortium had taken over from formerchairman Peter Johnson. Just what that plan was has been hotlydebated ever since; what certainly isn’t open to debate is that they’veturned a poorly performing business into a truly appalling one. Yet the
Everton status:Its complicated!
With the board of Everton being forced to hold a general meetingand answer someserious questionson their  performance asdirectors, let’s takea look at why Evertonians haveconcerns over their ability to run theclub
media have been sold an entirely different story, a fantasy some fans of the clubunfortunately believe; a theatrical fallacy which many in the media find isn’t worthchallenging due to the inevitable hassle they receive from Everton’s public relationsdepartment if they dare question the carefully crafted illusion of plucky little Evertonled by the former poor boy from the boy’s pen made good who claims to havewatched his heroes with holes in his shoes but a smile on his face. The harmlessramblings of a fantasist or an indication that the whole ownership of the club is afantasy? A fantasy which has irreparably damaged the very fabric of one of England’sgreat clubs which, for the people of the city of Liverpool, has been a community assetfor more than 135 years.Disregarding the unique circumstances found at Arsenal and Manchester United,which alleviate their owners from the need to provide personal investment forinfrastructure and commercial development, any form of investment by theincumbents at Everton is conspicuous by its absence; a fact that puts Everton out of step with the remainder of the Premier League. Everton’s owners have instead reliedupon the disposal of assets, debt finance, which is now almost exclusively obtainedoffshore, and the belief that the finances of others should be utilized in place of theirown.This thirteen year strategy has produced a balance sheet, the instrument throughwhich the health of any business is measured, that not only tells Everton supporterseverything they need to know about the state of their club, it tells UK banks,prospective buyers and the media, that all is not well. If they scratch the surface andignore the spin and painful management speak, what can be seen is that Everton is aclub starved of investment, that Everton is a business whose liabilities far outweightheir assets, whose owners have done nothing whatsoever to add value to a businessthat stumbles from one crisis to the next; it tells you that Everton have been left ashadow of its former self.Yet, as confirmed by Everton’s Paul Tyrrell on TalkSport, Everton’s former director of communications, who was, at the time, a member of the senior management team,the owners are looking at a sale price in the region of £125m; a remarkable return ontheir initial investment of £22m, remarkable on the basis they’ve done nothing toenhance the business, have cost the business millions, through their undeliverableschemes designed to avoid investment, and now they refuse to accept a few basictenets of the investment world; that the value of any personal investment can godown as well as up, is not guaranteed and may return less than the value of theoriginal investment or nothing at all.To protect those truly responsible for the financial fiasco at Everton, club officialsattempt to paint a very different picture, a picture all too readily accepted byproponents of the board who are usually opponents of the fan activists who havestriven to expose what has taken place. Poorly presented excuses, such as, “we onlyneed to sell a few players to address the balance sheet problem” are readily offered inplace of what clearly should be done, along with explanations into inadequatelyexplained events such as the 94% increase in otheroperating costs, which has been desperately explainedaway as being at similar levels to other clubs, which it is;but how many experienced a 94% increase in a singleyear? How many have been told the increases relate toexpensive equipment purchases, that appear nowherein the accounts whilst the profit and loss account tellsas disastrous a tale as the balance sheet.Everton’s fan activists are suspicious, and rightly so.Their names may have changed over time, from TheGFE to KEIOC to The Blue Union, but their pedigreeremains the same; they’re kindred spirits who have allbeen misled, misled over an iconic waterfront stadium,the aforementioned relocation to a Tesco car park anda proposed development at Goodison Park; projectsthat have collectively wasted millions of pounds thatEverton could ill afford. It’s not these fans who havewasted the money, yet they have been treated with alevel of contempt and disdain that is hard to believe,certainly hard to believe for the fans who naively call forthem to enter into dialog with their antagonists,challenging them to support the club, to support theboard; naive because, unlike the activists, they areunaware of the depths Everton will go to in order todiscredit them; using people masquerading as freelance journalists to photograph them, compiling a blacklistthat the fans have clear evidence of being in operationand having a board actively directing the club’semployees to act against them. Outrageous? Yes, butnot as outrageous as what many of these fans believehas been perpetrated at Goodison Park over the pastthirteen years.Fan activists such as the Blue Union believe that it is thevery ownership of the club that is both questionableand the root cause of all of the main problems atEverton. The fan group, which has been slowly gainingacceptance and gathering credibility since itsemergence an umbrella organisation, two years ago,has recently held a very informative public meetingwith Everton legend Neville Southall in attendance andare increasingly being brought to the attention of theirfanbase by the national press due to their activities andaffiliation with the Football Supporters Federation.
The current owners of Everton FC are lookingat a sale price in theregion of £125m;a remarkable return ontheir initial investment of £22m, on the basisthey’ve done nothing toenhance the business
All very different from the early days when Everton’s own fans, encouraged by the club of course, were quickto condemn them for matters they were completely innocent of, yet old habits die hard; Everton’s CEO,Robert Elstone, continues to wrongly link them to an unsavoury incident involving his children and him beingspat at; although, rather tellingly, he conveniently chooses to make these allegations to others rather thanspeaking with those accused directly.Fan activists prefer hard evidence rather than innuendo and misinformation. So when they raise the questionof the ownership of the club it’s based on what they’ve been told of the role of Sir Philip Green by formerdirectors who were well placed to observe what was taking place; how his money has been used to payformer directors for their shares and how his influence over the board’s decisions forced another to leave theclub. They’re concerned that this is the root cause of the problems at Everton; making it perhaps perfectlyunderstandable why individuals won’t invest in something that simply isn’t theirs in the first place. Thedissidents attempt not to mistake symptoms for causes; they attempt to identify the cause and address theproblem. They are not part of the problem but they want to be part of the solution in another chapter of Everton’s history, a chapter significantly better than the last.Unlike at other clubs such as Liverpool and Manchester United, the simple explanations over ownership anddebt are unfortunately thin on the ground at Everton where the truth is convoluted and inextricablyinterlinked with fantasy designed to mislead. The recent revelation that Everton’s Finch Farm training groundhas been purchased by Liverpool City Council, just prior to the previous owners, Finch Farm Ltd, beingliquidated is a prime example.It was heralded as a great deal for the city and a great deal for the club; which on face value you canunderstand. Everton would benefit from much lower rental costs, the new owners apparently waiving theirrights to levels of income set out under the terms of the previous lease, charges which were outlined in theDTZ prospectus, produced in 2011, when the owners put it up for sale. Everton have stated that Finch FarmLtd has nothing to do with them so it’s all the more intriguing as to why Everton approached Liverpool CityCouncil to take out a loan to buy Finch Farm twelve months ago and even more intriguing as to why thedirectors of Everton, faced with yet another golden opportunity to actually do something positive, eitherguaranteeing a loan or providing a soft loan to secure the property, which would cut out the middleman, thecouncil, and make a deal “which helps the club cut its cost base” even more attractive; but this didn’t happen.Once again Everton were reliant on the finances of another and it’s understandable as to why any Evertonianwould seek an explanation as to why Everton continue to operate this way.Is it because of the aforementioned Mr Green’s alleged involvement, suggesting that that the ultimateownership of a substantial number of Everton shares haven’t been declared in accordance with PremierLeague rules or is it an inability to increase the level of debt shown on the balance sheet, due to covenants onindebtedness attached to the 2002 Prudential securitization loan? Measures preventing excessive debt arecommon clauses with this form of debt finance; the loan, which will cost the club £68m over its term, was
£  £  
Bill Kenwright’s consortium turned a poorlyperforming business into a truly appalling onewhich is camouflaged by the £53m from TV money

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