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With the board of Everton being forced to hold a general meeting and answer some serious questions on their performance as directors, let’s take a look at why Evertonians have concerns over their ability to run the club
ith Everton Football Club’s first general meeting for five years taking place on 26th June, an extraordinary general meeting which perhaps the club’s directors would prefer not to be taking place, the catastrophes which have beset the thirteen year reign of Bill Kenwright’s board show little sign of abatement. Only since the end of last season, Everton has lost their manager, their captain, several players, their badge, their motto and last, but not least, their director of communications. One could be excused for thinking they’ve been incredibly unlucky, but the list of the catastrophes that their loyal fans have had to endure is longer than their beloved Dixie Dean’s 349 goal record and as for understanding what’s happened, it would be easier his record score sixty goals in a season! That an EGM is taking place at all is quite an achievement in itself; called by the club’s seventy five year old Shareholders Association, the oldest such organisation in world football, to question the financial performance of the board, the people of the people’s club have had to contend with changes made to the club’s constitution immediately following the last EGM, five years ago; changes designed with one thing in mind, to make their right much more difficult to exercise. Yet in an age of hollow sound bites and flaky meaningless straplines, Everton are far from The People’s Club in name only; much to the annoyance of some, healthy dissent and activism are truly in Evertonians DNA.
In 1892 the original custodians of Goodison Park, fresh from their battle with their former president, John Houlding, ensured that no individual held power over the rest of the shareholders by distributing the shares widely; even today almost 30% of the shares remain in the hands of fans so committed that they’ve purchased shares with a view to having a say in the club’s operation, despite attempts by the current owners who would prefer them to remain as silent as a North Korean opposition spokesman, a situation which has been demonstrably detrimental 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 to relocate the famous club to a supermarket car park. The fans were ultimately ignored, crushed by the voting power of the owners; but one of the key questions directed at chairman Bill Kenwright that night concerned Everton’s claim that Tesco was providing a £52m subsidy towards the cost of building a stadium; “Where we misled Mr Chairman?”, a definitive “No” came the reply; yet only a few months later a government inquiry established that not a single penny was being provided by Tesco nor anybody else.
It transpired that the £52m was nothing more than an additional value that would have bolstered Everton’s decimated balance sheet; decimated due to the board’s inadequate financial policies and their total lack of investment. The intricate business plan simple, it was to cash in on the windfall, through the envisaged sale of the club, leaving Everton’s loyal fanbase deceived and high and dry in a white elephant of a stadium nine miles from the city centre. It had all been so very different in 1999 when there was at least a degree of optimism over the newly appointed board. With a plan, and very little else, Bill Kenwright’s consortium had taken over from former chairman Peter Johnson. Just what that plan was has been hotly debated ever since; what certainly isn’t open to debate is that they’ve turned a poorly performing business into a truly appalling one. Yet the
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media have been sold an entirely different story, a fantasy some fans of the club unfortunately believe; a theatrical fallacy which many in the media find isn’t worth challenging due to the inevitable hassle they receive from Everton’s public relations department if they dare question the carefully crafted illusion of plucky little Everton led by the former poor boy from the boy’s pen made good who claims to have watched his heroes with holes in his shoes but a smile on his face. The harmless ramblings of a fantasist or an indication that the whole ownership of the club is a fantasy? A fantasy which has irreparably damaged the very fabric of one of England’s great clubs which, for the people of the city of Liverpool, has been a community asset for 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 for infrastructure and commercial development, any form of investment by the incumbents 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 relied upon the disposal of assets, debt finance, which is now almost exclusively obtained offshore, and the belief that the finances of others should be utilized in place of their own. This thirteen year strategy has produced a balance sheet, the instrument through which the health of any business is measured, that not only tells Everton supporters everything 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 and ignore the spin and painful management speak, what can be seen is that Everton is a club starved of investment, that Everton is a business whose liabilities far outweigh their assets, whose owners have done nothing whatsoever to add value to a business that stumbles from one crisis to the next; it tells you that Everton have been left a shadow 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 current owners of Everton FC are looking at a sale price in the region of £125m; a remarkable return on their initial investment of £22m, on the basis they’ve done nothing to enhance the business
explained events such as the 94% increase in other operating costs, which has been desperately explained away as being at similar levels to other clubs, which it is; but how many experienced a 94% increase in a single year? How many have been told the increases relate to expensive equipment purchases, that appear nowhere in the accounts whilst the profit and loss account tells as disastrous a tale as the balance sheet.
Everton’s fan activists are suspicious, and rightly so. Their names may have changed over time, from The GFE to KEIOC to The Blue Union, but their pedigree remains the same; they’re kindred spirits who have all been misled, misled over an iconic waterfront stadium, the aforementioned relocation to a Tesco car park and a proposed development at Goodison Park; projects that have collectively wasted millions of pounds that Everton could ill afford. It’s not these fans who have wasted the money, yet they have been treated with a level of contempt and disdain that is hard to believe, certainly hard to believe for the fans who naively call for them to enter into dialog with their antagonists, challenging them to support the club, to support the board; naive because, unlike the activists, they are unaware of the depths Everton will go to in order to discredit them; using people masquerading as freelance journalists to photograph them, compiling a blacklist that the fans have clear evidence of being in operation and having a board actively directing the club’s employees to act against them. Outrageous? Yes, but not as outrageous as what many of these fans believe the owners are looking at a sale price in the region of £125m; a remarkable return on has been perpetrated at Goodison Park over the past their initial investment of £22m, remarkable on the basis they’ve done nothing to thirteen years. enhance the business, have cost the business millions, through their undeliverable schemes designed to avoid investment, and now they refuse to accept a few basic Fan activists such as the Blue Union believe that it is the tenets of the investment world; that the value of any personal investment can go very ownership of the club that is both questionable down as well as up, is not guaranteed and may return less than the value of the and the root cause of all of the main problems at original investment or nothing at all. Everton. The fan group, which has been slowly gaining acceptance and gathering credibility since its To protect those truly responsible for the financial fiasco at Everton, club officials emergence an umbrella organisation, two years ago, attempt to paint a very different picture, a picture all too readily accepted by has recently held a very informative public meeting proponents of the board who are usually opponents of the fan activists who have with Everton legend Neville Southall in attendance and striven to expose what has taken place. Poorly presented excuses, such as, “we only are increasingly being brought to the attention of their need to sell a few players to address the balance sheet problem” are readily offered in fanbase by the national press due to their activities and place of what clearly should be done, along with explanations into inadequately affiliation with the Football Supporters Federation.
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All very different from the early days when Everton’s own fans, encouraged by the club of course, were quick to 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 being spat at; although, rather tellingly, he conveniently chooses to make these allegations to others rather than speaking with those accused directly. Fan activists prefer hard evidence rather than innuendo and misinformation. So when they raise the question of the ownership of the club it’s based on what they’ve been told of the role of Sir Philip Green by former directors who were well placed to observe what was taking place; how his money has been used to pay former directors for their shares and how his influence over the board’s decisions forced another to leave the club. They’re concerned that this is the root cause of the problems at Everton; making it perhaps perfectly understandable why individuals won’t invest in something that simply isn’t theirs in the first place. The dissidents attempt not to mistake symptoms for causes; they attempt to identify the cause and address the problem. 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.
be careful what you wish for
Bill Kenwright’s consortium turned a poorly performing business into a truly appalling one which is camouflaged by the £53m from TV money
Unlike at other clubs such as Liverpool and Manchester United, the simple explanations over ownership and debt are unfortunately thin on the ground at Everton where the truth is convoluted and inextricably interlinked with fantasy designed to mislead. The recent revelation that Everton’s Finch Farm training ground has been purchased by Liverpool City Council, just prior to the previous owners, Finch Farm Ltd, being liquidated 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 can understand. Everton would benefit from much lower rental costs, the new owners apparently waiving their rights to levels of income set out under the terms of the previous lease, charges which were outlined in the DTZ prospectus, produced in 2011, when the owners put it up for sale. Everton have stated that Finch Farm Ltd has nothing to do with them so it’s all the more intriguing as to why Everton approached Liverpool City Council to take out a loan to buy Finch Farm twelve months ago and even more intriguing as to why the directors of Everton, faced with yet another golden opportunity to actually do something positive, either guaranteeing a loan or providing a soft loan to secure the property, which would cut out the middleman, the council, 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 Evertonian would 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 ultimate ownership of a substantial number of Everton shares haven’t been declared in accordance with Premier League rules or is it an inability to increase the level of debt shown on the balance sheet, due to covenants on indebtedness attached to the 2002 Prudential securitization loan? Measures preventing excessive debt are common clauses with this form of debt finance; the loan, which will cost the club £68m over its term, was
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entered into due to excessive debt which could have seen the club enter administration; it was essentially a debt consolidation loan, the causes of which weren’t addressed meaning that two years later Wayne Rooney was sold to save the club yet again. The securitization loan also put an end to the proposed 2010 development at Goodison’s Park End, a development, which when announced, was described as being “as a result of Everton learning valuable lessons following the failure of Kirkby.” A bizarre statement as they’d learnt nothing; once again they were reliant on the finances of yet another middleman, Williams Tarr, who were paying for the construction which was to be leased back. Much to the embarrassment of Everton, who were a little premature, Williams Tarr couldn’t secure total ownership of the land due to the charge held by Prudential. The proposed lease was to have been serviced by Everton’s outsourcing partners, Sodexo and in particular Kitbag, yet another middleman, who having addressed the club’s inability to run two shops and a website through a standard outsourcing merchandise deal, appear to have now obtained the rights to Everton’s kit supply deal, the absence of which, from Everton commercial stream, will cost the club over £50m over the course of the Kitbag contract. Everton’s peers put the income from their own self- negotiated deals, with their kit manufacturers, to good use on the pitch, as was seen in January 2013 when the plea to the board, by David Moyes, for support in the push for European football, went unanswered; whilst others strengthened and achieved, Everton stagnated and the rest as they say is history.
history has told us who the real evertonians were in 1892, who will be the real evertonians attending the everton eGM at the Philharmonic hall?
The responsibility for these repeated failures, along with the inability to deliver any tangible solutions to a whole host of problems, is unquestionable. The board needs to stop looking for the next free lunch and take responsibility for the past as well as the future. The future will only be addressed when the board admit that their failures have cost them, not Everton, not the small shareholders and the fans, them, millions and millions of pounds. The chairman, Bill Kenwright, needs to understand that history is not written by the sycophants who promote his embarrassing stories; it will be written by those who have exposed the catalogue of disasters that have befallen Everton and if he wants to be remembered as someone other than the worst chairman in the history of the club, he needs to act now. The dissenters of the Blue Union have only ever made one request of the chairman, that he brings in professionals to conduct the sale process; anything else will only be achieved with a new owner. Their plans to achieve fan representation, whilst embracing the need for a professional business approach, are advanced and once again can only come to fruition once the ownership situation of the club is successfully resolved. Modern Evertonians will gather at the forthcoming EGM next week and think, with their modern levels of communication, smartphones, twitter, facebook the net and websites, that they are so much more sophisticated and removed from their forefathers of the nineteenth century. They’ll think that today is very different than over one hundred and twenty years ago, yet they’d be surprised to learn of press reports which talk of divisions in the ranks in 1892, of Houldingites, supporters of club president John Houlding, and that those supporting George Mahon at their meeting which defined the history of the club, entered into what were described as discussions which grew “irregular and personal” and that the “Houldingites” thought the dissenters didn’t know what they were talking about. History has told us who the real Evertonians were in 1892, who will be the real Evertonians attending the Everton EGM at The Philharmonic Hall on June 26th at 18:00?
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