I was thinking about investment, a hot topic amongst Evertonian’s and football in general, and it got me thinking, from a business perspective, would I, if I had the money at my disposal, invest in Everton as a business opportunity?

I have shared, in my previous articles on the site, my views on the current state of our club, such as the marketing side in Liverpool One Everton Nil, and the development and limitations of our current board in Kenwright – To Be Or Not To Be? However I’ve never really moved into the subject of investment in depth.

So many clubs have seen foreign investment in recent years, but Everton remain one of the clubs yet to succumb to the foreign money currently swimming around the Premier League. Most of these clubs have certain major factors in common; they tend to be London clubs, thus seemingly making them a more fashionable acquisition, or they are in areas with large catchments areas with minimal local competition and they tend to have modern stadiums. Everton, along with several other clubs, seem to have been overlooked or just don’t seem to be attractive to investors.

So let’s go to basics, how much would it cost to purchase Everton, what areas of Everton need investing in, and what future potential for extra revenue does Everton have?

Buying The Club

After his acquisition of the club in 1999, Kenwright immediately announced he was seeking to find new investors to help move the club forward, but now 9 year later, we still find ourselves without any new investors. In 2004, True Blue Holdings, the consortium which bought out Peter Johnson, was dissolved, making it easier for any potential investors to buy into the club, but even this has not lead to any concrete interest. Between the summer of 2004, when Gregg became disillusioned with Everton and wanted out, and winter 2006, when Earle bought Gregg’s approximately 25% share in Everton, no one, bar the ill fated Fortress Funds, expressed any interest in Everton. That means that no one made any serious takeover bids for a club which had a chairman who openly expressed his desire to attract investment, and the club’s second biggest shareholder was actively seeking a get out.

The majority of Everton’s shares are owned by a small group of people, with approximately 75% of Everton belonging to just 5 people, however Everton have no majority shareholder, so it would be possible for any serious investor to buy the majority of Everton Football Club, regardless of the stance of any one major shareholder.

The current value of Everton Football Club, to some, may seem surprising low. At current share price, usually between £1250 and £1500, with 35000 individual shares, Everton is currently valued between £43 750 000 and £52 500 000.

Improving The Club

It is fair to point out that Everton is a club on the up, which, despite a frustrating summer on the transfer front, has been on an upward trend for the majority of the past decade. I have, in previous articles, stated that I believed, when Kenwright seized control in 1999, Everton were a club stuck very much in the 60s, with a 1960s stadium, 1960s training ground, 1960s levels of marketing and a squad full of players who were in their prime in the 1960s. It is fair to say that many things have really advanced considerably, our marketing, though not at the cutting edge, has caught up by about 30 years, and is probably only about 5 or so years behind the times. Our training ground is now very much world class, whilst our players are of the best quality at Everton for some considerable time.

However one very big obstacle remains to Everton’s return to grace, the 1960s stadium we are currently residing in. With Destination Kirkby now on the rocks, it looks likely that Everton are going to have to find alternative sites. LCC have already stated that they will not offer Everton the same deal as Knowsley Council, who offered Everton the land on a very cheap lease, instead Everton, if they chose to locate within the city boundary, will need to pay market value for the land. Everton will also have to go into any potential new stadium proposal without the discount from Barr Construction, which was reported to have been in the region of £50 million. This means that, for the vitally required new stadium, Everton will now almost certainly need to invest between £120 million and £150 million for a new stadium of similar quality to the proposed Kirkby stadium.

Everton also have a debt to consider. Everton’s debts are currently standing at approximately £66 million, which although currently manageable, with the ‘credit crunch’ and increasing interest rates, the sooner these debts are cleared, the sooner Everton’s revenue can be invested back in the club, with Everton’s debt repayments currently standing at just under £3 million per year.

Everton are also currently lagging slightly behind in the marketing department. Everton can not claim a tradition of buying replica shirts and merchandise to the same degree as fans of Newcastle do, nor can we boast of being a major attraction to football tourists, meaning that the opening of a shop in the city centre will likely be run at a loss or with very little positive contribution. However Everton’s marketing and merchandising does need a boost, the city of Liverpool is full of images of LFC, meaning it would be possible for non-totalling tourists to visit our city without even noticing that Everton FC ply their trade here. For the required boost, to bring us on par with the likes of Spurs and Newcastle, Everton, in my opinion, would need an increased budget of around 2 million for both Research and Development of new merchandising, an increased marketing team, and a larger budget for promoting Everton at home and abroad.

Potential Revenue Return

There is a misconception that football is big business, football is not big business, far from it, football is business, but by no means big business. My memory may be playing tricks on me, but I seem to recall that Marks & Spencer’s flagship store on Oxford Street records a larger annual revenue than Manchester United, football’s wealthiest club. That is one store generating more revenue than the richest football club, which considering M&S are small in comparison with TESCO on a national level, who themselves are nothing in comparison to Coca Cola on an international level, football can not be classed as being big business, in fact the total revenue from all the European premier leagues according to Deloitte and Touche was £10.7 billion, only £1.6 billion more than M&S recorded in 2007. Everton’s current revenue stands at just £51.4million.

Everton’s catchment area is currently approximately 1.5million, which they share with Liverpool, and to a lesser extent in areas cross over with Manchester City and Manchester United, so it can be assumed that the local market is saturated by four of the biggest clubs in Britain, in fact the same can be said for the British market as a whole. This thus means that any increased revenue will come from foreign markets and non-totalling ventures. Everton are currently marketing at a steady level overseas with Soccer Prince, Chang and other ventures, but this will need to be taken up a gear if Everton are to compete with the elite which are pouring far larger resources into marketing overseas.

Total Investment & Types Of Investment

From this, I believe, if an investor was to come along with serious ambitions of building solid foundations to put Everton in the European elite long term, the potential buyer would need to put up in excess £220 million, this is before even considering the playing side of Everton. With the majority of this going on a new stadium, the importance of the success of the faltering Destination Kirkby is very evident.

If a potential businessman sees past this huge sum of money, the question is, what type of investor do Everton need, as Kenwright has always stated he will not sell to anyone but ‘the right person’.

The goings on at Liverpool are there for all to see, with the club plunged into debt, meaning that the team must qualify for the Champions League year in year out in order to keep up with payments. Manchester United under the Glazers, from a glance, seem to be doing very well, however try telling those fans who have been priced out of watching their team with price hikes and unfair ticket schemes that the Glazers are a good thing for Manchester United. Roman Abramovic may be pouring money into Chelsea, but he is doing so whilst changing the club’s image and soul, with Chelsea’s aim not being to make Chelsea big, but to make Chelsea the new Manchester United, and then of course there is Manchester City. These are all examples of investment I believe we should avoid like the plague.

With so many club’s becoming faceless franchises, for Everton’s individuality to be maintained, the investor has to be right. I personally want someone to invest in Everton Football Club, not the name, but the club. The difference between the likes of Chelsea, United and Liverpool is minimal, with the formation of FC United and Reclaim the Kop highlighting this. Everton need a 21st century John Moores, the man who bank rolled Everton in the 60s. He invested in the club and the club’s heritage, his aim was to rejuvenate Everton, not to create a new club. We need someone to invest in the Everton brand, the People’s Club, the School Of Science, to show people that we are one of the original pioneers of football, that we boast a record of success with cultured attacking football, whilst not turning the back on the fans and merely replacing them with new ones. This is obviously a very difficult balancing act, as any new owner would obviously aim to increase revenue with ticket price rises and other ventures which could affect the fan’s pockets.

I understand that this may seem very negative to many people, but I assure you it is not, not all is lost, we don’t have to settle for out lot, however the belief by some that there is a big businessman or sugar daddy out there to save Everton and instantly transform us into a top four club is somewhat far fetched, as many businessmen will be put off after an initial look into what investment Everton needs, whilst a sugar daddy, in my opinion, would be damaging to the club’s heritage and culture. I do, however, have ultimate faith in Everton Football Club, I personally believe that, in time, we will find our way back to the top, as long as we continue laying down solid foundations.

I believe that there will be a company or wealthy individual out there who sees the potential in Everton Football Club, and all we stand for, and that they will be willing to buy a minority share holding in Everton Football Club. Everton need to find this person, as we need to release a substantial amount of new shares to give us a cash injection, and, with the imminent collapse of Destination Kirkby, if we are to be the owners of our new stadium, we are going to have to find a backer willing to act as a guarantor for a very large loan, which ironically creates a catch 22 situation, we need an investor to build a new stadium, but many won’t touch us without one. But I have confidence that Everton Football Club, the founders and longest established member of the top flight will find that someone who will give us that boost we need to help build the next layers of foundations on our slow return to grace.

So back to my questioning myself as to whether I would invest in Everton as a business proposal. I would not invest the sums required to make Everton a member of the elite, as quite simply it is one gamble too far, even clubs like Villa and West Ham, who required less initial investment, have owners reluctant to invest vast sums to take break into the elite, as there are currently around eleven teams in the Premierleague who have an eye on the top four, including the teams currently occupying it, and the maths is simple, eleven does not go into four. As much as it pains me to say it, I would also have invested in many of the teams who have gained investment ahead of Everton, mainly due to location and stadium issues. However I would be willing to buy a smaller shareholding in Everton, I would be willing to help provide smaller levels of funding, and enter into a smaller gamble. Essentially I’m saying there isn’t likely to be an investor out there who purely aims to break into the top four where we so desire to be, but there will be an investor out there willing to give us that little boost, help consolidate our status as a UEFA Cup team and hopefully, slowly with growth and strengthening both on and off the pitch, we might manage to gain Champions League qualification for several seasons running.

Everton’s return to the top, I believe, won’t come in the form of a business man’s blank cheque, but will come by steady but ambitious management off the field, and, of course, Moyes’ great management on it. Unfortunately the road to the top, in my opinion, will be long, and whilst other clubs maybe taking gambles with risky short cuts, if we continue with the course we are currently on, preferably with the boost of a minority investor, we will find ourselves closer to the top for al onger period of time than the list of pretenders currently riding the short term wave of foreign money.

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