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Friday, January 31, 2014

All Fur Coat and no Knickers

Throughout the Kenwright era Everton’s accounts have always featured an imaginative preamble, creative summaries coupled with emotional reviews of off-field activities which, whilst having little impact on the matters in hand, served only to deflect from the root cause of Everton’s prevailing problems, the non-performance of a demonstrably inept board and the insipid activities of an equally inept management team who continually lunge from one expensive crisis to the next such as Kirkby, Everton Place and the embarrassing and ultimately costly badge fiasco.

This year, somewhat surprisingly, they have surpassed themselves; an eighty page document, a massive 150% increase on recent years, leads the reader firmly down a long and well-trodden path. The question is, why?

In terms of the preamble, less would have definitely been more as, in comparison to previous years, the accounts presented this year appear positively glowing, turnover is up, costs are being controlled, it’s a club so lean and mean Mr Micawber would have been ecstatic, a club perfectly positioned to take advantage of this year’s massive windfall from the Premier League’s increased media payments. Yet perhaps the theatrical presentation and the equally positive accompanying press release, which the vast majority in the media will unquestioningly regurgitate, fails to hide the full story, fails to disguise the underlying trend seen by the more discerning eye.

The stark reality is that earnings remain insufficient to drive the business forward; indeed EBITDA yet again fails to even cover the interest payable on loans, borrowing, from unidentifiable offshore entities, remains a necessity with a further £10m borrowed during this period and player purchases, perfectly balanced via sell to buy, remain wholly dependent on continued disposals resulting in a heavy reliance on a short-sighted player recruitment policy whilst Everton’s continued inability to address the commercial opportunities, being exploited by all other clubs, continues to be somewhat of an elusive challenge, a major hindrance to competing financially with their peers in the Premier League.


Yes the new media deal will make a difference in the future, if players and their agents are prevented from once again taking the lion’s share, but a rising tide lifts all ships and Everton, if they are to progress from this mind numbing mediocrity, desperately need to address their commercial shortcomings, the real reason why they continually fail to compete financially.

Attempting to develop commercial opportunities, opportunities which are being exploited to great effect by all other clubs, is a subject which KEIOC has repeatedly highlighted. The true nature of the deal with Kitbag is finally confirmed in the latest accounts when the income from the line “Sponsorship, Advertising and Merchandising” is compared to the previous year which was the final year of the Le Coq Sportif kit supply deal. When the record ten year, £30m, Kitbag deal was originally announced, in 2009, proclaimed as the best deal in the history of the club, it covered the sale of kits and merchandise through two shops and an online store. There was a separate five year kit supply deal with Le Coq Sportif but three years into this arrangement they were replaced by Nike in a deal negotiated by Kitbag. When brokered, Kitbag were also being announced as the financiers, with Sodexo, of the ill-fated £9m Park End “Goodison Place” development, a deal described by Everton’s CEO at the time as “a development which would be "self-funded" as cash would be taken from extended deals with catering partner Sodexo and retail partner Kitbag.” Surely Everton wouldn’t have signed away the rights to a Kit Supply deal so cheaply, deals that all other clubs in the Premier League are increasingly exploiting through their position in the most valuable league in the world? Surely not.

Whilst Nike, along with a host of major manufacturers, are paying millions a season, tens of millions in many cases, for the right to supply our individual Premier League clubs, even mediocre clubs, Everton aren’t seeing a penny, so the question is where is all the money going, who’s in receipt of Everton’s Kit supply money? This isn’t an insignificant amount we’re talking about, even a cursory look at what other clubs are receiving would indicate a figure between £50m and £100m over the term of the Kitbag contract. Let’s hope the commercial team doesn’t sign an extension with Kitbag as a form of compensation for the collapse in merchandise sales due to the badge fiasco! If true it really is the best deal in Everton’s history, the best deal for Kitbag!














The chairman writes “when I sit down to carry out my review of the previous year, I focus on whether our Club is in a better position than it was a year ago….the answer can only be a resounding yes” Really? Tuesday night didn’t feel like that, the above table doesn’t show that and the total lack of any form of investment from a single member of the board coupled with an inability to address the stadium issue due to a lack of any form of cohesive vision along with the continued trend displayed in these accounts tells anybody with a modicum of intelligence otherwise.

No doubt the board will answer this question, along with how they’re progressing on the sale of the club, the search for new investment and the progress on the new stadium at the forthcoming AGM, meetings which were traditionally held in the month following publication of the accounts, meetings that, you’ll remember, were reinstated following last year’s EGM; unless of course the board are going to renege on the vote taken by the shareholders?

Of course there are some real signs of hope, Roberto has arrived with a fresher and more appealing brand of football and at least one of the idiots who should never have been at the club in the first place has been rightly shown the door and replaced by a more competent individual.

Viva la revolución
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