Dummies Guide

The Keep Everton In Our City campaign group, formed in early 2007 by a concerned and disillusioned faction of matchgoing Evertonians who had sat through and watched as the debacles of the Kings Dock, NTL and Fortress Sports Fund schemes unravelled before them, has evolved significantly since those early days but has steadfastly stood by their initial concerns:

Today, initial concerns well founded, supporters of KEIOC are embroiled in a public inquiry (1) into a development that is 320% greater than that allowed for the whole of Knowsley under current planning policies (2); the stadium, now valued at £130M (3), continues to baffle the collective minds of those QC’s at the inquiry that are attempting to understand firstly Everton’s ability to generate their £78M contribution (4) and, secondly, exactly where Tesco’s £52M contribution is actually coming from (5).

A cursory look at the quality and sheer quantity of evidence presented to the public inquiry by KEIOC (6) gives an indication that the group are perhaps something more than an Everton supporting collection of fanatical, passionate and emotional butchers, bakers and candlestick makers. Within their rank and file they can call on solicitors, barristers, engineers, architects, councillors, council officers, planners, Members of Parliament and transport experts to name but a few. Remarkably, this group, from such a diverse background, sit comfortably together due to their belief in a common cause; simply that Everton do not belong in Kirkby.

The campaign to date, funded through donations from matchgoing Evertonians, has seen planes flying over Goodison, leafleting, billboard advertising, funding and support for the establishment of a political party, the lobbying of shareholders, bringing together the two shareholders associations at meetings and, most recently, funding and conducting the campaign to deliver an EGM on the question of Kirkby.

To some, KEIOC represents a so called luddites view, a group opposed to change and in favour of maintaining the status quo; the reality couldn’t be more different; supporters of KEIOC embrace evolutionary and revolutionary concepts to advance the club, and today they are just as capable of discussing the nuances of the Regional Spatial Strategy, Unitary Development Plans and elements of the North West Retail Hierarchy as they are debating what Arteta’s best position is or whom David Moyes should play in the back four.

At the inquiry KEIOC supporters happily discuss matters with Everton’s acting CEO, Robert Elstone, for whom they have a healthy respect. KEIOC’s argument isn’t with individuals within the club it’s simply a difference of opinion as to what is best for the future prosperity of the club and, importantly, its supporters.

At this moment, there are essentially two major aims to the KEIOC campaign. Firstly, preventing the relocation of the club to Kirkby and secondly the promotion of two specific sites, within Liverpool, that KEIOC believe will enable Everton to progress as a major premiership club.

There appears to be quite a lot of confusion surrounding the first aim; for KEIOC it’s not simply an emotional objection to Everton setting up home outside the City of Liverpool; save for some arbitrary civic boundary Kirkby is, after all, as much a part of Liverpool as Walton or Anfield. The primary objection surrounds the business case put forward by the club, the secondary objection concerns the future consequences for the club and its supporters and the tertiary objection involves the ability of the proposed stadium to deliver what is required for a top-flight premiership club.

Kirkby is in desperate need of appropriate regeneration yet many, even within Kirkby, are oblivious to the sheer scale of what is being proposed by the proponents. This retail development is half the size of the Trafford Centre and the Liverpool One developments and, due to this, comes into conflict with a whole host of local, regional and national planning policies, hence the objections from all neighbouring authorities.

KEIOC’s case against Kirkby is that readily available evidence would appear to indicate that the stadium would simply fail to deliver not only what was promised to the supporters in 2007 but also those revenue streams, estimated by Deloitte (7), that are essential for the future viability of the club. The following points should not be considered in isolation as representing a killer blow to the stadium project, their impact is derived from their collective application:

Seats

The only new stadia that function near capacity are those of Arsenal and Reading. One of the reasons behind this is that both clubs built stadia of a size appropriate to their need; Arsenal, with near maximum attendance levels at Highbury and with a 20,000 season ticket waiting list built a 60,000-seat stadium and Reading, located in a small town, built a 24,000-seat stadium. At the other end of the spectrum is Sunderland; having built a 49,000-seat stadium they have, according to Deloitte, over 16,000 empty seats at every game. An investigation into attendance levels at all new stadia built since 1994 reveals that average attendances, at those stadia, represent 77% of capacity (11). Deloitte issue a warning over getting this wrong in their letter concerning the Everton move (7).

Distance to a major centre

As previously described, it is the collective effect of the aforementioned concerns that KEIOC are highlighting as potential dangers to the future well being of Everton Football Club. KEIOC’s case against the proposed relocation of Everton Football Club to Kirkby can be encapsulated in the following statement:

KEIOC’s initial concerns, surrounding the pursuit of a stadium development that appeared too good to be true, the financing of which appeared flawed and the development of which represented such a significant departure from current planning policies that the secretary of state would jeopardize the project by calling in the application, were all proven to be legitimate. The fans have now seen that the stadium is far from effectively free, will not generate £10m a season for the manager and the public inquiry has been sitting since November.

It may well be the case, as some believe, that a new stadium for £80m still represents value for money and in the absence of any viable alternative represents Everton’s only option. However, such a stadium in a location that fails to attract the level of interest from fans, the corporate hospitality sector and the conference and banqueting market is of little use as a revenue generator or as an aid to the future aspirations of a top flight premiership club.

Using known factors such as the 40% opposition to the move, trailblazing transport and travel restrictions, limitations on use of the stadium already in place and research using data provided by Deloitte, KEIOC predict that attendance levels, once the new stadium effect has subsided, will be in the region of 38,000 and that the financial benefit of relocation will be negated. Some, not all, of these problems may be addressed through the implementation of an aggressive marketing and discounting policy, but this again will reduce the level of contribution for on pitch activities and KEIOC believe that the collective impact of these factors will prove to be overwhelming. 

Irrespective of the arguments for and against the relocation, there remains the presence of a £52m cross-subsidy from Tesco that for many is the decisive factor in accepting the move. KEIOC aren’t expecting to see Sir Terry Leahy presenting Bill Kenwright with a giant cheque for £52m on the pitch at Goodison any time soon. Despite the best endeavours by top QC’s at the inquiry to get to the bottom of where this £52m is coming from, the confusion between cost and value remains. KEIOC believe the explanation has always been in the public realm. In 2007, in response to claims by Everton directors that Everton were to receive £50m (sic) from Tesco, Mr Tony Fletcher of Tesco stated "Reports in a number of news outlets today have stated that Tesco will fund £50m towards the cost of a new stadium for Everton FC. Tesco wish to point out that the intention would be for the proposed stadium funding package to be derived from the value generated by the overall retail led development scheme not as a result of direct funding from Tesco.” KEIOC maintain that the stadium’s cost and value are separate issues.”

Whether the application is approved or declined KEIOC’s position and resolve will remain the same. If approved, the pressure will be on for Everton to finance the construction cost and it has been admitted during the inquiry that Everton have, to date, no finance available from their stated option list (21). If the application is declined the pressure will be on Everton to develop an alternative plan, either a redeveloped Goodison or a new build on another site.

Whilst Everton have been restricted under the terms of their exclusivity agreement with Tesco and Knowsley Council, KEIOC have persevered with building good relationships with Liverpool City Council and the owners of the land, known as the loop site, on Scotland Rd.

During many meetings with the leader of the Council and his opposite number in the Labour group, the councillors have repeatedly confirmed that they would be prepared to assist Everton to redevelop Goodison or develop the Scotland Rd site; in fact this assistance is a matter of public record under Council resolution 538 (22). These leaders have spoken at KEIOC meetings and have been encouraged by KEIOC to speak at Council planning meetings and the 2008 EGM held at Goodison where Warren Bradley questioned Everton’s version of events surrounding working with the Council and Joe Anderson delivered a rousing speech in favour of a redeveloped Goodison Park that was well received by the vast majority of people in the room on the night (23).

KEIOC has encouraged the owner of the Scotland Rd loop site (24) to maintain interest in the possibility of developing the site with Everton and the Council. Everton’s insistence that a retail enabling development of 500,000 sq feet, the size of Destination Kirkby, is the only method of financing available to deliver a football stadium is, in the opinion of KEIOC, little more than a device to prevent meaningful discussions taking place; this size of retail would never receive planning permission in Liverpool so another plan, more applicable and suitable to a top flight football club should be developed as a matter of urgency.

To secure a new or redeveloped stadium KEIOC advocate the use of established yet innovative financing methods coupled with the appropriate options already highlighted by Everton. The use of asset disposal, stadium naming rights, syndicated debt finance and equity funding could be utilised in conjunction with funding from Equity Seat Right (25), a product that has been used in the United States to finance the complete construction cost of stadia without placing debt on the club, and, in line with the people’s club ethic, a supporters trust (26) should be established to finance a specific section of the stadium.

KEIOC have continued to campaign for an affordable stadium, in a suitable location that is acceptable to the supporters and one that will provide the maximum opportunity for Everton Football Club to generate the revenue streams essential for success in the premier league. KEIOC believe that two locations meet these criteria and the criteria laid down by the club, namely that any site must be available, suitable, viable, accessible and deliverable. KEIOC would add sustainable to this list, as long-term success of the location is essential.

With the aforementioned in mind KEIOC propose that the two sites for consideration should be Goodison Park and the Scotland Road Loop Site. Whilst both have their individual challenges, physical and financial, both could meet the future needs of Everton Football Club.

KEIOC’s support for these sites can be condensed into the following statement:

As an alternative to Destination Kirkby KEIOC support the phased redevelopment of Goodison Park or the relocation to a site on Scotland Road. Both sites have advantages and disadvantages yet both meet the qualifying criteria by being acceptable, available, suitable, viable, accessible, deliverable and sustainable.

Whilst construction difficulties and land requirements can all be solved through cooperation with engineers, architects and the council, the financing behind these schemes remains the greatest challenge.

A suitable method of financing the construction costs must be identified. In addition to established methods identified by the club, KEIOC advocate the establishment of a supporters trust to provide capital for the construction of a section of the stadium and the use of an innovative American financial product known as Equity Seat Right (ESR) to provide the main element of the financial package; this methodology has the desirable effect of placing no additional debt on the club. The negative effect of some loss of income due to the use of ESR can be offset by increased income derived from enhanced onsite hotel, conference, banqueting and leisure facilities.

The redevelopment of Goodison Park would see the fusion of the historic elements of Goodison, the first purpose built football stadium in England, with modern facilities offering unobstructed views, wide concourses and first class corporate facilities. The addition, at the Park end, of a hotel complex enhances the stadiums ability to attract non-matchday events.

A stadium on the Scotland Road site would be of an iconic and futuristic design suitable to take Everton into an exciting future. Incorporating features such as a sliding roof and sliding pitch technology, a twenty-five-story apartment, hotel, conference and banqueting complex, including additional restaurant and leisure facilities, means that this stadium would enable Everton to derive the maximum additional revenue from non-matchday events. Its close proximity to Liverpool’s City centre ensures transport and parking requirements are more than adequately met and will be an aid to the securing major events such as concerts, conferences, exhibitions and trade shows. KEIOC will shortly release a 3D fly by animation by Black Widow Internet promoting the Fusion & Vision aspects of what could be achieved at both sites.

Whichever way the decision on the public inquiry is given, it may well be the case that Everton need to have a deliverable contingency plan in place. It would be advantageous if that plan promoted a scheme that the vast majority of Evertonians could embrace.

KEIOC

Reference

  1. Source: The Secretary of State - The public inquiry was announced in August 2008, it began in November 2008.
  2. Source: KMBC - http://www.knowsley.gov.uk/resources/204576/udp_adopted2006.pdf
  3. http://inquiry.knowsley.gov.uk/Proof%20of%20Evidence/SUP_KMBC_A_1_1.pdf The Knowsley UDP allows for 9,000 sq m of supermarket space and an additional 7,000 sq m of additional comparison (non-food) retail, throughout the borough of Knowsley. Tesco have applied for 50,000 sq m in Kirkby alone
  4. Source: DTZ - http://www.knowsley.gov.uk/resources/228322/FinancialStatement.pdf In 2007, Both Keith Wyness and Sir Terry Leahy repeatedly told the fans that the stadium was worth £150m, when the DTZ, (KEIOC, Proof of Evidence, Appendix 5), report emerged as part of the planning application it became a £130m stadium, possibly due to the reduction in capacity or Everton’s ability to only raise £80m.
  5. Source: DTZ - http://www.knowsley.gov.uk/resources/228322/FinancialStatement.pdf £78m is listed in the DTZ report and in Robert Elstone’s proof of evidence as Everton’s current contribution towards the cost of the stadium, the public inquiry has added £6m to the cost of the stadium but neither Everton nor Tesco will explain who is going to pay for this.
  6. Source: Tesco leave the inquiry baffled as to the origin of the £52m http://www.liverpooldailypost.co.uk/everton-fc/everton-fc-stadium/2008/12/11/everton-inquiry-mystery-surrounds-kirkby-s-52million-economic-miracle-64375-22451792/
  7. Source: www.keioc.net
  8. Source: Deloitte - “New stadiums are not always successful; this is emphasised by the range of increased turnover from 19 per cent at Stoke City to 146 per cent at Middlesbrough. Deloitte warns that the 'new stadium effect' can quickly erode after one season, particularly if the club's performance on the pitch fails to live up to the expectations of its recent converts. In such cases, the 'feel good' factor associated with the move to a new stadium is quickly lost. Investment in the stadium has to be matched by investment in the team.” – Deloitte – August 2007
  9. Source: Keith Wyness - http://www.liverpooldailypost.co.uk/liverpool-news/regional-news/2007/07/17/everton-must-move-to-kirkby-64375-19465235/
  10. Source: Deloitte – Annual Review of Football Finance –May 2008
  11. Source - KEIOC cross-examination of Robert Elstone at the public inquiry: www.keioc.net Day 10. “Other clubs have elected to follow the relocation route in a bid to increase their stadium derived revenue, Arsenal have already relocated to a 60,000 seat stadium Ashburton Grove, around the corner from their traditional Highbury home, Tottenham are building a 60,000 seat stadium next door to White Hart Lane, West Ham are hoping to relocate to a new ground in the east end of London and our nearest and dearest “across the park” Liverpool are attempting to build a 60,000 seat stadium in Stanley Park next to their ground at Anfield. Can you tell me what was Arsenals season ticket waiting list before their move? It was twenty thousand. What is Tottenham’s waiting list? It’s twenty two thousand. What’s West Ham’s? It’s 8,000 and, finally, have you any idea what Liverpool’s is? It’s 65,000. Could you tell me what Everton’s season ticket waiting list is? None”
  12. Source: KEIOC and the Deloitte Annual Review of Football Finance (9)
  13. Source: applicants transport planners Steers Davies Gleave.
  14. Source: applicants transport planners Steers Davies Gleave
  15. Source: applicants transport planners Steers Davies Gleave
  16. Source: applicants transport planners Steers Davies Gleave
  17. Source: http://www.liverpooldailypost.co.uk/everton-fc/everton-fc-news/2009/01/08/everton-fc-told-cut-match-traffic-or-lose-10-000-seats-64375-22644826/
  18. Source: KEIOC and an investigation using data provided by the RAC.
  19. Source: Robert Elstone’s Proof of Evidence: http://inquiry.knowsley.gov.uk/Proof%20of%20Evidence/TEV_P8.pdf
  20. Source: The Public Inquiry - http://www.liverpooldailypost.co.uk/everton-fc/everton-fc-stadium/2008/12/11/everton-inquiry-mystery-surrounds-kirkby-s-52million-economic-miracle-64375-22451792/
  21. Source: DTZ Report - http://www.knowsley.gov.uk/resources/228322/FinancialStatement.pdf
  22. Source: KEIOC Cross-examination of Robert Elstone www.keioc.net Day 10
  23. Source: KEIOC - http://www.keioc.net/index.php?mact=News,cntnt01,detail,0&cntnt01articleid=19&cntnt01dateformat=%25d%20%25B%20%25Y&cntnt01returnid=85
  24. Source: KEIOC - http://www.scribd.com/doc/5586189/September-2008-EGM-Transcript-Questions-and-Answers
  25. Bestway Holdings Ltd, 2, Abbey Rd, Park Royal, London. NW10 7BW
  26. Source: Stadium Capital Finance Group. http://www.seatrights.com/
  27. Source: Supporters Direct http://www.supporters-direct.org/home.asp