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An Open Letter To: Mr. Bill Kenwright Cbe


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#1 Leadline

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Posted 20 Aug 2007 - 09:43

Heres the link: http://www.bluekippe...tadium2.htm#aol

An Open Letter to: Mr. Bill Kenwright CBE

Chairman
Everton FC
Goodison Park
Liverpool

Professor Tom Cannon
Ideopolis International Ltd.,
Rodney Street
Liverpool

Dear Chairman.

You’ll recall that two years ago I was elected as a “special advisor” to the Board at the club’s Annual General Meeting, so it is only right that I give you my advice on the proposed Ground move.

I am, also, writing to you because so many of my fellow Evertonians have asked my views on this crucial issue. I guess this reflects not only my role of a Business School Dean, but my long term – and very public – interest in sports finance.
Like every Blue, I feel many emotions. Some of the best nights and days of my life were at Goodison; against Fulham, when we won our first post-war title, against Bayern and the 4-4 against Liverpool. Goodison was great – but even greater were the players and the fans. I want my children and grandchildren to look forward to the same kind of success so I’ve looked closely at the case for the move to Kirkby and the alternatives.

Sir Terry Leahy has already completed some of the analysis I would normally make. He flags the scale of the Kirkby development – 80 acres against our current 7 acres and the slightly larger (than Goodison) Scotland Road Site – with all that means for development and new finance. He highlights the £150 million cost of the same stadium as a stand-alone project against £35M the Kirkby development is likely to cost Everton.

Looking at the alternative sites to Kirkby, it is hard to see how the costs to the club could be kept below £150 Million. The contribution of local and corporate partners is crucial to keeping the costs to the club down. I admire Sir Mohammed Anwar Pervez and his achievements at Bestway, but there is a world of difference between its financial capacity and that of Tesco. According to the latest figures Tesco’s profits are twice Bestway’s total turnover! At £4 billion, its profits are fifty times greater than Bestway’s £73 million profits.

It is hard to see how Bestway could provide significant financial support, when a £150 million stadium development would pretty well wipe out their entire profits for the last three years! Similar comments can be made about the local authorities. Here, I confess to some personal interests. Although I was born and lived off Stanley Road, my family – like so many Liverpudlians – was moved to Kirkby by the Council when I was eleven. Even now, although my company is based on Rodney Street, I have worked with Knowsley Council and found it an outstanding partner, as have Ford, Vertex, QVC and a host of others.

I don’t doubt Warren Bradley’s sincerity, but I question his ability to deliver his promises about funding, planning permissions, access roads etc. I remember the Kings’ Dock and the apparent promises about planning permission around Goodison and developments around the planned arena. Working on Rodney Street, I am acutely aware of the problems faced by the Mathew Street Festival, The Fourth Grace, The Tram etc. I am, also, aware that Warren’s already going cap in hand to Gordon Brown to cover a £20 million deficit on the Capital of Culture.

I am less than encouraged that a key role in Everton’s future will be played by Jason Harborrow, the Council’s newly appointed Executive Director for Culture, Media and Sport. We know him best, of course, as the Chief Executive of the Culture Company.
This means that I must conclude that the sites in Liverpool require that the club must fund any new ground development here out of its own resources. That means finding at least £150 million, plus any lost income while the parts of Goodison are redeveloped if the “redevelop at Goodison” option is pursued.

This raises some of the greatest concerns that I have about the future not just about Everton, but about many other top flight clubs in England. Despite the new money coming into the game through television, increased ticket prices, merchandising, Premier League clubs (if we include the risk investments of new owners) are massively in debt with total indebtedness now over £3 Billion or roughly the total Premier League TV income for the next 3 years.

I want Everton to be relatively debt free, if the feared financial crunch happens and Hedge Funds (already under pressure from crashing stock markets) and others start demanding their “pound of flesh” from new investors in the Premier League.
Every ½% increase in interest charges costs a club borrowing £150 Million an extra £1 Million a year– we’ve had four of these increases over the last year –on top of the £10 million required to service the basic debt for a stadium costing £150 million, plus any other of the club’s debts.

The Kirkby alternative will involve debt, but using Sir Terry’s figure of £35 Million, an annual outlay of around £2.5 Million to service the basic debt for the stadium against at least £11 Million for the Scotland Road site. Even staying at Goodison with no redevelopment costs but lost revenues from obstructed views, limited executive facilities, weak local amenities etc. is expensive. The table below answers many questions for me.

Comparing the three most widely touted alternatives and using conservative estimates of income and expenditure, the move can give us a minimum of £6.5 Million a year more than we have now to spend on players and other developments. The Scotland Road loop would actually mean £4.5M less than we have now or £11M annually less than Kirkby, even if we assume, as I do here, bigger average gates at that site.

Besides this, the likely two year delay could cost the club around £15 Million in lost income and added costs. Similar analysis for a redeveloped Goodison indicates that this is the most expensive option with the lowest returns. Over the next 5-6 years, the Scotland Road site would reduce Everton’s spending power by £50 million compared to Kirkby.



Kirkby Scotland Road Undeveloped Goodison
Costs Annual £M £M £M
Debt Servicing 2.5 11 0
Obstructed Views - - 1
Operating costs -1 0 0.5
Total 1.5 11 1.5
Net Additional Annual
Gate 4 4.5 0
Executive 2 2 0
Amenity Development car parks etc 2 0 0
Total 8 6.5 0
Balance +6.5 -4.5 -1.5

I’ll always remember the glory days and nights, but if I want my grandchildren to have more glory days and nights from the great players we can sign – rather than the bank charges we can pay – for me Tesco and Knowsley is undoubtedly the best choice.
I confirm, however, that whatever the outcome of the vote, wherever we play – I’ll support Everton.
Yours truly, Professor Tom Cannon. (20/08/07)

This fella make a very interesting number of points and he knows his stuff.
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#2 Bill

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Posted 20 Aug 2007 - 10:04

They all do mate, Both sides always put up good points or Figures and supposedly they all know their stuff, but when it comes to the crunch its you and me who have to Vote, so make sure you make its the right decision for yourself, not for what the other people are wanting.
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#3 RuffRob

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Posted 20 Aug 2007 - 16:24

All good stuff from the Proff, another who is thinking with his head.

My £100m estimate in difference in cost to Everton for the two most widely talked about proposals looks to be in the right order.

I think Licker is corret when he says that debating the issue is in a way a little pointless, as I agree that the Kirby development will more than likly go ahead - Its just two good an offer for the club to turn down and there is now way they are going to let it pass them by.
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