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Liverpool Echo – view from the Gwladys Street

December 29, 2016

the esk

This article first appeared in the Liverpool Echo on 28th December 2016.

1 – How do you judge our season so far?

It’s been a difficult season to date, and despite the hopes of the January transfer window (see below) I think it will continue to be difficult for the following reasons.

We had an appalling summer, and it’s my opinion that this is the primary reason for the levels of performance seen in the first half of the season. The summer, despite the early hopes and ambitions, seemed to be highly disruptive in terms of preparation for the season ahead.

We had a series of unsuccessful attempts (some which got extremely close to closing) with big name players, Moshiri in the early days of the summer was keen on at least one “trophy” player acquisition, sadly however that failed to materialise. Although Koeman was his no.1 choice as manager, it seemed to take an age to complete and for him to arrive at Finch Farm, similarly the recruitment of a director of football seemed less than smooth, although the final signing of Walsh must be viewed as a huge strategic and long term benefit to the club.

As reported the players themselves were less than optimally fit, at least by Koeman’s exacting standards and whilst in recent weeks we’ve seen the team looking much sharper and fitter that was certainly not the case in the early season.

On the pitch there’s been a puzzling lack of drive and ambition in the main. Puzzling because it must be clear that many of the squad are playing for their Everton futures, yet in the main that’s not been apparent much to the dismay of the ever loyal Blue hoards, especially the away support.

There’s evidence in recent weeks of a pick up in form and confidence – an excellent fighting display versus Arsenal followed by a more workman-like performance versus Leicester indicate better times, but from my perspective we won’t see huge progress until we have major personnel changes in the squad and also in the leadership on the pitch.

Jagielka has been a fine player for Everton since his arrival in 2007, but respectfully I believe he has limitations as a Captain on the pitch and whatsmore now appears to be struggling physically with the demands of the ever quickening pace of the Premier League. It might just be that a change of scene for his final years in the Premier League will serve him well and allow us to move on also.If so I’d have no hesitation in appointing Coleman  – a real leader on the pitch and I’m sure he’d be an equally fine club captain, something which Jagielka has excelled at to be fair.

Despite whatever signings we achieve in the January window, I don’t believe we’ll break into the top 6 this season (unless there’s a spectacular loss of form from those above) – best of the rest, the famed 7th place trophy is our realistic target, and hope for Europa League qualification through a FA Cup win.

2 – Lukaku – lazy and not worth £100k a week or a goal machine we should savour?

 

If Martinez did nothing else whilst at Everton he should be remembered as the man who convinced Lukaku to firstly sign on loan and subsequently on a permanent basis. I’ve watched Everton since the early 70’s and with the exception of Lineker’s one season with us, he’s the most efficient, ruthless finisher I’ve seen in a blue shirt.

That’s not to say he’s perfect, he’s not of course, but for the life of me I cannot understand those that wish to see Lukaku moved on in the summer transfer window. Every part of the club should be doing everything it can to retain him,and what’s more use him as a focal point to recruit other highly talented players. He is the only player in the current squad that you can see a Champions League level team being built around in the next two or three years.

His scoring record is exceptional particularly given his age, the relatively struggling team he’s had to play alongside for the last 30 months or so, and largely the absence of tactics suited to his game. If we can fix the issues of a struggling team and play more to a style which suits him – running at goal, partnered by a decent (at least) no.10 then not only will he score at the rate of one goal every other game, he’ll make us a more effective team and reduce the pressure on the defence and the requirement to play two defensive midfielders. Koeman has said we should press from higher up the pitch – yes we can do that, but not when Lukaku is isolated often 20 or 30 yards from the nearest blue shirt.

Just consider his current scoring rate for Everton at the age of 23 – 0.49 goals per game, that compares with some of our recent greats, Latchford (0.47), Royle (0.43), Cottee (0.41) and Sharp (0.36).

In my view it’s essential he signs a new contract, we keep him and build a team around him.

3 – What’s your take on the January transfer window and is it when Steve Walsh really starts earning his corn?

Traditionally a difficult window, but there has to be two major objectives this window. Reduce the number of players currently contracted to the club but not contributing, or likely to the first team or on loan. We have a large number of fringe players who frankly should be playing elsewhere permanently given their limited prospects at Everton – Niasse, Gibson, McGeady, younger players like McAleny, Garbutt and Galloway.

Then we have current squad members who have had game time but without being too harsh probably don’t fit the criteria moving forwards, Oviedo, Cleverly, McCarthy (despite recent upturn), Lennon and even Deulofeu.

Remove the above and we look desperately short on numbers, so yes this is when Walsh has to show he’s putting things in place not only for the short term but for longer term too. The second objective must be to start the recruitment process in January, continuing into the summer of 2017.

In terms of incoming players it is well documented that Schneiderlin and Depay are likely movers from Manchester United to ourselves. Schneiderlin has a good relationship with Koeman and would certainly solve several of our midfield problems. Depay is a highly talented individual who has lost his way somewhat – a Dutch friend is highly excited by the prospect of him regaining his form in a blue shirt.

Elsewhere a central defender (particularly if Jagielka was to leave) is essential. I’ve heard the Van Dijke has a great relationship not only with Koeman but his family – he’d be a tremendous acquisition both as a player but also as a statement if we could beat off the inevitable interest from Champions League level clubs.

I’m sure Wash has a couple of players not currently in the spotlight (as with Gueye) and I’d like to think he’s looking at a playmaker in midfield and someone to play alongside Lukaku.

If we could do early business on Lookman (from Charlton), Schneiderlin and Depay and then bring in Van Dijke plus a couple of Steve Walsh “finds” it would be a hugely successful window.

4 – What are your hopes ahead of the club’s General Meeting on January 4?

I’ll try and be brief. Above all else shareholders and fans need information. For all the wonderful work the club does on so many fronts providing information on the business of the club is not one of them. Now I understand that Everton are a private company and obviously there has to be commercial confidentiality,but we are due a lot if information on many important aspects of the club and our future.

Clearly the biggest issue and the one where information is so keenly sought after is the future ground move. I can’t think of a better statement in terms of the direction of the club that for the board to announce the agreement in principle (subject to planning permission) of the acquisition of the Bramley Moore dock site.

As the senior club in the City of Liverpool there would be nothing more fitting than the toes of our new stadium dipping into the waters of the Mersey.

Additionally I’d be keen to hear about the future financing of the stadium, the future ownership structure of the club – will Moshiri become outright owner or be happy to own a significant majority?

Clearly to compete against much more heavily resourced clubs in the Premier League we need to address our commercial performance. In recent years it has been constrained by a lack of capital, and dare I say it a lack of ambition from the board – those issues under Moshiri should no longer apply. It is time to hear of new plans for transforming our commercial performance so we can compete once more at the top of the Premier League.

I’ll touch on a couple of other items further down

5 – Will Ross Barkley ever be the player we hoped?

I guess the first question is whether or not our hopes were realistic? He’s a highly talented individual who has shown glimpses of being able to compete with the finest midfielders in the game, but, and it’s a big but, the hopes we placed on him have to date far exceeded his contribution regardless of his abilities.

For Koeman I believe the Barkley issue is the single largest issue of his management of Everton. Can Koeman provide whatever it is that’s required to see the fulfilment of his talents and our dreams? Perhaps it’s too early in Koeman’s reign but I don’t see any evidence to date that he’s worked out how best to play Barkley – advanced position or concentrate on a deeper more defensive role?

Perhaps Barkley himself doesn’t know the answer to his best position? For all his talent he doesn’t seem to have a firm idea of how he himself should play. Maybe that’s what makes him a difficult player to manage?Perhaps that is what is required – Ross himself to say, “OK this is my position, I’m going to make it my own and you (Koeman) can build a midfield around me”

The fear is that unless Ross imposes himself or Koeman imposes a workable solution on Ross we will never see the best of him, and either Ross or Koeman will lose patience and he’ll move to another club. It would be soul destroying to see another great young homemade talent have to move elsewhere to fulfil ambitions, albeit for very different reasons.

In the meantime every Blue should be fully behind Ross and make his job of finding himself in a Koeman team as easy as possible – Ross must know that every Blue wants him to succeed – at Everton.

6 – Any other business?

I’m from a family of Blues that stretches back in one form or another to our first game at Goodison. Throughout we’ve seen good times, great times and some pretty awful times also. However we’ve always believed not only are we the senior club in the city we are one of the greatest club teams in the history of the game.

The difficulty in recent years is seeing us not able to compete on the pitch because of the lack of resources and ambition off it. I believe that’s changing now, and I’m genuinely hopeful of our gradual rise back to the top of the game on the back of a well resourced owner, ambition on and off the pitch, a great manager and a highly competitive squad.

To achieve that the Moshiri influence has to increase and accelerate – the longer our transformation takes to come about the greater the gap between ourselves and the 6 clubs above us.

If the ambitions of the fans are to be met we have no time to waste. We must see huge improvements on the pitch and also off it. We need to invest in a new stadium asap, we need to bring new talent into the top of the club to drive us forward in the way our competitors have done in recent years. Accept with one difference, I want it done the Everton way, with a certain class and dignity, a recognition of our past, and most importantly retaining our roots in and our support of our community.

It’s a huge amount to ask for, but then if we are going to be true to our club motto we have a huge amount to do.

Nil satis nisi optimum is not just a motto, it should be the manner in which everything that has the Everton name attached to it should be done.

What the 2016 Accounts tell us about our future (and our past)

December 20, 2016

the esk

This article first appeared on Grandoldteam on 19th December 2016.

Timing is everything.

If proof was ever needed by Everton and Evertonians of the timing and relevance of the arrival of our new investor, then the latest accounts demonstrate that ably.

What we might have looked like today without Moshiri is very different from our future ahead of us. Looking at the accounts, without him we’d have probably not only sold Stones but had to have sold Lukaku last summer – the balance sheet was in such a mess. There would be no dockland stadium on the horizon, and in all probability we’d still have Martinez as manager and certainly not have Walsh and the team he’s building behind the scenes at Finch Farm and elsewhere.

Thus already we have much to be thankful for, yet the scale of the challenges ahead should not be easily dismissed.

Let’s start with the main news item of the accounts – the interest-free, security-free, repayment schedule-free loan of £80 million by Moshiri.

It’s unusual to say the least that a 49.9% shareholder would give the other shareholders who own half the company a free ride, nevertheless that’s what Moshiri has done.

Why has he done it? – out of necessity

Simply put he had to to enable the club to progress. Without the removal of the secured Prudential/AIB loan no ground move, land purchase, or option to buy would be possible. It was critical the loan was removed – it gives us freedom to do what we want, and freedom for Moshiri to acquire more shares in the future.

The short term debt through Rights & Media Funding would clearly affect our ability to borrow when required for the new stadium. It was also expensive, although not as expensive in the past. There’s a new facility with R&MF which might be used in the short term depending upon the level of net spending in the January window, but would not present the problems of previous years given the enormous increase in broadcasting revenues this year.

Looking at the rest of the accounts briefly, it’s a continued tale of under-performance on the commercial front. We must address this as soon as possible to fund future increases in player wages if we are to compete on the pitch.

The argument will be made that we’re held up by being at Goodison Park, we sell out our hospitality etc etc. Whilst that is true, it is the lack of commercial revenues and the gap between our current earnings and those of our competitors that should cause the greatest concern, and be addressed immediately.

It’s clear the Chang relationship will finish at the end of this season, probably to the relief of both parties, I think Chang have not fully benefited from our relationship in recent years and they’ll be happy to move on. What is most important though is that we get full value for the real estate that is our shirt front, we’re currently way below market rates based on the value of other shirt sponsorship deals – it will be interesting to see how much of an up-lift we will achieve. Equally the Kitbag (now owned by Fanatics) and the Umbro deal I hope is being re-examined, I can’t believe we will wait until 2019 to change suppliers.

Those that support Everton will be only too familiar with the expression “That’s Everton that” – loosely meaning two steps forward, one back, or there’s a positive but there’s also a big “but” somewhere in the sentence.

The accounts represent “that’s Everton that”. There’s the huge progress and potential enabled by Moshiri’s capital injection – the enabler for our new stadium and our more immediate progress on the pitch, but there’s also the legacy issues in terms of the current stadium, management, other major shareholders, commercial relationships and un-ambitious thinking.

The positive is that Moshiri has demonstrated his commitment and desire to move the club forward, not only with words but also hard cash. We’ve seen changes to the footballing management team, recruiting and coaching teams, but we’re yet to see the full scale of changes in the boardroom and upper management levels of the club off the pitch.

I’ve no doubt we will, and in the very near future the announcement over Bramley Moore and our new stadium, but let’s be quite clear, none of this would have and will have been possible without Moshiri – the progression has started, and I believe the pace of change will increase also in the coming months.

I started by saying timing is everything, the opening lines to the song with the same title are

“When the stars line up

And you catch a good break

People think you’re lucky

But you know it’s grace”

That’s Everton that.

The accounts show the legacy of the past, but they show the potential of the future under Moshiri, and that future is bright – very good times ahead.

Time for honesty, the squad and the need for a major overhaul

December 20, 2016

the esk

This article first appeared on Grandoldteam on 28th November 2016.

 I’m sure this will not be news to many of you, but sometimes it pays to state the obvious. Despite the talents of a small group of core players, we have a woefully weak squad which completely reflects the challenges facing the club.

It’s clear even our established players are not currently playing to form or ability but that’s not our greatest issue. Our biggest issue is the quality of the squad.

Looking on the official site we have a first team squad of 39 numbered players plus several non first team squad members.

Let’s start with the easy bit, the players who aren’t going to get a game for Koeman no matter what:

Niasse

McGeady*

Of the remaining players, we’ve McAleny, Browning, Pennington, Dowell and Grant who are unlikely to feature unless there’s an injury crisis.

Currently injured, we’ve got Gibson, Kone and currently Besic on the long term injury list – Besic when fit is the most likely to feature in a starting 11, Kone at best a squad player.

Galloway,Tarashaj, Garbutt and McGeady* are on loan

That leaves us with:

Goalkeepers Defenders Midfield Attackers
Stekelenburg Baines Barry Lukaku
Robles Coleman Gueye Bolasie
Funes Mori Barkley Mirallas
Jagielka Lennon Deulofeu
Williams Davies Valencia
Coleman McCarthy
Oviedo Cleverly
Holgate

Looking at that table, what is required? It’s a long list

In goal, Stekelenburg is capable of excellent games and moments of brilliance, but it’s his inconsistencies which have held him back. Robles is unfortunately just a level behind what is required in the Premier League. Ideally a replacement for Stekelenburg with him becoming #2, or at least a replacement for Robles.

Stekelenburg

In defence, Baines despite injury worries is still capable of a couple of more seasons in the Premier League. Jagielka, sadly, and I mean that genuinely is on a swift decline ( in a Howard sort of way) and needs replacing. Williams is in the absence of another candidate, Captain elect. Funes Mori, a worthwhile squad member, but we need at least one additional central defender. At right back Coleman, whilst not reaching the heights of 2 years ago still offers enough – for the time being at least. Oviedo is not the player he might have been, albeit understandably and must be a candidate for replacement.

Phil Jagielka

In midfield, the hope is that Barry can defy the sands of time and continue for a season or more with Gueye alongside – the question of whether we need to play 2 defensive midfielders is a discussion in itself.  Cleverly never has been an Everton player in my eyes, and I’m also not a huge fan of McCarthy, so there’s two replacements required. Lennon is reverting to the mean, a useful at times squad player but does not have the finished product to warrant an extended run in a high level Premier League team. That leaves Barkley who could be, should be, an answer to every Blues’ wishes – will he? I don’t know, but I’d hate him to become the player he could become somewhere else…..

Everton v Crystal Palace - Premier League

Up front we have Lukaku who I’d sign on a 10 year contract this evening if he’d agree to do so. For all the complaints, he is by a country mile our most valuable and significant player, our current squad still haven’t worked out the best way to support him but we’d be in serious trouble without him.

Bolasie, I think is a player with real ability – he’s not going to be consistent, but he’ll produce perhaps 1 in 3 games currently and with more options in the box, and more quality in decision making and delivery, more frequently. Mirallas and Deulofeu flatter to deceive and perhaps in the next stage of our development are useful squad players, but in a CL squad probably superfluous.

So where does that leave us going into this January window and following on in the summer?

kenwrightmoshiri

If we accept we need around 25 players capable of stepping up into the 1st team squad without weakening our performance significantly we’re short of many players.

Koeman, Walsh and Lawrence Stewart have a huge task ahead, with a minimum of nine replacements required before the beginning of the 2016/17 season, – goalkeeper, centre defence, left back, right midfield, centre midfield, advanced midfield, wide attacker, #10 and another centre forward.

That’s the scale of the task ahead.

The great disconnect, why we love our team but need the club to rebuild our trust

December 20, 2016

the esk

This article first appeared on Grandoldteam on 23rd November 2016.

When you speak to almost anyone in football about Everton Football Club, you normally get glowing references back – be it about their personal dealings, the warmth of welcome, professionalism, and how well the club is run.

The one major exception to that group is Evertonians themselves. Despite our love for our team, we all grumble about what we see on the pitch, and long for the success of previous eras, that is usual among football supporters. However there’s also a significant level of discontent about the way the club is run and how it communicates with the real stakeholders of any football club – the fans.

The question is whether that will continue under Moshiri’s ownership, or whether we’ll see a new era of openness and dialogue.

Fan engagement matters. It matters because it demonstrates trust between those running the club and those supporting the club. A lack of engagement breeds suspicion and causes unnecessary division and a lack of trust.

Before looking at the areas where engagement is required I’ll make one further observation on engagement. Look at the success of EiTC and the positives of engaging with the community. It’s been an amazing success benefiting all parties – the question to the football club is why not take those outreach principles and truly create the unity that Everton fan loyalty deserves, and in doing so benefits us all?

I want to talk about communication and corporate governance.

Communication with the fan base is critical, yet sadly almost completely overlooked by the club. In today’s age of multiple media and communication opportunities there is really no excuse for not communicating with fans other than if there is no intent to do so.

There are issues in the past, the present and future which require greater openness in disclosing details to the fans.

Despite the questions asked at last year’s AGM we are none the wiser in terms of past relationships with potential shadow directors, the identity of the beneficial ownership of past and current lenders to the club, and confirmation that the share ownership of the club in the past is consistent with that previously reported.

As we stand today we are not any wiser as to the future investment in the club, the ownership structure, its funding, its plans and critically the new stadium, including location and design.

Clarification of all the above will go a long way to rebuilding trust, and creating a platform to move forward. The opportunity for such disclosure is perhaps a few weeks away at our AGM – I hope the club does not forgo the opportunity to put the record straight.

The role of directors and Corporate Governance

Way back in 1899 the FA created a set of rules to protect football club’s best interests. Later it became known as Rule 34 and stated “ that being a club director was a form of public service, that directors should be ‘custodians’, to support and look after clubs”. It was this rule that prohibited directors from being paid, restricted the dividends to shareholders, and protected grounds from asset-stripping.

These rules fell by the wayside in 1983 when Spurs created a holding company structure (with the implied permission of the FA) which released club directors from the responsibilities of rule 34.

As a result investment has flowed into almost all clubs (with a notable exception). Looking forwards as leading clubs become hugely profitable on the back of the massive broadcasting deals in both the Premier League and the Champions League, it’s unrealistic to assume those days will once more return.

However the underlying principles of being custodians, and the resulting public service element of club directorships should not be ignored it should be encouraged. This I believe is hugely relevant to Everton given our history, our values and perhaps of all English clubs, our great roots in our local community.

How can this be achieved?

  • A commitment to the principles of rule 34, particularly the custodianship and public service element of being an Everton director.
  • A commitment to the best standards of corporate governance, including;
    • A majority of directors being independent of the executive management and shareholders
    • Ensuring that the interest of the shareholders are aligned with the interests of the football club
    • A commitment to the highest standards of disclosure, reporting, audit and accounting standards
  • A commitment to fan representation at board level

Let me just touch on some of the above.

A commitment to the custodian and public service element of club directorship would be a huge step, confirming the alignment of club and shareholder interests, whilst acknowledging and embedding the role Everton plays in the community, society and the region more generally.

In terms of board composition it can be argued that for too long the board has solely represented the interests of the club’s major shareholders. Whilst I am sure Mr Moshiri wishes to see his investment in Everton succeed along his own plans and ambitions, I’m sure he will be able to recognise the benefit of having truly independent directors knowledgeable of commerce and the football industry generally.

It should be fairly self evident that all benefit when the interests of shareholders and the club are perfectly aligned, yet it can be argued that this has not been the case at Everton for many years, and whilst the value of shareholdings in the club have soared the club has achieved little on the pitch and fallen badly behind its rivals. A clear case of non-alignment.

Everton is a private company and therefore has fewer reporting obligations than befits an organisation with such a high social and regional presence and profile. Whilst we appear to meet our statutory obligations, greater disclosure would again benefit relationships between the club and the fanbase. As an example, other operating costs are explained in a single line in the accounts, yet account for between 23 and 28% of our operating expenses over the last 7 years.

Finally fan representation at board level – subject worthy of more than a couple of lines, but I can’t think of a better way of confirming the link and value of the fan base to the club and shareholders than by allowing representation at Board level.

To conclude, following Mr Moshiri’s current acquisition of 49.9% of our club and with agreements in place to acquire a majority holding, there can be no better time to sweep out the old and bring in a new more open and engaging era between club and fans.

The team have always had our (the fans) support, it’s time for the club to repay our support and faith with better communication about the past, the present and future, plus a commitment from the club to structural changes at board level and hugely improved corporate governance.

Review of the book “For the Boys in the Royal Blue Jersey” written by Steve Zocek

December 20, 2016

the esk

This review first appeared on Grandoldteam on 14th November 2016.

I don’t know Steve personally but I’ve seen him at plenty of away games over the years, and as Joe Royle says in his foreword, Steve has “more than just a fanatical support for his club; it is a marvelous obsession”.

51jcfivtkrl-_sx351_bo1204203200_

In Steve’s own words, he’s a fan not a journalist and that’s the charm of the book. I’m probably of a similar age so with the exception of a few of his interviewees I can recall seeing them play in the Royal Blue of Everton.

The book is a collection of 50 interviews, arranged in alphabetical order. 49 are players, the other is a memorable interview with the daughter of Alan Ball, Steve’s hero. It’s a wonderful interview as it not only give information on Alan and football but an insight into his family life and perhaps most meaningfully the relationship between Bally, Everton and of course, us the fans – very enjoyable read.

It’s a book to pick your way through, for me I enjoyed going from one player to another based on my own preferences, I don’t think many will start with Alan Ainscow and read through in alphabetic order to George Wood.

There’s lots in the book I  wasn’t aware of, personal insights from players, little nuggets of information that have come out in conversation. One thing that struck me is Steve’s knowledge of our club and the players themselves – forgive me for using the word but it’s phenomenal.

I’m not going to do any spoilers, other than mention my particular favourite stories featured the players in the mid/late 60’s playing under Harry Catterick.

Having said that this book is a great read for all ages, you don’t need to be in your 50’s or older to enjoy it. If you love Everton, and our history you’ll love the stories, and be in awe of Steve’s dedication.

The book is a must for Evertonians hungry to learn more of the greats (and some of the not so greats) who have pulled on the royal blue jersey. Even better that part of the proceeds of the book go direct to the Former Players’ Foundation.

I’ll leave you with 2 quotes from the book

“I…would have crawled on my hands and knees from Huddersfield to sign for Everton”

Ray Wilson (World Cup Winner)

“I have lived my dreams for playing for one of the best teams in the world”

John Bailey

Many thanks to Steve, I hope you enjoy the book as much as I did!

You can buy the book from Amazon here.

Nothing will be the same – in Everton’s boardroom.

December 20, 2016

the esk

This article first appeared on Grandoldteam on 18th October 2016.

So said the strapline from Everton’s marketing department.

Well, in the light of Chris Matheson’s comments at yesterday’s House of Commons Culture, Media and Sport Select Committee we have a chance to make those words come true.

Under parliamentary privilege, Matheson said: “I understand that Sir Philip Green had something of a role of shadow director at Everton, including having PWC (accountancy firm Price Waterhouse Cooper) conduct an audit of the club and summoning the chief executive and the team manager to BHS headquarters to discuss transfer budgets.”

“If someone has paid for some shares through someone else and through an entity in the British Virgin Islands, but isn’t a director, would that a problem?”

He also asked questions on Vibrac and BCR Sports.

“Vibrac is an offshore entity….which I believe provided finance to Everton , West Ham, Fulham, Reading and Southampton.

“And I understand it has provided £150m worth of finance to European clubs, including those clubs I just stated, in 2013.

“And I believe Vibrac is registered in the British Virgin Islands. Does it ring any bells?”

On BCR Sports, Matheson added: “Until March 2016, Robert Earl was a director of Everton – and I should say I am a season ticket holder at Everton – declared 23% of the ownership at Everton through BCR Sports, registered in the British Virgin Islands.

“However, a previous director and, in fact, the previous owner of those shares, Paul Gregg, says he wasn’t paid for those shares that were transferred to Robert Earl , by Robert Earl or even by BCR Sports … by Sir Phillip Green who was not registered as a director at Everton.”

An opportunity to provide clarity on the past, and the future

Here’s the opportunity to provide clarity on the past, and perhaps more importantly clarity about the future in terms of ownership plans, investment, and importantly greater clarity for smaller shareholders and fans, plus a commitment to the highest levels of corporate governance.

As a club we excel in so many matters, our community work, our commitment to former players are without exception, superior to any other Premier League Club. With the recruitment of Koeman, his team and Steve Walsh it’s evident we are making progress on the pitch and will continue to do so.

The one area where, at least in my eyes, we are miles behind some of our competitors, and certainly far from best practice is the management, financial reporting and communications from the club.

The argument goes of course, that as a private company, there is no legal requirement to provide information beyond statutory requirements, and whilst that is true, does it fit in with the requirements and demands for the 21st Century, particularly an institution so embedded in its local community and fanbase?

I, and I’m sure thousands of others, don’t believe current disclosure levels are fit for purpose. As a result barriers are created when there’s no need for them. In addition, suspicions arise as to the reasons for non-disclosure, all of which damage the brand of Everton FC.

Furthermore if even some of the claims made about Everton’s financing and ownership in the past happen to be true, then existing shareholders (and fans) need to be informed, and if necessary bring to account the perpetrators of any potential wrong doings, misinformation and omissions.

So what’s to be done?

  • Full disclosure of the circumstances around the alleged involvement of Philip Green and/or any other non-disclosed parties, including financing arrangements for the club, financing arrangements of shareholders, and involvement in the management and running of the club.
  • If those circumstances differ from those reported and communicated by the club or its officials an explanation as to why it differs, and the repercussions for individuals involved in those differences including the removal of any officers and directors proven to have misled fans and shareholders.
  • A commitment from the major shareholder, Farhad Moshiri for greater openness in the future.
  • An explanation of the future ownership of the club, new directors, our  stadium plans –  an expansion on the plans he briefly articulated early in the year.

We are striving for excellence on the pitch, we are achieving excellence in the community around us, the only area where that does not appear to be happening is in the boardroom. Yet that should be the easiest area to fix.

If we really mean “nothing will be the same” prove it by making good any alleged wrongdoing in the past, and provide greater clarity and disclosure about the future. By doing so you’ll  demonstrate strength and integrity and win the support of all supporters, making us a stronger and better club in the process.

Poor execution leads to failed delivery – Everton’s transfer window

December 20, 2016

the esk

This article first appeared on Grandoldteam on 1st September 2016.

The over-riding feeling of this transfer window is frustration that we’ve again failed to take full advantage of an opportunity presented to us given our new major shareholder, new manager and Director of Football. It’s clear our recruitment process failed us and as a result we will find it more difficult to advance at the pace we the fans, and I’m sure Moshiri and Koeman had hoped.

I want to give some thought as to why the window has turned out the way it has.

Anyone who has successfully sold products or services, or anyone who has successfully recruited people at the highest levels knows that the most difficult part of the task is usually getting the initial interest. It’s getting that first communication compelling enough to engage the customer or target. That’s why companies spend billions each year on promoting their brand, so that when the opportunity comes along to present the brand to a customer or target there’s as high an engagement rate as possible. Why? Because once you have the engagement, assuming your product or proposition makes sense the rest in my experience is, on a relative basis, much easier.

Now what’s the above got to do with Everton?

We operate in a highly competitive environment and we’re clearly not a premium brand in our own right in the modern game. There are plenty of positives of course, our Premier League status, our fan base, our manager and some of our previous recruitment successes with our players and current squad. There are also negatives – we’re not consistently in Europe, we’ve not won a trophy in 21 years, and we’re some way off being able to guarantee levels of performance and success that attract the very best players.

In examining what we achieved in the transfer window, it seems to me at least that we got the initial pitch correct.  We were able to engage our targets and their agents early on in the process of them becoming potential Everton players. The range of players we were linked with suggests that getting through the door to speak to a Witsel, Mata, Carvalho, Brahimi etc was not overly problematic.

The real issue was how and why none of these prospects and several  later in the window, even though of lower stature in the game, could not be closed and become Everton players?

For some it was money – Witsel for example where ultimately we pulled out, others Carvalho as an example, listened to the pitch but was not convinced. However many, particularly later on in the window got down to final negotiations, and this is where the problem seems to lie, particularly with overseas players – ultimately we did not have the skills and experience to see the deals across the line.

So what’s to be done about it? Moshiri and Ryazantsev proved their abilities in attracting talent by bringing Koeman and Walsh to the club, and certainly in keeping Lukaku at the club through their meetings with Raiola. Kenwright and Elstone, well what can be said?

Something very badly went wrong in terms of preparation, negotiations and ability to close. I doubt Moshiri with all his experience will allow a similar situation in January. Was he wrong to entrust this element of the task to his Chairman and CEO as the window progressed? Where Moshiri went wrong was in my opinion, not remaining fully briefed on the progress, or lack of, and any issues that were arising. Perhaps towards the end of the window he became more aware of this, particularly with his comment on the state of the transfer window. However the truth is outside of Kenwright and Elstone he had few alternatives to turn to inside the club or board.

Where does it leave us? In organisational terms we need to be able to execute deals efficiently, and in a timely manner with a proper process. I’m not concerned about identification of targets, Walsh and Koeman are perfectly adept at this, Walsh in particular, nor about our initial approach. I am concerned though at Board level we do not have the right people to see us meet our objectives and that’s where the change has to come – something that won’t be lost on Moshiri.

There was considerable talk early in the summer about the prospects of David Dein being introduced into the club. Additionally the BP CFO, Dr Brian Gilvary has been heavily associated with a non-executive position on the board. Neither of these have come to fruition yet, perhaps the timing will coincide with the next phase of Moshiri’s acquisition when he exercises his options agreement with Kenwright, Woods and Abercrombie. I can only hope so.

I’ve read the local media talking about the successes of the window, adopting a balanced approach that we’ve done OK because we’re stronger now than we were at the end of last season. Well frankly that’s not good enough. We have to judge the window on the opportunity that was presented to us and how we failed to take anything like full advantage of that. Had we done so, especially given the start to the season on the pitch, we would have been in a great position to move forward. Sadly we haven’t, and again we’ve allowed our competitors to strengthen at a greater pace than we ourselves have done.

You can’t catch up if you’re still running slower than your competition, and because of the organisational and personnel issues in this window that’s exactly what has happened. We need a football man experienced at the very highest levels of the game in the Chair to run negotiations and a truly world class CEO to execute the deals as they are agreed. Sadly we had neither, and for a while at least our progress on the pitch will be much more difficult because of it.

Usmanov to Everton, da ili nyet?

December 20, 2016

the esk

This article first appeared on Grandoldteam on 17th August 2016.

Much has been said and written about Usmanov and the chances of him investing in Everton alongside his business partner Moshiri.

Now don’t get me wrong, I’ll be delighted to see him do so, but there are reasons why I don’t believe he will, and there are significant practical problems to be overcome for him to do so.

Firstly it’s probably good to look back at the history of Usmanov’s and Kroenke’s investment in Arsenal.

The story goes back to 2007 – it’s fairly lengthy but I’ll give the shortest version I can.

David Dein introduced Stan Kroenke in early 2007 believing that his money could help Arsenal be more competitive in the Premier League. Kroenke bought Granada’s shares and a few from Danny Fiszman to take his holding to around 12 %. However, the Arsenal board were not happy with Dein and he was removed from the board in April 2007.

At about the same time Usmanov started becoming interested in acquiring Arsenal shares, forming R&W Holdings with Moshiri. Dein sold all his shares (14.6%) to R&W and became their Chairman. R&W started actively buying shares in the market, acquiring 21% by May 2008. Dein then resigned from R&W thinking that by doing so there would be an improvement in Usmanov’s relationship with the then Arsenal board.

However, the Arsenal board feared an attempted takeover by Usmanov and agreed to a “lockdown” meaning they would not sell their shares to anyone other than “permitted persons” through to April 2009. There was a further agreement giving the board first option on any director sales up to October 2012.

The board invited Kroenke to join them in September prior to the lockdown period, to ensure Dein could never return. However, in December 2008, a director called Lady Nina Bracewell-Smith who owned 15.9% left the board meaning her shares were no longer subject to the lockdown – critically she never showed any interest in selling to Usmanov.

Over the next two years Kroenke acquired another 3 blocks of shares taking his holding to 28.58 % in 2010, just below the critical 30% takeover threshold. Eventually in April 2011 he had acquired 29.99%. By this time R&W had got their holdings up to 27% through acquiring non board holdings ( but not Bracewell-Smith’s though).

On April 11th 2011 Kroenke in a takeover bid acquired the board’s and Bracewell-Smith’s shares taking him to 62% (there is an interesting sub plot to this, but for another time), R&W immediately refused to sell. Since this date both Kroenke and R&W have increased their holdings when shares have become available in the market to today’s figure of 67% and 30% respectively.

As a result of the failed takeover by Kroenke, and Usmanov/Moshiri’s decision not to sell their holdings to Kroenke, there has been total deadlock between Kroenke and R&W Holdings. As is well documented R&W have no board representation and their advice to the board and Kroenke is completely ignored.

Now, looking at the present position the theory goes that Moshiri sold his R&W shares to Usmanov allowing Moshiri to acquire his initial stake in Everton through Blue Heaven Holdings in the Isle of Man. Usmanov would then dispose of R&W to join his friend and long-time business partner at Everton.

This requires careful examination.

Firstly, if indeed Usmanov wished to invest in Everton, why did he acquire 100% of R&W Holdings (30.04% of Arsenal) by buying Moshiri’s share; why didn’t Moshiri acquire R&W leaving Usmanov to come straight into Everton? Then Moshiri could dispose of R&W and join his business partner at Everton.

The biggest stumbling block for me is how does Usmanov find a buyer for his stake in Arsenal?

Several people have suggested Kroenke might be a buyer, Usmanov could find another investor, sell to his family or dispose of his shares in the open market (Arsenal being an ISDX quoted company).

Firstly, Kroenke being a buyer. Why would he do so? Why would he spend another £400 million on acquiring the remaining shares in Arsenal that would derive him no additional benefit? His current stake of 67.05% gives him effective control of the company, the board and future direction, spending plans etc. He does not have to acquire any further shares to strengthen his position.

Furthermore, Kroenke would be very much aware that by acquiring R&W’s shares in Arsenal he would then potentially face Usmanov as competition in the Premier League, competition that probably only Manchester City could compete with in future years. This would clearly not be a wise decision by Kroenke.

Finding another investor. Clearly the premier league is still attractive to investors, particularly overseas investors, but what would a buyer of 30% of Arsenal be acquiring? Well, obviously the shareholding, but as has already been demonstrated that guarantees no influence, board position nor dividends. Therefore, I have to question who would be prepared to take such a position, a minority holder in a business run by an autocrat? From my own experience very few investors would buy into such a scenario.

Could Usmanov sell or pass his shares to family members? The Premier League is very clear on this, and if he was to do so with the intent of buying into Everton then the answer is a very firm no.

Can Usmanov sell his shares in the open market? In theory yes, but this is a very impractical method of selling a large block of shares in a very illiquid market, and there’s no guarantee that he could sell all his shares, something he’d have to do in order to take directly or indirectly a significant (above 9.9%) stake in Everton.

Finally, it shouldn’t be forgotten that Usmanov has publicly stated his holdings in Arsenal are a private, non-business investment “for family members to benefit for generations to come”. It should also be remembered that culturally investor timeframes in Russia are significantly longer than those in the West.

Farhad Moshiri should not be over-looked in all of this either – this is a man that has publicly stated his commitment to Everton, has acquired 50% and has options to acquire over 75%, put funds into the club and promised significant investment in the future. Perhaps, despite his great friendship with Usmanov, and the great amount of time they reportedly spend discussing football matters, this is actually something Moshiri wants to do alone? He should be afforded the respect until such a time as Usmanov’s interest (should it exist) be confirmed.

To conclude I’m not saying that Usmanov will definitely not invest in Everton in the future, but I am saying there are clear obstacles to him doing so, and the evidence to date in terms of how Moshiri sold his R&W shares to Usmanov to acquire a stake in Everton, plus Usmanov’s comments re Arsenal suggest he has no intention of doing so.

*This is an opinion piece, views expressed are entirely my own

Everton, our summer transfers and short term cost control regulations

December 20, 2016

the esk

This article first appeared on Grandoldteam on 22nd June 2016.

As is now commonly accepted Everton are for the first time in the Premier League era in a position to deal extensively in the transfer market and change their wage structure and previous limitations to attract higher quality talent.

However Everton being Everton, there’s almost inevitably a reason for things to be perhaps not quite as straightforward as they ought to be.

I’m going to try and achieve the impossible – make sense of the options open to Everton under the Short Term Cost Control (STCC) rules and keep it interesting.

In an attempt to stop salaries increasing in line with broadcasting revenues the Premier League introduced a limitation on salary increases 3 years ago. New regulations for the 3 years from 2016/17 fix salary increases to the greater of a fixed amount each year (£7 million a year from 2016/17 salary levels) or £7 million plus any increases in non broadcasting revenues.

Non broadcasting revenues include sponsorship, commercial and match day revenues plus critically profits generated from player sales.

Back to Everton

Now returning to Everton, I’m going to make some assumptions about our transfer activity and the increases in current contracts offered to key players. I stress we’re not looking at the amount we will spend in the transfer market, that’s a separate discussion and from noises from the club is not a limiting factor – nor likely to be a regulatory issue given the underlying profitability of the club moving forward,and the ability to fund in the future .

I’m going to assume we add 5 players to our squad over the summer with an average wage bill of £120,000 per week per player. That adds £31 million a year to our wage bill.

I’m also going to assume that we offer new contracts to several of our most valued players, particularly Lukaku, Barkley and we’ll include Stones as well. From figures suggested in the press, these players are likely to receive increases of perhaps £70,000 a week, thereby increasing the wage bill by £200,000 a week or £10 million a year. We also have the increase in manager wages to factor in (£3 million increase on Martinez’s costs)

We’re losing players like Osman, Pienaar and Hibbert plus a high earner in Howard, but in a squad game they need replacing so I’m assuming a zero effect on salary levels.Equally the sale of fringe players like Kone and Niasse will likely have limited impact on total salary levels either because of replacements or other smaller increases in squad contracts.

So far a total increase in salaries of £44 million.

Possible solutions

How do we fund that given the £7 million cap on salaries?

Sponsorship revenues: Potentially could increase this year with an unwinding of current arrangements with Chang but given that there’s a year left on the current deal, and our profile should be considerably higher in 12 months time, I’m taking the view there’ll be little change until season 2017/18.

Similarly commercial revenues due to the nature of the outsourced contracts are likely to remain flat at least for the next season.

Match day revenues will probably show a small increase as I’m assuming we’ll play to near capacity crowds under Koeman but that has to be tempered with the reduction in season ticket prices plus the increase in season ticket sales, all of which reduce the yield per seat.

That leaves one final source of “income” for the purposes of meeting the short term cost control rules – player trading profits.

I’m not going to get into full “football manager 2016” mode but to create income of £35-40 million there’s only a limited number of options in the current squad, particularly as we appear to have ruled out Lukaku leaving and if we were to dispose of Niasse there’s the potential for a significant trading loss. On Niasse perhaps a year long loan elsewhere is the most sensible option, reducing the wage bill and not crystalising the inevitable trading loss when he is eventually sold. The most likely option is the sale of Stones which would create sufficient profit to meet the required increase under the STCC rules (as well as reducing salary costs).

Selling Stones reduces the increase in salary costs to approximately £38 million rather than the £44 million quoted earlier

Thus in this most exciting of summers ahead of us we have to do one of the following:

  • An enormous increase in sponsorship and commercial sometime in financial year 2016/17 – unlikely in my opinion.
  • A significant sale, likely to be John Stones, to create a trading profit to meet the STCC requirements.

It’s interesting that if we go down the route of selling Stones (which seems our only viable option), just as in chess a player sacrifice can lead to winning the game.

His sale permits the overhaul and upgrading of our entire squad,and the ability to pay competitive salaries – not because we can’t afford it but because regulatory considerations – a worthwhile sacrifice in my book.

The scale of change within the club is just becoming evident, exciting times ahead…..