Thoughts before the General Meeting, January 4th 2017
This article first appeared in the Liverpool Echo on 2nd January 2017
This is no ordinary General Meeting, it’s the first General Meeting of shareholders since Farhad Moshiri acquired 17,465 shares giving him a current stake of 49.9% in Everton.
I’m assuming that football matters will be dealt with at the AGM by comments from the Manager as has happened in recent years. Whilst perhaps not quite with the oratory style of Martinez the hope will be that Koeman talks with greater substance.
It is the opportunity for the major shareholders and board to lay out their plans for Everton in the coming years. It is the opportunity for Moshiri to expand on his programme comments in March 2016
Of course, since then we’ve had his lengthy interview with Jim White on national radio which filled in a number of topics, and confirmed his ambitions and intentions on and off the pitch. However given the manner in which it was delivered, and the medium used it still does not satisfy the requirement for more formal communications from the club.
The key part of his interview included the following comments:
“I think with the stadium the fans must know we have done the hard bit,”
“The club was restricted [in its ability to] expand Goodison by banking covenants so we’ve repaid the debts, we have the finances.
“I went to Liverpool a few weeks ago with Bill [Kenwright]. We visited all the sites with the Mayor. The club has taken soundings from fans and in our mind we know where to go. We are committed.
“So my point to the fans is that I can just reassure them that they will have a stadium that rewards their loyalty and their passion support for our club. This is my key aim.”
“We don’t have the flexibility that Chelsea and Manchester City had in the days before Financial Fair Play. We can only invest what we spent last year, plus £7 million, plus increasing commercial income.
“So the way to compete is to build a big stadium, to increase merchandising and commercial income and we have no restrictions to spend.”
Thus I think it’s reasonable for shareholders (and fans) to expect information on the following topics which I will expand upon below:
It’s been well documented that Bramley Moore is the preferred site, and as I’ve mentioned previously I believe we have agreement of an option to acquire subject to planning permission. Singularly this is the largest single decision the club will have made perhaps ever. Quite simply shareholders need clarification. I don’t believe it’s a coincidence that the General Meeting has been delayed almost as far as the Articles permit.
- Clarification of the location of the stadium
- Outline details of style and size of stadium
- Best estimates of anticipated time frame
Future funding & ownership.
From the accounts it is clear that the accumulated debt (short and long term) has been cleared by Moshiri’s injection of £80 million at the end of the financial year, however despite record revenues received this year from the Premier League broadcasting deals it is clear additional funding will be required for squad development, working capital, and specifically the funding of the new stadium.
- How will this funding be achieved, and what impact does the future funding have on current shareholder ownership?
- What are the short term and medium term funding requirements?
- How will they be financed? Debt or further issuance of shares?
- If there is a further issue of shares what will be the mechanism?
- Is it the intention of Mr Moshiri to acquire further shares via his options agreement and then to underwrite a further issue of shares?
Board composition & future governance
As the club enters a new expansionary phase, it makes sense to examine the skills required to maximise the opportunities before us, including adding additional talent to the board and senior management positions within the club.
- What are the plans to strengthen the board further, recruit additional talents and reduce the concentration of shareholder and senior employee representation?
- Will the board seek independent directors to improve corporate governance?
- What are the plans to bring additional senior executives into the business to maximise our commercial successes in the future?
Commercial performance and development plans
In the latest report and accounts commercial revenues fell despite recruitment in this area.All our competitors and peer group saw significant increases in commercial revenues from retailing, entertainment and particularly sponsorship opportunities.
- Aside from the absence of European football, what are the causes of this and what has been done to address this issue in the future?
The outsourcing of commercial activities were probably necessary in the past given the precarious balance sheet and P&L accounts of previous years. However that is now not an issue for the club.
- Given the lost revenue opportunities of not managing commercial and retail activities in house when does the board expect to resolve this issue?
Our sponsorship revenues and number of commercial relationships are dwarfed by the 6 biggest revenue earners in the Premier League.
- What plans are there to improve sponsorship, shirt manufacturing and retailing arrangements?
With just 10 commercial partnerships we trail our rivals, for example Manchester City have 33, Arsenal 31 and Liverpool 18.
- How does the board proposed to increase the number of commercial arrangements and maximise the revenue opportunities from each?
In my experience the most useful General Meetings are those that look forward as well as holding previous actions to account. Given the changes we are about to encounter in the business of Everton, and the changes in match day experiences for Blues when the new stadium arrives, the General Meeting provides a marvelous opportunity for the board and major shareholders to update and inform shareholders and fans of the times ahead.
My hope and expectation is that this opportunity is not passed up, there’s no reason for it, in fact grabbing the opportunity can only be beneficial for the club, shareholders and supporters alike.
I look forward to a successful and informative General Meeting.