Everton finances

Everton, the board and shareholders

I suppose this could have been written at any time over the last 20 years, but I’d like to examine the relationship between the club, the board and shareholders.

The reason for doing so now as against the more troubled times of the past may not be immediately obvious to the casual observer, but I believe given the change that’s running through the club currently it’s a good time to examine the issue more carefully.


Let’s walk through where we stand currently in terms of shareholders and then Board members.

Shareholders first. Everton have 35,000 shares issued and are currently held by the following (as per the last published accounts):

Blue Heaven Holdings Limited* 17,465 49.90%
William Kenwright 4,256 12.16%
Jon Woods 3,116 8.90%
Lord Granchester 2,773 7.92%
Estate of Sir Philip Carter 714 2.04%
Others 9,792 27.98%

*Farhad Moshiri is sole beneficial owner of BHHL

The Board consists of the following:

William Kenwright Chairman
John Woods Deputy Chairman
Robert Elstone Chief Executive Officer
Denise Barret-Baxendale Deputy CEO
Alexander Ryazantsev Non Executive Director
Dr Keith Harris Non Executive Director

The Board holds or represents the holder of, (if we accept that Ryazantsev is a director representing the interest of Farhad Moshiri) 70.96% of the shares of the Company. A figure which has roughly reflected the number of shares the board has held or represented for many years, certainly as far back as May 2004 when Anita Gregg was elected to the Board.

Thus, it is fair to say that shareholders representing 30% of the issued shares have had little or no say in the management of the company for over 13 years.

I can see the argument that the Company as a private company has very few obligations to report to or listen to the thoughts of the smaller shareholders other than through the General Meetings and annual report and accounts. However as has been discussed before, Everton, like other football clubs are unlike usual companies. Given the connection between club, community and fans (some of whom are shareholders) there’s arguably an equitable obligation (even if not strictly a legal obligation) to do more in my opinion.

The relevance of this debate, and the timing of it, is due to the extra-ordinary changes that are occurring within the club.

We have entered a significant expansionary phase in our finances, and the club in the next few years will bear very little in resemblance to the club of just a couple of years ago.

Be it the loan (£80m) provided by Farhad Moshiri to repair the balance sheet, the credit facility (£60m) provided by ICBC, or the significant funds (£3-400m) about to be raised to fund the stadium, shareholders representing 30% of the club have had little or no input, or indeed information about how these changes affect the business that they continue to have ownership of.

For large quoted companies there is a code imaginatively call the UK Corporate Governance Code which examines and suggests best practices for large businesses. Whilst the provisions do not apply to a company such as Everton there should be no reason why the principles behind the code shouldn’t form part of Everton’s structure, accountability and governance strategy.

A key area is communication. The code offers the following principle:  The board should keep in touch with shareholder opinion in whatever ways are most practical and efficient. I have to ask how the current board are achieving this? Is it through the Shareholder’s Association – although not a member myself I do not believe that to be the case. Perhaps several of the other more significant shareholders are privy to more than the 1500 or so small shareholders who have to rely upon the General Meetings and Report & Accounts.

My question is in this age is this sufficient information and engagement given how easy it is to communicate these days?

One area the code is very clear on is the area of independent directors, explaining what is an independent director and the benefits of having such.

There’s a recommendation that the board should have an appropriate combination of executive and non-executive directors (and, in particular, independent non-executive directors) such that no individual or small group of individuals can dominate the board’s decision taking.

 As can be seen from the board composition above, Everton fall significantly short on this provision with only one potentially independent director (Dr Keith Harris) whom depending upon the source used and the reasons for him being on the board may not be independent at all.

The Board currently has two senior executives (the CEO &  Deputy CEO), two directors (the Chair & Deputy Chair) both still significant shareholders, and Ryazantsev who whilst bringing much-needed external expertise to the club’s affairs clearly represents the interests of Moshiri. With the addition of Harris mentioned above, then there’s little evidence of independent representation.

Since Moshiri acquired his 49.9% holding we’ve seen a huge change in our finances (part event-driven but more significantly due to his ownership), a huge change in football management and playing personnel, plus the growing certainty of a move to Bramley Moore Dock.

All huge positives, however the one area we’ve seen no significant change in is the governance of the club and the representation of and communication with the owners of 30% of the company.

In reference to governance, I mean bringing independent talent into the boardroom to challenge and question (constructively) the direction of the directors who are either executives, major shareholders or representatives of major shareholders.

 We are a growing business that needs fresh talent and independent thought in our board room. As a growing business we face fresh challenges requiring different skill sets from the survival strategies of the last 20 years or more.

We also need better communications, a common theme with all stakeholders, but none so more relevant than with the minority shareholders, who in all likelihood, will support the direction of travel, yet would appreciate the courtesy and commonsense of a more inclusive strategy and engagement.

 We are progressing as a club and business no doubt, yet on board composition, several aspects of governance, and small shareholder communication and engagement still way off the pace.

NSNO from the board room down.

Categories: Everton finances

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6 replies »

  1. Some interesting material there that many ‘ordinary ‘ fans probably don’t pay much attention to.

    The idea of bringing in or appointing an independent ‘think tank’ of business professionals to examine and drill down into the current operating mechanisms of the club, with a working brief of highlighting areas of weakness for improvement and even radical re-direction, sounds like perfect timing for the club as we move toward the biggest challenge and opportunity we’ve faced in years, namely BMD.

    Fans want to see a winning and attractive team on the field, but the club needs a winning team behind the scenes equally as importantly.

    And yes indeed, it has to be NSNO from the top down, without compromise.

  2. We strongly reemphasize this point. We totally agree:
    “There’s a recommendation that the board should have an appropriate combination of executive and non-executive directors (and, in particular, independent non-executive directors) such that no individual or small group of individuals can dominate the board’s decision taking.”

  3. Couldn’t agree more with this post. These are no doubt exciting times at our club, and it’s great to have Moshiri’s money to spend, but corporate governance issues are extremely important to any business organisation. A rigorous, fully accountable decision-making process, and improved communications with the club’s small shareholders, must be an integral part of the new Everton. Well done to The Esk for raising this extremely important issue – let’s hope the board are listening.

    • Thanks Graham, I’d hope the club would see the benefits of greater communication with shareholders and perhaps even more importantly independent non execs at board level.

      We live in hope!

      • We do indeed! Independent – and constructive – talent in the boardroom has to be the way forward for our club.

  4. Very interesting article, in the circumstances I think Mr Moshiri should make an offer to buy all the remaining small shareholders out, in line with takeovers of other Football clubs.

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