I’ve done this a couple of times, the first going all the way back to May 2016, but with the prospects of news about the stadium at Bramley Moore, it’s interesting to consider the impact of the stadium financing costs versus the likely increase in revenues and how it impacts both the club and most importantly from the fans perspective the affordability of the match day experience.
As is widely recognised Everton have a fantastic pricing policy for season ticket holders, one which I am sure the club would like to extend to Bramley Moore.
So here are the assumptions used.
| Stadium capacity | 60,000 |
| Number of season tickets sold | 42,000 |
| Number of Executive box/premium seats | 5,600 |
| Number of away supporters per game | 3,000 |
| Number of non-season ticket sales per game | 9,400 |
| Average cost per game season ticket (net of VAT) | £16.00 |
| Average spend for premium seats (net of VAT) | £166.66 |
| Average cost of walk up ticket (net of VAT) | £41.66 |
| Average cost away ticket (net of VAT) | £25.00 |
| Average food & beverage revenue | 25,000 fans/match spending £10 (£8.33 net) |
| Average season long merchandising revenue | 40,000 fans/season spending £100 (£83.33 net) |
Obviously, these are only my view of likely capacity, pricing, splits between different ticket prices and the amount spent on food and beverage plus merchandising. However, on the assumption the club decided to maintain its current pricing policies then I believe them to be fairly reasonable.
A key part of the new stadium will be the ability for fans to spend longer in the stadium, opportunity for a wider range of food and beverage choices plus merchandising opportunities currently unavailable at Goodison. I have however deliberately kept those estimates low.
Revenues generated
Using the above assumptions this would produce the following revenues for a 19 home game season. It does not take into account European games or cup games which would obviously impact the total revenues generated. It is a base case.
| Average £ per game | Total £ per season | ||
| Season tickets |
42000 |
16.00 |
12,768,000 |
| Executive/premium seating |
5600 |
166.66 |
17,732,624 |
| Away supporters |
3000 |
25.00 |
1,425,000 |
| General sale tickets |
9400 |
41.66 |
7,440,476 |
| Total |
60000 |
39,366,100 |
|
| Food & Beverage |
25000 |
8.33 |
3,956,750 |
| Merchandising per season |
40000 |
83.33 |
3,333,200 |
| Match day income per season |
46,656,050 |
This has a huge positive impact on the revenues of the club. Match day incomes could rise from less than £20 million a year to over £46 million without the need to increase season ticket prices.
Costs
Everton will in due course announce its own estimate of the total costs in the building of the Bramley Moore Stadium. However based on information from within the construction industry the following are, I believe reasonable estimates of the costs.
It is believed the total cost will be in the order of £500 million, considerably in excess of the figures quoted earlier in the year.
The £500 million figure arises from the following:
| Estimated acquisition cost of lease | £25 million |
| Estimate of current tender values for construction | £425 million |
| Estimated cost of associated developments | £50 million |
| Total | £500 million |
Although not quoted in the press, it is believed the lease acquisition cost was £25 million – the figure should be confirmed in the soon to be published annual accounts.
The £425 million figure is the current construction industry estimate for the value of the tenders currently being assessed by Everton.
Around the stadium and on Nelson dock, in particular, it is believed that there will be associated developments with an estimated cost of £50 million.
Funding
In the document released by the Liverpool City Council in March 2017 it assumed that the capital requirement of £300 million (as estimated then) would be met by debt with a guarantee provided by the Liverpool City Council. This would allow Everton to leverage of the superior credit rating offered by the city council. The involvement of the council was re-affirmed with the recent exchange of contracts on the 200 year lease (here)
Assuming the development costs are indeed £500 million then the capital can come essentially from 3 sources, external debt, shareholder debt or equity, and a contribution from a naming rights partner which can either be securitised or paid up front.
At this stage, nothing is known about how much will be financed by debt, and what value can be created out of a naming rights deal. Therefore, I’m going to offer a number of values for the amount of debt in order to see the relevant costs of each.
Assumptions:
Debt repayment period: 40 years (as per original LCC report)
Cost of guarantee: 1.3% (as per original LCC report)
Cost of borrowing: 3.5% (current average yield of Aaa corporate bond)
This gives the following debt repayments for the different amounts borrowed (in £m):
| Amount borrowed | 300 | 350 | 400 | 450 | 500 |
| Guarantee cost | 3.9 | 4.55 | 5.2 | 5.85 | 6.5 |
| Cap & interest repayment | 11.62 | 13.56 | 15.49 | 17.43 | 19.37 |
| Total | 15.52 | 18.11 | 20.69 | 23.28 | 25.87 |
Conclusions
Even though the cost of the project will have soared from the original conservative estimate put out by the club, assuming we maintain our Premier league position and attract capacity crowds then even very large levels of indebtedness can be supported by the new stadium without the bulk of the Everton supporter base having to pay more for their match ticket.
Whilst we all want the club to be adequately resourced to be competitive, Bramley Moore gives us the opportunity to do that without increasing the cost burden on ordinary fans. It requires capital of course, capital provided by its major shareholder and/or debt providers but as he is well aware the new stadium adds considerably to the capital value of the club.
In my opinion the club moving to a new “iconic” stadium whilst still maintaining an affordable ticket pricing policy is not only very achievable financially but would send out a completely different message to a sport which throughout all its advances in recent years has left its roots behind making the game frequently un-affordable to its core supporter base.
Such a policy would at a stroke, re-affirm Everton’s working class roots, and pave the way for making it more likely that future generations of match-going local Merseysiders chose Everton over other rivals. A stadium holding 60,000 mainly local, mainly from the core socioeconomic class associated with football, full of fans of different ages because of our innovative concessionary pricing would be a sight to behold.
Our status as senior club in the city would be assured……
Categories: Everton finances, Uncategorized
Interesting angle you offer there Esk in the final two paragraphs – “send out a completely different message to a sport which throughout all its advances in recent years has left its roots behind.”
As well as maintaining ticket prices at the current levels for at least two or three more seasons – a terrific stance taken by the club already and one that others would do well to heed – maybe Everton could also look to act positively in a couple of other areas that affect the rank and file supporters, namely the matchday programme price and replica shirt prices.
Everton have for years offered a tremendous matchday programme product and whilst many fans probably wouldn’t want it to become awash with them, an increase corporate partner and local business advertisements and the associated revenue could possibly see the price reduced from the current £3.50 back to £3.00. It might only be 50p, but it’s the gesture that counts and would again set Everton apart from so many others.
For years, supporters of just about every club have complained about the cost of replica shirts and kits, particularly for younger supporters who outgrow them quickly and then want annual upgrades due to design changes and second and third options.
Merchandising is an area that has caused countless debates within the Everton fanbase for more years than I can remember, particularly in terms of availability outside of official club outlets on top of the pricing questions.
If replica shirts and kits could see the prices reduced, even if only by a small amount, this I am sure would be gratefully received and would assist all those purchasers, particularly the parents and grandparents providing youngsters with the birthday and Christmas presents they most desire.
A couple of pounds reduction on a replica shirt and a 50p reduction in the matchday programme price might seem to be somewhat trivial amounts, but I feel sure that there would be a fair proportion of the current match going supporters who would appreciate the gestures.
The move to BMD should/will offer so many additional commercial revenue opportunities, that the small reductions I’ve suggested here would end up being an effective loss-leader in generating further supporter based income.
Cheers again, for another interesting article.
Thanks Andy for your comments, I totally agree with you.
Hi Esk
Interesting read, but are the merchandise, walk-ups and catering figures correct?
If that is the income figure for merchandising, the profit figure will be lower than the Kitbag deal.
Similarly, if the food & beverage is the income figure, the current Sodexo deal (if scaled up by by a factor of 1.5) would be about as profitable.
The model also assumes a sell out every match with an average £50 (gross) ticket price. Either no concessions or optimistic in my humble opinion.
Or am I just being either a nit-picker, or thick, or a miserable arl arse…
Hi Dave, thanks for your comments. Walk up figure may be optimistic reducing the yield to say £30 net would reduce revenues by £2.5m. F&B figures are just for regular supporters, the corporates I have included in their ticket price. Merchandising is just for match day sales at the stadium, ie purchases on site not total merchandising. Appreciate your comments though, hope all is good.
Cheers Esk. All good at Hibbo Heights and hope all is well on the Esk Estate.
Just a thought, but whilst increased revenue should be pointed out, surely what really matters is profit. For example, assume a range of net margins for food and merchandise of say 30%, then additional stewarding/police/business rates costs.
As I say, just a thought.
Cheers
I agree profit ultimately is the most important for any business, however for Everton the focus has to be on non broadcasting revenue growth in order to keep increasing the wage bill over and above the £7m pa limit set by PL rules.
Always thought it strange that the PL have based it on turnover rather than non broadcasting profit.
For example, historically EFC (allegedly) have made losses on merchandising which led to the Kitbag/Fanatics deal. So by taking the loss back in-house, it increases turnover, allowing more to be spent on wages side thereby weakening the trading position.
Or am I just the perfect storm of weird and pessimistic?