Sometimes an argument is so compelling it is worth repeating more than once. It’s the argument for, and justification of a capacity of 60,000 at the new Bramley-Moore stadium.

From my perspective there are two elements to the logical argument, namely demand and affordability, with a third more emotional argument centred on ambition and the statement that the capacity will say to the global footballing and commercial world all senior clubs operate in.

Let’s start with the logical argument, demand and affordability.

Under the “leadership” of the former CEO, Robert Elstone the club’s position has always been that there is a limit to the capacity increase because the demand for seats based on Goodison Park was limited. I assume that was the justification as actually the club never confirmed the basis for this assumption apart to vague references to “season ticket waiting lists”.

Before we get into the specifics of Everton, it is worth looking at the “new stadium effect” on attendances across a number of clubs.

Since 1988, 32 Football League & Premier League clubs have moved to a new ground. If we compare the average attendances 5 years prior to the move versus 5 years after average attendances increased by 62%.

If we look at clubs that had more than 80% stadium utilisation prior to the move (i.e. had average attendances greater than 80% of capacity) the increase in attendances, over the same time frame, are striking.

The one club which is always used as a counter argument to an aggressive increase in capacity is Manchester City. It’s often said that they have difficulty in selling out their increased capacity Etihad stadium.  In the first 8 years at the Etihad they had 96% utilisation, followed by 98.8% utilisation in the last three seasons.

Tottenham Hotspur are increasing capacity by 72% and will perform in front of capacity crowds for the foreseeable future.

Looking specifically at Everton, what is the basis for believing we can fill a 60,000 seat stadium?

The demand to watch Everton, despite the difficulties on-field and the antiquated, but much loved Goodison Park continues to grow. The best season of football in recent years at Goodison was Martinez’ first season. In that we averaged 37,732 spectators. Last season we averaged 38,797 in what was the worst season on record. The season before we averaged 39,047, the first time in our history we sold out for every game, and the highest average attendance since 1978, and only beaten 3 times since the Championship winning side of 1969/70.

This, in a stadium which is perhaps 25 years past its “best before” date with limited facilities, and many thousands of obstructed views.

The easiest way to judge demand is to break down the crowd into different categories, to segment the different types of fans and see how realistic it is to sell each category.

I’ve used the following categories: Executive or premium seat spectators, season ticket holders, and “walk-up/non-season ticket holders”. For the purposes of this piece, we can ignore away supporters on the assumption we will sell a maximum of 3,000 for every game. Also, the sale of away tickets to Bramley-Moore is outside the control of Everton.

In a 60,000 capacity stadium it’s a reasonable assumption that the categories would breakdown as follows:

Season ticket holders: 42,000

Executive/premium seats: 5,000

Walk up/non-regular supporters: 10,000

Away supporters: 3,000

With an admirable pricing policy Everton at Goodison have maximised season ticket sales, topping out at 32,000 (the highest permitted under PL rules). This compares with Manchester United 55,000, Arsenal 45,000, Tottenham Hotspur 45,000, Manchester City 40,000 and West Ham United a staggering 52,000.

West Ham United have, by moving to the much-maligned former Olympic stadium increased season ticket sales from around 25,000 at the Boleyn Ground to 52,000 in their third season at their new home.

I have been extremely cautious in suggesting an executive/premium capacity of only 5,000. Whilst this represents a big increase from our existing 1400 or so “premium” seats it is a relatively low percentage of the overall capacity of the ground (8.3%). Most modern stadia look in excess of 10%, Liverpool currently are at 14%. Chelsea had they gone forward with their ground redevelopment were looking at 28%. Tottenham’s redeveloped New White Hart Lane has 12% premium seating.

The ratio of premium seating to regular seating is extremely important – it helps keep the cost of regular seats affordable (although admittedly not at Tottenham). As a rule of thumb, 10% premium seats should generate the same level of matchday income as the remaining 90% regular seating.

5,000 is an extremely conservative figure, and one which the club should have every confidence in selling out season after season at an iconic stadium in an iconic location.

The final category is walk up/non-regular spectators. By this I mean the wide group of people who will visit any number of games from a one-off visitor to fans who can’t get to every game and therefore do not have a season ticket.

The figure of 10,000 may seem high. However, in reality, it is very achievable.  Everton have always had a relatively high “walk-up”  element to our support. This is born out by “walk-up” sales of between 5,000 and 7,000 during the Moyes’ era when season ticket sales were much lower, and indeed our continued ability to sell out the worst seats at Goodison regardless of the opposition. It’s also a low figure when viewed against other club’s “walk-up” figures. Liverpool rely upon approximately 18,000 non-season ticket/non-executive sales per game.

With the right approach to marketing which includes attracting casual visitors, local and far-flung blues who can’t attend every game, it’s a very achievable figure. Everton have proven very adept at marketing tickets to Goodison which given the quality of the view (and many times the product as well) should give them huge confidence to achieve capacity crowds.

Affordability

The evidence for demand, and the general effect of a new stadium is there for all to see. The second element is affordability.

There is no doubt that the final 10% of seats put into a stadium are (i) the most expensive to build and (ii) the most difficult to sell. I’ve covered the likelihood of selling these seats, what about the cost?

Every seat carries a construction cost, some of which is relatively fixed, for example in the case of Bramley-Moore the ground preparation and technical challenges of the site, plus a variable cost based on all the additional core resources required as a stadium grows in size.

If we take an industry accepted average of around £6,000 a seat for a stadium build, what impact does a much higher cost for the final seats have?

If I assume it costs £9,000 per seat for the last 6,000 seats that adds £54,000,000 to the build cost. If all of that money is borrowed at 5.25%, then the additional cost is around £3.9m a year.

That means the last 6,000 seats cost £650 a year each to build. In a 20 match season , and with perhaps just two additional events per year, that brings the cost down below £30 per event. Whilst I accept that this cost will only just be covered by ticket prices in the early years, once moderate ticket price inflation is accounted for over 25 years the investment pays for itself. It doesn’t take into account the addition food, beverage and retail sales, as a result of the higher capacity.

The increase in net revenue as a result of the increased capacity:

Based on the above, a 54,000 seat stadium might be expected to cost around £450 million (assuming fixed costs of around £120 million). A 60,000 seat stadium using the above might expect to cost £504 million.

Using very conservative assumptions on ticket prices the 54,000 seat stadium would generate approximately £42 million, whilst a 60,000 seat stadium would generate £49 million from a 19 home game football season.

If we assume we borrow £300 million for the 54,000 seat stadium (i.e. 2/3rds of cost) the capital and interest repayments over 25 years at 5.25% are approximately £21.5 million, and for the 60,000 seat stadium, £336 million at an annual cost of £24 million.

The net income for a 54,000 seat stadium starts at £20.5 million, whilst the net income for a 60,000 seat stadium starts at £25 million. I stress this is based on a very conservative pricing model. If more aggressive (perhaps realistic) pricing is used then the difference between the two stadia increases proportionately.

Equally, if shareholder contributions in the form of capital increase, thereby reducing borrowings, the net figure continues to climb.

The point is that the higher capacity stadium assuming fully utilised, generates more income, thereby reducing the risk to financing a higher capacity stadium.

Ambition:

Ultimately, the stadium comes down to the ambition and willingness of the club and particularly the major shareholder to finance its build.

The business case is clear for a larger stadium. All the historic evidence based on other clubs is that new stadia attract far more spectators than most would reasonably model for. In addition, the figures above demonstrate the demand, and how a 60,000 seat stadium can be filled. It also demonstrates the significant increase in marginal income from the higher capacity, even before taking into account the higher food, beverage and retail sales from the higher footfall.

A higher capacity stadium also makes a statement to the footballing and commercial world, that under Moshiri we are re-building a club that not only can compete at the highest levels but is making the investment and commitment to be at the top-table once more.

When we built the new Main Stand at the end of the 1960’s we sold ourselves short on not putting a cantilever roof on, all to save £60,000 (6% of the build cost at the time)

Let’s not repeat the mistakes of the past, falling short of the highest standards and ambitions.

Anything less than the best and the biggest the site can hold reduces that claim, and condemns us to remaining behind our once peers. Whatever we decide in the very near future shapes the club going forward – it will determine the level of our ambition and our likely status in the game for generations to come.

Thanks for reading, apologies for the length of the article!