The Bramley-Moore business model will stretch “affordable” ticketing policies

“Our most expensive adult Season Ticket is £565 in the Sir Philip Carter Park Stand, less than £30 per game.

In real terms, when you allow for the impact of inflation, our adult Season Ticket prices are 16% cheaper than they were 10 years ago, saving our adult supporters approximately £100 a season.

dbb agm 19

But I am particularly proud of our pricing for our young and older fans. Under-11s pay just £95 a season, equivalent to £5 a match across the whole stadium. Under-18s pay £149, Under-21s and Seniors £299, and concessions are still available up to the age of 24.  

In a time when young people face really difficult financial challenges, including university tuition fees, saving for a deposit on a house, and with a youth unemployment rate of 11%, we are striving to make it as easy as possible for our young supporters to come to Goodison Park.

We remain committed to our young fans and ensure our family values are reflected in our pricing policy. You will be delighted to hear, I am sure, that one in four Season Ticket holders are under the age of 18.”

Denise Barrett-Baxendale, speaking at the AGM in January 2019. (*The prices quoted include VAT at 20%)

All of the above has been, and is very laudable, putting affordability at the heart of Everton’s pricing policy at Goodison Park.

As the reality of Bramley-Moore becomes ever closer however, the question will turn in the next few months as to how Everton address affordability in future years? It’s arguable of course, that economic conditions may not improve significantly in the short term given the uncertainties associated with Brexit, thus making the policy even more relevant and in fact needed.

However, I believe the issue of future pricing at Bramley-Moore requires addressing. Whilst it is correct for the club to promote the benefits of a new stadium which will create a new match going experience at an entirely different level to Goodison Park, it can’t ignore that a stadium move funded predominantly by debt, comes at a cost to all spectators.

Financing:

The financing model for building Bramley-Moore has been outlined by Farhad Moshiri, most recently at the January AGM. His expectation is that Everton will borrow £350 million from financial institutions, the remainder being funded by a combination of naming rights funding and his own pocket.

Debt of course, has to be paid back. It’s not yet known precisely what the cost of financing will be in interest rate terms, but rates of about 4.5% shouldn’t be too far from the mark. At 4.5%, repayable over 30 years, would see the club committed to annual repayments of approximately £21.3 million.

Current Revenues

The purpose of a new stadium, apart from providing great facilities and a “fortress” in which to play is to provide greater revenues to support the footballing activities and competitiveness on the pitch.

Because of the low capacity of Goodison Park, poor corporate facilities and the affordable pricing policy mentioned above, match day revenues have lagged our competitors, and reduced in real and actual terms over recent years:

matchday updated

Revenues for 16/17. *denotes revenues 17/18

Our match day revenues in recent years:

match day revenues everton

Projecting forwards to Bramley-Moore

In order to generate net revenues greater than Goodison Park currently provides, Bramley Moore will have to generate well in excess of £40 million (£2 million a game). Even at those levels (and we are projecting 4 years forwards) we will remain far apart from the largest Premier League clubs (Manchester United £110m, Arsenal £100m, Liverpool £81m, Chelsea £66m, Manchester City £57m, for example).

Can this be done with an ongoing commitment to affordability?

Let’s start with those who are likely to be least price sensitive. Even at Everton there is a reasonable number of affluent supporters, individuals and business owners who will look forward to the opportunity to spend sums of money on levels of services which Goodison can only dream of providing.  Currently, the 1400 or so (3.5% of capacity) “premium seats” account for near to 25% of current match day revenues. It is not unrealistic to assume that if “premium seat” capacity approaches 8-10% then the contribution should approach 50% of match day revenues.

Please note all the following assumptions are ex VAT, paying spectators would obviously pay an additional 20%

At the upper end of expectations, 5,000 “premium seats” at an average price of £200 would generate £19 million per annum. The range of pricing across premium seating is quite extreme from facilities costing £5,000 a match down to more affordable £100-£150 offerings. Nevertheless, they do form a significant part of the overall match day income.

Of the notional £40 million target, that leaves £21 million to find from 47,000 seats.

Away seating is capped at £25 (ex VAT), and with 3,000 seats would generate a maximum of  £1.4 million in a 19 game season.

Thus around £20 million has to be found from the remaining 44,000 seats.

If we assume, of those seats 40,000 are sold to season ticket holders, that leaves 4,000 “walk up” seats for non-regular fans and visitors to the stadium.

Based on the different categories of fans currently attending games (juniors/young adults/seniors and adults) remaining consistent it’s possible to calculate the likely increase in ticket prices to meet the minimum revenue targets.

40% increase across the board………

I’ve not included the workings (available on request) but the broad findings of any reasonable model will show that ticket prices for all categories of season ticket holders and walk ups would have to increase by a minimum of 40% from current levels to marginally increase our net revenues from the current Goodison Park levels.

In simple terms, including VAT, this would see junior tickets rising to £132/£209, young adult/senior tickets rising to £420, and regular season tickets rising in a range from £588 to £791.

In practice, the very best season tickets by position may see higher increases using the so-called “theatre  pricing” policies, however I have assumed not for this article.

Walk up, or non regular attending fan tickets would average £60 (incl. VAT).

In terms of revenue generation, this is of course a base case – it looks at just Premier League revenues, it does not account for cup ties or indeed regular participation in European competition.

In reality, I would expect the increases to be larger to improve the net revenue position and reflect the risks associated with increased debt.

There are obviously a number of assumptions made, but it is clear that the proposed model of a 52,000 seat stadium predominantly (70%) funded by debt has significant cost implications for ordinary supporters without adding hugely to the overall financial and competitive position of the club.

Whilst I understand the desire to highlight the current affordability and commitment to that, I also think there has to be a recognition that that cannot continue in its current form. With the increases suggested above, Everton would still be by Premier League terms, relatively inexpensive, however for people on tight or fixed budgets and especially those bringing family members I hope the club begins to communicate the impact of their proposed capacity and funding plans with the fan base.

It should be an areas the various fan groups and the shareholder association wish to address through their usual channels.

7 Comments

  1. Crikey when you look at those numbers, it makes the blood run cold.

    I guess that with a move to a shiny new stadium, we had to expect some level of ticket price increase but, and I’ve no reason to dispute the mathematics, increases of the magnitude of 40% are sobering to say the least.

    Esk, could you do a similar exercise based on a capacity of 60,000 – the figure that so many Blues were hoping for?

  2. Andy, with a capacity of 60,000 assuming similar numbers of premium seats, ticket price increases to create the same amount of revenue would be less than 20% across the board. An increase in premium seats to say 6,000 with a capacity of 60,000 would permit no increase to generate the same amount of revenue.

  3. Why are we bothering ? I understand the baseline economics but what’s the point of this new stadium that nobody can drive too, where supporters will have to find at least 40% more for tickets so we have more seats but our crew can’t afford to go to sit in them. A stadium that will cost £21m pa in interest payments. Meanwhile the team continues to go backwards with another decade lost. Why are we so determined to have a sexy iconic stadium with our infamous ability to NOT produce atmosphere ? Walton Hall Park at just over half the cost, and a focus purely on football, the team and whisper it quietly even a trophy ?

    All daft I know, of course we need a new stadium on the iconic river Mersey. Everybody says we do so it must be right. Just pray the team using it most are not playing in the Chanpionship .

  4. Paul, I wonder if DBB is FULLY aware of the cost implications, that continuing with the current season ticket pricing policies will have on the club’s ability to compete at the ‘top table’ in the future. She is almost dictating future pricing on season ticket sales as a way of guaranteeing some level of her own ‘social inclusion’ policy for the club’s less well off fans.

    All very laudible and worthwhile, but I wonder what our current Finance Director makes of it all, as he is charged with bringing in additional revenue streams, whilst trying to make the club’s finances more sustainable and avoid the need for the heavyweight borrowing costs that the club has been involved with over the last decade?

    Quite clearly something has to give. I’m quite concerned as how in such a short space of time, our new CEO has almost completely changed the status of the club to ‘major player’ in the charity field rather than putting maximum emphasis on improving the financial performance of the football club.

    Such statements on her behalf at the AGM is going to make it extremely difficult to actually implement any form of realistic price increase in the future sale of season ticket’s without the club being accused of ‘hanging the fans out to dry’ to pay for the shiny new stadium.

  5. This doesn’t surprise me. Without being that clever when it comes to understanding business finance I look at it as simply 60,000 will bring in more revenue than 50,000. So there is more pressure to have a higher base level of ticket prices with 52,000 compared to 62,000.

    With the leaked BMD brochure, not only is the capacity lower than the ambitions of our (peers) rivals, so too, it would appear, the size of the stands by comparison to our rivals. It’s also observed that the size of the stands is now smaller than what was shown at the ‘workshops’ last Easter.

    I suppose many fans are not swayed by this detail as it will be a new stadium, ten, twenty, a hundred times better than Goodison on the banks of the Royal Blue Mersey.

    But to me it shows a dampening down of the ambitions of Everton Football Club. Even from the “Key Principles”. We’re falling short of the hype of “iconic” and “world class” and all these other soundbites.
    It’s like the club is struggling to convince themselves that we need to be with that pack (put it simply as the top 6).

    On the pitch (for too long) we’re a mid-table team. That’s what I see reflected in the club that we’re a medium sized club in the league not as big or ambitious as the Sky 6. So why build that sized stadium; and to hell with the consequences. We seem to have lost our way not just on the pitch.

  6. There is always the alternate approach as demonstrated by Arsenal. Namely don’t rely solely on match day income to fund the stadium debt repayments.

    Arsenal operated on a ‘sell an playing asset’ model for 10* seasons in order to bring the debt levels down and to bring the club back into a financial situation comparable to that prior to the Emirates.

    Might not be the idea scenario given the bloated squad we have at present and an urgent need to trim the wage bill to undertake a playing staff rebuild, but allocating a £25m pa player sale towards the stadium doesn’t strike me as an unattainable target; especially given that players are clearly the clubs largest asset.

    *would need to actually do some research to check on this figure, but it’s around this number…

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