“The measure of success is not whether you have a tough problem to deal with, but whether it is the same problem you had last year” – John Foster Dulles
When a football club Board has started to interfere with on-field matters, be it the Chairman walking into a FA Cup semi-final dressing room with less than an hour before kick off to quieten arguments, to owners making player recruitment decisions or even misguided directors suggesting team composition or tactics it’s almost always an indication that all is not well within the football club. For a manager in such circumstances, the door marked exit is just a few feet away.
What does it say about a football club when the manager starts to interfere with off-field matters?
I find it remarkable that Rafa Benitez, after just four months at the Everton helm becomes the first person in many years, from within the club, to acknowledge that all is not what it should be. He wants “improvement in every department…the club should be in a much better position”. Now, there are two ways of looking at this (i) the cynic might say this is a clever tactic to spread the responsibility, an act of mitigation if results aren’t what might be expected or (ii) he’s a realist, he recognises he can’t achieve what he wants to do with the organisation and people around him. Personally I think it is the latter rather than the former.
Regardless of the motivation, his comments put the focus on Farhad Moshiri, his directors and the executive team below them to improve performance, and that can only be to the benefit of the club. Moshiri has to act, he and his board have to be seen to make improvements following Benitez’ comments. To not do so suggests that they believe Benitez is incorrect in his assessment.
The biggest question of course, for fans and minority shareholders, is why has the owner, board and executive team not recognised this previously? Why, based on past experience elsewhere or based on peer experience within football have they not recognised what some outside the club have recognised for a long time and many others who now are beginning to express concerns?
“The successful investor is usually an individual who is inherently interested in business problems” – Philip Arthur Fisher
Attending his first game at Goodison in March 2016, Farhad Moshiri said “I am here to support (the board) as required to ensure the club recaptures the glory days of the past and builds sustained success in the future.”
“As required” – perhaps the most critical part of what Moshiri said. Is it feasible that upon buying 49.9% of Everton he really misunderstood what was required? Was he drawn by Kenwright to believe that all that was required was money? Money that would allow us to attract a Hollywood manager and star players? Could it be that effectively he had the wool pulled over his eyes? Did he buy into the concept that he possessed a board with a “revered” status?
Even if he did initially, surely the evidence of the last five years has caused him to re-evaluate that assessment?
Moshiri has supported the board (and club) financially investing £450 million through loans and equity conversions and he has paved the way for our stadium move to Bramley Moore committing another £100 million to the building of the stadium.
He has also got involved (to his and our cost) in the bits of football he clearly enjoys, the recruitment of managers, the recruitment of players and mixing with agents, being part of the gossipy football community.
But has he proved to be a solution provider, solving our greatest problems? As the opening quote of this article stated if you face the same problems as in previous years then that is not success. Undoubtedly, our problems have rolled from one year to the next and critically seem to grown bigger over time. In order of importance, I’d identify the implementation and execution of the director of football model, recruitment, revenue generation, cost control, identity and governance as our biggest problems.
Director of football
Let’s start with the director of football. I am a strong advocate of the director of football model, a model which removes many of the footballing operational responsibilities from the first team coach, freeing his (or her) time to focus on coaching the first team. In an ideal scenario the director of football establishes the footballing philosophy throughout the club. In order to do so though the DoF has to be given both the responsibility and authority to lead, to ultimately be responsible for all football related issues at the club including but not limited to recruitment, supporting resources (scouting, coaching, health, fitness & well-being of players and staff), budgeting and (on the footballing side) organisational structure.
The performance and structure of the academy, its expectations in terms of scouting, recruiting and developing players suitable for the first team or for sale to other clubs has been wholly inadequate.
Clearly, this hasn’t yet worked effectively at Everton. Whilst Brands’ qualities are widely acknowledged throughout the game there is little evidence of effectiveness at Everton despite being in the role for more than three years. Is this structural, political or down to the individual candidate? Possibly all three, but it is known that Moshiri is a strong advocate of Brands. Having said that, Benitez’ intervention must raise some concerns with Brands and (one would hope) Moshiri. Benitez’ comments could easily be interpreted as encroachment into the DoF’s sphere of influence.
Regardless, the effectiveness of the director of football model has to be addressed by the owner, either in terms of the individual or most likely providing the structure to give Brands the absolute authority he requires to be effective. That would also impact Moshiri’s behaviour and involvement in recruitment.
Since the summer of 2016 Everton have spent £531 million on incoming transfers and the estimated wage bill for the period is considerably in excess of £700 million. Without any hyperbole, it has been an area of gross mismanagement, poor planning, poor execution and on numerous occasions completely unstructured. This includes managerial selections not just player recruitment .
Currently constrained by the impact of Covid-19 and the potential breaking of profitability and sustainability rules, past recruitment decisions and the loss of key players during Moshiri’s time at the club has created a hugely unproductive, imbalanced squad. Such has been the poor recruitment and salary negotiations that many players have been literally unsellable, leading to a number of “deadwood” players just seeing out their contracts. From a resource perspective it has been hugely wasteful, from a performance perspective leading to under-achievement which in turn then impacts revenues, lower prize money from the Premier League and only one disastrous Europa League qualification.
Equally, management recruitment has been inconsistent, seemingly without strategy and poorly executed. Whilst idealistically one would hope for considerable input from the director of football, in practice management selection has been the domain of the owner. With the greatest of goodwill, it is surely not one of his core competencies. The question to the board is why has this been permitted? As directors you have a duty to all shareholders, not just the majority shareholder.
The lack of strategy, the lack of clear ownership of recruitment (is it Moshiri, the Chairman, the manager of the director of football who runs recruitment?), the appalling contract negotiations point to a business without effective management and leadership.
Revenue generation and cost control
It will be no surprise to regular readers of this site but over Moshiri’s time at the club we have failed to grow revenues and spectacularly failed to maintain any semblance of cost control. Covid of course, has had an impact, but nevertheless there has been no significant improvement in our commercial partnering and no significant results regarding expansion into overseas markets.
Aside from the close relationship (provided by Moshiri) with USM there has been no leap forwards in strategy or ambition commercially. Perhaps some will point at performance and argue that this only comes about through regular participation in Europe and winning trophies. I have to disagree. Everton is a highly recognised brand in world football that we are failing to exploit. Ultimately it comes down to strategy, scale of ambition and the quality of the commercial development team – if the strategy and ambition is bold and aggressive you can recruit higher quality personnel to fulfil the task. This is true at board and executive levels.
Cost control is a major concern and I am sure it has been noted in discussions with potential lenders. We have behaved irresponsibly with numerous examples of ridiculous contracts which negated any opportunity to trade non-performing players out of the club.
As a result of poor performance on the pitch, not qualifying regularly for European football, regular exceptional costs from manager changes, not being able (or willing perhaps) to exercise cost restraint (until this most recent period) the financial results of the club have been appalling. It has therefore necessitated further capital injections from Moshiri, has severely impacted our ability to restructure the squad and potentially compromises how we fund the stadium going forwards.
A shareholder or fan can justifiably claim the board has failed in its responsibilities to manage the finances of the club efficiently and sustainably.
As I mentioned earlier, Everton are a highly recognised (globally) club, steeped in history and achievement, responsible for many of the game’s greatest developments over time. We have been referred to as the Black Watch, the School of Science, the Mersey Millionaires, even the People’s Club. Our football has had its own style, we, above all other clubs revere the “number 9”, we have had the world’s greatest goal scorer and goalkeeper play for us for the bulk of their careers, we’ve had Pele grace our pitch and hosted a World Cup semi-final. We are Football League and Premier league founders. We have been renowned for our administrative capabilities and for almost our entirety considered to be a “well-run club”
What is our identity now?
How can we allow a situation when we are no longer considered part of the footballing elite? How are we in a position where if, for example, a Super League was formed (or any other modification to competition structure) we would be rule takers not rule makers? Who is responsible? Who cares or has made an effort to stop our long-term decline as a former power base within the game?
These are fundamental questions that require answers from the board and major shareholder.
Global market forces will sort out those companies that do not have sound corporate governance. – Mervyn King
Governance is the system by which an organisation is controlled and operates, and the mechanisms by which it, and its directors and employees, are held to account.
Does it matter? Yes it absolutely matters, good companies, high performing companies, long term industry or sector leaders have one thing in common – good governance.
They have an effective management structure with clearly defined roles for the Chair, for the directors (executive and non executive) and at executive level. You can’t run a business successfully without this.
How does Everton stack up in this regard? As we know there’s little clarity over decision making. When does the major shareholder impose his decisions, when does the board perform its role (including acting independently from shareholders) ? Why is every board member an executive? Why do we not have independent non-executive directors who provide valuable oversight but also bring fresh perspectives and external views into the boardroom.
The simple answer to all the questions above is that Moshiri wants it this way. He has complete control over the club. If he was not satisfied with performance of his Chairman, his directors or executives he would surely make changes (as he did with Keith Harris, and all of his management selections).
The question for us, as fans and some who will be minority shareholders is what happens next. Has Benitez either unwittingly or deliberately opened Pandora’s box bringing the need to improve “in all areas” to the attention of the board but certainly to Moshiri.
I hope his (Benitez) comments are a watershed moment that brings proper, effective, experienced management to the board and executive team of the club we love. That brings the footballing rewards Moshiri’s investment should provide and for which fans long for. What is clear is that Moshiri has to make changes to the manner in which our club is run for there to be any realistic hope of footballing success. Doing nothing is no longer an option.