With Everton struggling to compete financially with the majority of teams in the Premier League, Evertonians are becoming increasingly fragmented, with supporters allegiance to the board split between pro, anti and somewhere in the middle. With the debate heating up and the different camps releasing their own propaganda, I thought it was time that I delved into the financial statements of Everton Football Club Company Ltd to look at the clubs off the pitch performance during the last 16 years, the period in which Everton have been under the ownership of Bill Kenwright. In doing so, I am not looking to support any of the sides in the board debate; instead I am looking to present detailed facts to enable supporters to make up their own minds.
The first part of the investigation looks at the ownership of Everton Football Club, tracing back to 1999 and Peter Johnson’s sale of the club to the consortium led by Bill Kenwright.
As of today there is currently around 1,500 individuals who own the 35,000 shares in Everton Football Club Company Ltd, however a relatively small number of people own the majority of Everton’s shares.
To understand how we got to this position let’s rewind to late 1998-early 1999 and Everton are in a very difficult place, both financially and on the football pitch. Peter Johnson, the majority shareholder (71.39% of shares) and chairman had come under increasing pressure from both supporters and the local press and reluctantly had taken the decision to stand down from his position and announced his intention to sell his shareholding in the club. Sir Philip Carter, the former chairman accepted an invitation to return in an interim capacity and to oversee the transition to new ownership.
Sir Philip Carter’s report to the shareholders in the 1999 financial statements, presented a pessimistic, yet candid and open view on the clubs performance. The late Sir Philip Carter was an excellent business man, taking up the position of managing director at Littlewoods and in 1992 was one of the instigators in the creation of the Premier League. Carter recognised the leagues potential and was instrumental in securing Sky’s backing for the new venture. Carter was extremely well respected in the football world and his damming view of how Everton had been managed during Peter Johnson’s era highlights exactly how bad things had gotten at the football club. You can criticise Bill Kenwright for many things, but he was instrumental in rescuing Everton from the callus mismanagement of Peter Johnson.
‘Anyone with more than a passing interest in our fortunes will certainly realise that last season was one of considerable turbulence. We entered the season on an optimistic note. A new management team [Walter Smith, assisted by Archie Knox] had been put in place with substantial funds that had been made available to assist in rebuilding our squad, which it must be acknowledged was in desperate need of strengthening [during the previous campaign the Blues had survived relegation on goal difference, with a 1-1 draw on the final day of the season lifting them out of the bottom three].
Defenders Alex Cleland, Marco Materazzi and midfielders John Collins and Olivier Dacourt arrived prior to the new campaign and were soon joined by striker Ibrahima Bakayoko, goalkeeper Steve Simonsen, and then defender David Unsworth returning to his beloved Goodison. A total investment in excess of £22m was required to secure their services, plus a considerable addition to the wage bill. Given that only Duncan Ferguson, John Spencer, Tony Thomas and Gavin McCann were sold, you can readily appreciate how the Club’s financial situation became extremely serious virtually overnight.’
‘I think it is fair to state that we had overstretched ourselves financially in bringing in new players and by November, after detailed discussion with our Bank, we agreed that the only course of action was to reduce our borrowings…The only offer for the Club to consider was that received from Newcastle [for Duncan Ferguson]. The speed of the transfer on that’ night of November 23rd certainly caught many of us by surprise. In the eyes of many supporters the sale of Duncan was unthinkable, but it must be remembered that no one personality is bigger than the Club’s future welfare and the best that can be said is that the sale assisted in stabilising the immediate financial crisis we faced.’
The sale of Duncan Ferguson and subsequent fan reaction, certainly expedited the sale of the football club and with Bill Kenwright and his True Blue Holdings consortium the only viable option, Peter Johnson retreated back over the Mersey and took up office once more at Tranmere Rovers.
After months of negotiations a deal was finally reached in December 1999, with the directors of True Blue Holdings agreeing to buy Johnson’s 71.39% stake at a price of £857 per share and thus becoming the majority owners of Everton Football Club. A look inside the financial statements for True Blue (Holdings) Ltd for the period ending 31st May 2001 shows that the deal completed on 3rd March 2000. The breakdown of the ownership reported in the financial statements is detailed in the table below.
True Blue Holdings remained majority shareholders until 2004, when a bitter battle between Bill Kenwright and the Gregg Family resulted in True Blue Holdings winding up. Consequently the share ownership in Everton was devolved proportionally to each individual director of the consortium.
In time the Gregg family became increasingly disenfranchised with Everton and in 2006 they agreed to sell their shareholding to Robert Earl’s BCR Sports, an investment vehicle registered in the British Virgin Isles. The sale price remained undisclosed, however it is reported that the Gregg’s recouped their initial investment in Everton.
An accusation often levelled at the current board is a lack of further investment into the football club. The table below details the estimated and relatively small net worth of the current Everton directors. With the exception of Robert Earl, the other directors simply do not have the financial wealth to invest significant sums into Everton and unfortunately, it would appear that Robert Earl does not have a passion for football or Everton.
If we compare the wealth of the major Everton shareholders to the estimated net worth of the owners of each of last season’s Premier League clubs, the huge financial chasm that exists between the Blues and their peers is plainly evident. Under the current ownership, Everton do not have the financial might to compete with the Premier League’s big guns, this in itself is not a criticism of the current board, it is an unfortunate fact of modern day football.
An accusation often directed at Bill Kenwright and his fellow directors, is that the major shareholders are siphoning funds away from the football club. Firstly, and this is true of many clubs and not just Everton, there isn’t enough profit in football for the directors to withdraw funds from a football club. The only people making money out of football are the players, their agents and the TV companies. The table below drawn directly from Everton’s financial statements over the last 16 years, shows that the directors of the club have not received a penny in dividends and apart from when the chief executive has sat on the board, not a penny in wages. What is clear from this table is the significant salary received previously by Keith Wyness and currently by Robert Elstone.
To surmise the investigation so far, Bill Kenwright and True Blue Holdings purchased their major shareholding at a time when the football club was in financial trouble. The banks were putting pressure on the club to sell players and Everton were struggling to remain afloat, both financially and in the Premier League.
Unfortunately, the major shareholders, or certainly those with a direct interest, do not have the financial resources to push Everton forward and realistically, with the club under their ownership this is not going to change.
With regards to the board withdrawing funds from the club, we can categorically state there is no evidence that Bill Kenwright and his fellow directors have ever withdrawn a penny from the club and they certainly do not receive a salary in connection to any of the work they do for Everton.
Part two of our investigation into the ownership and finances of Everton Football Club will be published tomorrow, with a focus on the clubs financial performance since 1999.