The Everton Board Thread (Inc. Bill Kenwright / Blue Union)

[pfim]

January's transfer window answers that question in spectacular fashion

The 330k/month in interest isn't going to help much in a transfer window.

 

[Goat]

Then isn't that the asking price? The shares of Everton are being traded currently?

Well no, its up to the owners of the shares to set the sale price.

Im talking single shares trading, for example, its up to Bill to determine how much he sells his block of shares for and we are led to believe that the current board have no interest in selling their blocks of shares unless its for them all.

 

[Goat]

The 330k/month in interest isn't going to help much in a transfer window.

But surely 4m PA would?

 

[pfim]

But surely 4m PA would?

I guess. Then how does that work? Who pays off the debt and how are the compensated for putting 45 million in capital into the club?

 

[Mikey_Fitzgerald]

The 330k/month in interest isn't going to help much in a transfer window.

We're constantly having to plug holes every year at the moment, and that effects both our buying and selling policy

Get rid of that debt and we have a lot more freedom in the market both to obtain players we want and also hold on to the players we already have

 

[Allezfan]

The 330k/month in interest isn't going to help much in a transfer window.

4 million a year extra to the wage bill isn't to be sniffed at. That's 75k a week.

 

[Goat]

I guess. Then how does that work? Who pays off the debt and how are the compensated for putting 45 million in capital into the club?

They wont and they wouldnt be.

Hence it not happening.

 

[pfim]

Well no, its up to the owners of the shares to set the sale price.

Im talking single shares trading, for example, its up to Bill to determine how much he sells his block of shares for and we are led to believe that the current board have no interest in selling their blocks of shares unless its for them all.

Ok, then where did the 1400 number come from, if not the board (the shareholders)? Mind you, I'm not trying to be difficult. I'm just not making sense of this.

 

[Goat]

Ok, then where did the 1400 number come from, if not the board (the shareholders)? Mind you, I'm not trying to be difficult. I'm just not making sense of this.

Well the current board own around 70% of the shares, the other 30% are owned by smaller shareholders, although I think Grantchester has a biggish chunk? Anyway, as im sure you know, people trade in shares, thats where the 1400 number came from, stated by the esk in this thread somewhere, who I think has a few shares.

 

[pfim]

Well the current board own around 70% of the shares, the other 30% are owned by smaller shareholders, although I think Grantchester has a biggish chunk? Anyway, as im sure you know, people trade in shares, thats where the 1400 number came from, stated by the esk in this thread somewhere, who I think has a few shares.

Ok, so someone was approached about selling their few shares? It would make sense that the price would be much lower than what you'd pay for a controlling interest in the club. Thanks.

 

[roydo]

Ok, then where did the 1400 number come from, if not the board (the shareholders)? Mind you, I'm not trying to be difficult. I'm just not making sense of this.

Recent trades have been in the £1200-£1400 range, but as a Private Ltd Company, there is no set/published/independent valuation basis. For example, the price you might pay for one share in Marks & Spencer would be around the same as everyone else paid. But buying one share off a current Everton shareholder would be agreed between the two of you.

 

[roydo]

Ok, so someone was approached about selling their few shares? It would make sense that the price would be much lower than what you'd pay for a controlling interest in the club. Thanks.

Not quite. All shares carry equal rights. There shouldnt ever be a difference in the price of one share and another. Assuming they are the same types of shares.

 

[Big Doug]

just so tired of us being skint, a club like ours has massive potential we should be doing a city and having some arab build us up to overtake the red side of the city, imagine the dynamics of the PL if City an Everton were challenging for the title whilst Utd and Liverpool were battling it out for top 4/6. I can dream

 

[nsno-chris]

Snipet from a research paper showing the optimal method for buying a football club. Although the majority would like to think its just a case of 'person A paid £20M, he shouldn't want anymore' blah blah. Its a business, there are models in the business world.

If you have time, go through the accounts and value the company (EFC), its around the £130m mark

Controlling costs has been a major problem for EPL clubs in the past. Club revenues have grown by 267% between 1996/97 and 2010/11. Player wages, traditionally a club’s main expense, rose by 450% during the same period (Jones et al., 2012). This is a major factor in why the majority of EPL clubs struggle to generate profits. If a club is profitable or at least breaking even, it shows that they are prudent and controlling costs. Therefore a club’s net profit figure (after player trading) is included within the multivariate valuation model.

In the case of any company valuation, it is important to review all of the assets and liabilities of that organisation as is evident in the bankruptcy and broker valuation sections above. This is no exception when it comes to football club valuation. The main assets of a club (typically a stadium, training ground and player registrations) need to be weighed up versus the liabilities (normally trade creditors and debt). A club’s net assets figure (total assets less total liabilities) is therefore included within the multivariate valuation model.

There are number of key performance indicators (KPIs) that relate specifically to the football industry. It was previously mentioned that broadcasting revenues are largely similar amongst EPL clubs. One area that this is not the case is match-day income. For instance, Manchester United earned an average of £3.7m every home match-day in 2010/11 whilst Liverpool took in an average of £1.5m for every game at home13. This is primarily down to Manchester United’s Old Trafford having a capacity of 75,765 in comparison to Liverpool’s Anfield only having 45,276. This also illustrates the difference that stadium size and utilisation can make in terms of revenue in football. Therefore a club’s percentage stadium attendance is included within the multivariate valuation model as it illustrates how efficiently a club is utilising its stadium, one of its core revenue generating assets. The fundamental KPI in the football industry in terms of cost management is what percentage of revenue is made up player wage expenditure. It is commonly known as the wages to turnover ratio and a figure of 50% or less is seen as prudent. EPL clubs in 2010/11 had a combined wages to turnover ratio of 70% (Jones et al, 2012). As an established metric for club’s ability to control its biggest cost, the wages to turnover ratio is also included within the multivariate valuation model.
The motivation for the inclusion of each component in the multivariate model has been outlined in this section. The format of the model is below:

Club Valuation = (Revenue + Net Assets) x (Net Profit + Revenue) x (Stadium Capacity %) ÷ (Wage Ratio %)
Revenue

The rationale for the sequence of the variables will now be explained. Revenue generation includes all the cash generated by the club in a financial year. It is extremely important within the football industry and the underpinning factor of UEFA and the EPL’s financial controls. A club’s revenue figure is added to its net assets as these underpin a club’s ability to generate future revenue and consequently make up the backbone of the valuation model. The net assets figure is made up of a club’s fixed assets added to current assets less current and long term liabilities taken from its audited financial statements. The figure takes into consideration a club’s short and long term debt obligations. The combined revenue and net assets figure is multiplied by the club’s net profit (or loss) figure added to revenue and divided by revenue. The figure examines a club’s profitability in comparison to its overall revenue. In the case of profitable clubs, the combined revenue and net assets will be multiplied by a figure greater than 1 to enhance the impending valuation in line with profits. Whilst in loss making clubs it will be multiplied by a figure less than 1 to reduce the impending valuation in line with losses. The overall figure is then multiplied by the average stadium utilisation percentage which illustrates how effectively the club is using its core differentiating asset. The higher stadium utilisation (up to a maximum of 100%), the higher the impending valuation. Finally, the overall figure is divided by a club’s wages to revenue ratio. This illustrates a club’s ability to control its major expenditure and the lower the percentage the higher the club’s final valuation.

The model is straightforward to calculate but not too simplistic like the revenue multiples technique. It uses audited accounting data and industry KPIs to provide a bespoke valuation method for an industry that is extremely dissimilar to the regular corporate domain. The method also allows practical flexibility. It is possible to value a club for any contingency scenario such as European qualification or relegation from the EPL by adjusting the variables accordingly. This is also applicable when valuing big spenders such as Chelsea and Manchester City where interest free debt can be removed from the net assets figure to reflect the true position of the clubs

 

[pfim]

Not quite. All shares carry equal rights. There shouldnt ever be a difference in the price of one share and another. Assuming they are the same types of shares.

Yes, all shares have equal rights. But given the parameters of being a private business, if I have 3 shares to sell and the board has 24,000 shares, they will get a different share price than I will because they control the company and are offering that control as part of the sale.