The New Stadium – A Financial Albatross?

by   |   27/05/2022  40 Comments  [Jump to last]

As if the season hasn't been bad enough, in a comment on another thread, one of our posters provided this pithy observation about the new stadium:

“And as for the new stadium at Bramley-Moore Dock, don't get me started – what a financial albatross that's become before a brick has been laid.”

Let's take the second point first as it would seem to be the easiest to address. While perhaps literally correct, as most of the structural work has been done in sand, concrete, and steel reinforcement – and not much if any brick-laying, the colloquial meaning of "before a brick has been laid" would seem seriously at odds with the tremendous progress that has been made on the build to date?

Heck, the Echo was blubbing in ecstasy just this week when a trio of Everton greats were recently given a tour of the ongoing construction (it began last year, for anyone who hadn't noticed) and they were overwhelmed.

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But the key assertion is that the new stadium is (and was before construction even started?) a "Finacial Albatross".

Let's set against that claim a couple of bald facts: the initial and arguably most critical construction phase was financed directly by Farhad Moshiri to the tune of £100M – no financial burden on the club at this point, and apparently completed on time and within budget.

A second fact to consider is the fixed-price contract for the remaining works agreed between Everton FC and the main contractors, Laing O'Rourke. Admittedly the exact funding mechanisms put in place to support this work have not been divulged by the club, but Everton's survival in the Premier League has removed the greatest threat (although absent of any evidence that any such threat actually existed) to the new stadium being completed.

Yes, Arsenal's new stadium certainly cramped their style after years of Champions League football. But the even more expensive stadium in London replacing White Hart Lane does not seem to have impacted Spurs' onfield plans to the same degree.

Farhad Moshiri appears to have escaped risk of sanctions after severing his relationship with USM Holdings and that leaves only scare-mongering to suggest that the funding for Everton's new stadium at Bramley-Moore Dock is in any real doubt.

So is there any evidence that the new stadium is already (or would ever become) a "Financial Albatross" for the club? What am I missing?

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John Zapa
1 Posted 27/05/2022 at 13:59:20
The answer to your question is quite simple; Yes.

Estimated construction cost is £500M, roughly with a 25-year repayment of interest plus principle it would cost the club around £25M per year. In addition, other costs would increase such as security, housekeeping, maintenance etc... at least £1M per year.

On the income side, the club is currently earning around £14M per year from attendances, even if we consider a very generous doubling of income at the new stadium due to more tickets, higher general prices and more premium seats, then it would still leave a bill of around £12M (£26M expenses - £14M additional income) per year that the club needs to fund from its operations somehow.

In the past, there was the concept of USM sponsoring the stadium to cover the shortfall but, with this avenue closed, it does lead me to think that the new stadium will be a financial albatross around the club’s neck.

Kevin Molloy
2 Posted 27/05/2022 at 14:29:07
I will hold up my hand and admit I was worrying over nothing if Farhad pays for the bloody lot out of his own pocket.

But, if we assume he's not going to do that, and that the cost will be several hundred million pounds for an extra 10,000 seats that will most likely only be filled for the big games, the question comes, "How are we ever going to pay back the loan the club will need to take out?''

And we've already turned down the Council's rock-bottom loan rate, and with interest rates now going up, how do us paupers service this loan?

Is it through the commercial deals that our astute owners will put together once it's built? Will Vodafone et al really be knocking everyone out of their way to secure their box at Everton, when we've got those bastards not a mile away, and the small matter of the two Manchester clubs 20 miles further out?

I just don't see how it's going to work…

Dave Lynch
3 Posted 27/05/2022 at 14:46:09
It will work because of the revenue streams it will bring in.

It will host concerts, probably functions and seminars as well as naming rights and a host of other events.

Let's just get it built, Goodison has been a milestone around our neck for years, we "have" to progress and move with the times.

Kenwright blew out on the King's Dock, there is no way we would be in this situation if the postman had delivered that cheque... which was supposedly "in the post".

Jay Harris
4 Posted 27/05/2022 at 14:58:56
We need to open up our narrow mindedness. The commercial opportunities this build generates will create new avenues for income. Hotels, Bars, Restaurants, sponsorship let alone increased media exposure and as Dave says events etc. The stadium will pay for itself and will last many years beyond repaying the costs.
Barry Rathbone
5 Posted 27/05/2022 at 17:59:34
Once Benitez was given five quid as a transfer budget, the Albatroz had landed.

It's a theme common to virtually all new footy stadiums – Leicester went into administration in the first season at the King Power, Southampton endured a similar fate at St Marys.

It's just a fact that the vast majority of clubs banking on 'transformation from a new build fail - Bolton, Boro, Derby, Hull, Sunderland, Arsenal, Cardiff, Reading – all examples of a delusion that increased revenue streams are a cure-all.

The jury is out on Spurs, they seem no different to their White Hart Lane incarnation at the moment... give it time.

Man City and West Ham never built new footy stadiums, effectively receiving freebie athletic stadiums and, in the case of the Hammers, no financial millstone appears to be a winner.

Lovely idea having a brand spanker on the Mersey but you can't ignore precedent – well you can if blind faith and delusion is your thing. The odds are the new stadium at Bramley-Moore Dock will kill us without China or someone buying Moshiri out. You heard it here first.

Tony Hill
6 Posted 27/05/2022 at 18:46:54
Ah, Barry @5, “blind faith and delusion”. You’ve just summed us up. Castles (or Cavalier Towers) in the air.

What sort of dullards need boring foundations?

Clive Rogers
7 Posted 27/05/2022 at 21:36:25
In the recently published Sunday times rich list Moshiri’s wealth has gone down to £1.7B having been £2.9B previously. So he won’t be forking out for the stadium and is looking for finance or a sale of the club with a provision that the ground is finished.
Alan McGuffog
8 Posted 27/05/2022 at 21:40:04
I'll bet he's shitting himself. Do they have food banks in Monaco, I wonder?
Paul Birmingham
9 Posted 27/05/2022 at 22:44:37
Let’s take faith, and some blind and blinkered faith, but Everton, will turn the corner, the curve of mediocrity, failure and all that entails, and consumes all TWrs, eventually.

Time to emerge out of the 30 years in the wilderness, no mans land.

Blind Faith but True Faith, never more shown by the greatest Partizans football supporters in the World, the last 2 months of season 2021-2022.


UTFT!

Jimmy I'Anson
10 Posted 28/05/2022 at 09:46:22
What is the value of the 4th most successful club in England that could realistically be pushing for Europe and has just moved into a brand new stadium? Particularly in light of the recent interest in Chelsea, who I hear had over 200 serious notes of interest at a cost of £4.5 billion.

Moshiri will sell up and no doubt make a big profit, which is his right. So if this plays out, what then happens to the stadium financial albatross around the clubs neck? Is it just swallowed up and lost in the purchasing cost?

Danny Baily
11 Posted 28/05/2022 at 09:51:03
Jimmy 10, it's a bit of a stretch to call us the 4th most successful club in England these days!
Michael Kenrick
12 Posted 28/05/2022 at 11:08:59
It's hard to counter future projections of doom from any who are easily freaked out by the massive cost of the new stadium – especially in the context of our astounding financial losses. But at least the construction costs are exempted from those accounts.

If John's numbers (@1) are correct, then the stadium payment required will be the current equivalent of about 1½ players (fees plus wages). Expressed like that, perhaps it's not quite as daunting as suggested…?

And the need for the stadium that Kevin (@2) questions... well, the imperative has been there for the last 25+ years. Heck, Goodison has for years been on the verge of failing its safety certificate!!!

But seriously, the new stadium is now going ahead in brilliant fashion with a world-class architect and crack construction team – and you're running around in panic, fretting that it's not going to work?

But regarding the finance, it's almost as if Moshiri is doing some serious money washing here:

The club walked away from what appeared to be a very generous loan deal offered by Liverpool City Council, yet there has still been no confirmation of the public placements expected on the futures market to fund his great edifice on the Mersey.

He has forked out over £100M for the initial phase of construction to be completed.

His fortune has tumbled to the tune of £1.2Bn, yet the lads from The Athletic – who you would think are much more clued in than we mere fans – continue to insist he's in it for the long haul; there is no indication that Moshiri is preparing to sell the club, des[ite persistent rumours from Mr Abrahms.

Meanwhile, the diggers and cranes and steel erectors are hard at it, with the number of workers on site set to increase to an incredible 1,300 as the main phase of construction storms ahead. Laing O'Rouke would not be doing this if weren't receiving regular progress payments, or of there was any question mark over getting paid for their work.

Perhaps the plan all along was for Moshiri to directly fund construction? And then to convert that to even more equity in another share issue? Putting the value of the stadium exactly where it needs to be: on the club bottom line.

Then, when it eventually does come time for Moshiri to sell, he can make full profit and then some – as have most Premier League club owners who realize the ever-increasing value of their massive assets.

Jimmy I'Anson
13 Posted 28/05/2022 at 11:15:59
Danny, in league terms at least, it's not a stretch it's a fact.
Jimmy I'Anson
14 Posted 28/05/2022 at 11:38:36
Can we just clarify Mr Moshiri's wealth according to The Times rich list 2022? He is now worth £1.7Bn which is a drop of £300M from the previous year. This is said to be down to his relationship with Usmanov.

I hate to see fictitious information being quoted.

Tony Abrahams
15 Posted 28/05/2022 at 11:42:52
The rumours have gone a bit quiet my end, Michael, but believe it or not I tend to switch off at the end of the season, and don't speak to many people about Everton for a few weeks. Moshiri has lost his banker though, and this will definitely make him tighten his purse strings, even more than any of his financial losses, imo.

So I live in hope, especially after living in desperation for the last few weeks of the season, but if things carry on the way they have been going, I'm certain my desperation will return very soon.

I've heard Moshiri doesn't court publicity, I've heard he's gone to ground. I've heard he's desperate to sell, and I've heard he eventually even put a relegation clause into the sale of Everton FC?

I also think he's a fool if he sells, but desperate men, do desperate things, and keeping Bill Kenwright on as chairman is a pretty good example, unless he really is a deluded fool?

Dave Abrahams
16 Posted 28/05/2022 at 11:57:46
The Russia v Ukraine war won't last forever and it's possible Mr Usmanov will be welcomed back into the British way of life and rejoin all the Russian billionaires who have been accepted by the banks here for many years and become part of the system again.

Or maybe that's just wishful thinking on my part and I realise that a lot of Everton fans didn't want Mr Usmanov and his money in the first place.

It never bothered me, to be honest… Usmanov or Kenwright?

Christine Foster
17 Posted 28/05/2022 at 11:58:30
Michael / Tony,

If I were in Moshiri's shoes, I would be selling a majority shareholding, in real terms 75% that allows a constitution to be changed by the new owner, but keeping the remainder.

In short, he capitalises on potential value when selling, then, once the stadium is built, sells his remaining shares at the then higher price. Two bites at the cherry rather than wash his hands... and a better chance of recovering his money.

Kevin Molloy
18 Posted 28/05/2022 at 12:19:09
Michael,

There are a number of issues which gnaw away at me on this. I'll list them in brief:

Goodison kept us up this year. It's our biggest asset. Yes, it's falling down, but sprucing it back up again ain't gonna cost half a billion.

To those saying 'there's no future for Everton at Goodison' I say, 'Look at Anfield'… exactly the same scenario. And they didn't spend out half a billion. Nowhere near.

Goodison is of an age now where it resembles a cathedral. There have been Evertonians (all our immediate ancestors) supporting the team there since the Victorian Age. And we may be set to throw it all away for a new construction on a windy smelly dock miles from anywhere, with one bus in and out.

The idea that Moshiri will transform from serial bungler to Isambard Kingdom Brunel is not one I think is very likely over the next couple of years.

If he does build it, it's likely to be like most modern constructions, underwhelming when compared to the architects of the past.

I know it looks great on paper, but so did those horrendous concrete flyovers of the 1950s we are still burdened with.

The cost. We can all see how much it will be, and the question comes: How do we pay it back?

No doubt a response will be 'like other clubs have done'. But we are not like other clubs.

The difference in financial might between Everton's fanbase and that of Arsenal and Tottenham is vast. Our match day revenue will be a tenth of Spurs, if we are lucky.

And we can't call on an international fanbase like Man Utd, or superrich owners like Man City.

We are mainly funded through the telly. If you compare out match day revenue now, to what it will be when we move, it won't be much different.

We rarely hit capacity now, we don't have a lot of fans with a lot of money.

And big business have got much brighter stadiums to show their clients around in the vicinity than ours.

I know some people think it will become a major venue for concerts etc, I don't see it. They'll go to Kings Dock and other friendlier locations.

Yes, I suppose I am being a gloom bucket. but there are a couple of things I know for certain.

Our owner is not to be trusted, and will not hesitate to cut us off at the knees at any point to serve his purposes.

And I just don't believe that an accountant like him has looked at the deal we think we are getting and is going to bring it to fruition.

If he does move us out of Goodison, I feel we may bitterly regret down the line that we listened to him and didn't explore revamping Goodison for a tenth of the cost.

Alan McGuffog
19 Posted 28/05/2022 at 12:53:26
Kevin,

You make good points but the fact is that there is no 'if'
– we are moving, it's happening.

I first went to Goodison in 1961, Boys Pen. I've stood or sat in all parts of the ground. I love it. But... it's a crappy ground.

Worst thing we did was pull down the old Goodison Road stand and replace it with the God-awful Main Stand. Using a design that was outdated even when built in 1970 – contrast with the re-design of Old Trafford shortly after.

How many grounds still sell obscured-view seats? Admittedly these have been a blessing this season.

Michael Kenrick
20 Posted 28/05/2022 at 13:43:59
Kevin...

I thought of doing a point by point but oh dear... you don't seem to live in the Real World, do you?

Revamp Goodison? – Ship sailed a long time ago.

Moshiri is an accountant; he seems to be doing his job, which includes finding spondoolies to fund the new stadium build.

Brunel was a Civil Engineer. Perhaps England's finest. Don't conflate the two – that's just silly.

The plans are in, everyone raves about the design and aesthetics. It's under construction. And it looks nothing like a 1950s flyover.

Goodison Park is at 98.7% of capacity on the season – a bloody awful season to boot. That's despite the club finally putting prices up.

And yet they have a season-ticket waiting list of 17,000. So the extra 13,500 seats (not 10,000) – all with unobstructed views – might see some additional demand realized?? Just saying.

Actually, you know what. Fuck it. Since you don't even seem to accept the new stadium is actually under construction – but you do seem to believe that Moshiri is building it himself – while Goodison Park could be redeveloped, I think I'm done here.

Kevin Molloy
21 Posted 28/05/2022 at 14:32:57
Michael,

Sorry, I didn't realise it was no longer possible to improve Goodison. Why is that exactly? Is it just cos we've started work down at the Dock?

I note you have faith that 'he seems to have the money', and that a lot of money has already been spent. You imply from this, that the stadium is therefore going to be built. And you may well be right.

However, this is a fast-moving situation, Usmanov was excommunicated just 2 months ago, we can't know what are the medium-term implications of that on our project.

There is still a hell of a lot more money that will be required, it won't be the first project around here to put in the foundations and nothing else.

It's difficult to estimate how much our attendance will go up by. Probably as good a best as any is to look at how West Ham's crowd (similar size club and fanbase) has gone up since their move. That will probably tell us how much attraction a new stadium holds.

I've just had a look and to be fair, yes they seem to have gone up from 34k to over 50k, so maybe you're right, it will pull in significant extra people. Even so, though, I still don't see how that increase touches the sides of the loan we may be taking out.

You seem incredulous that anyone could doubt this project. I'm surprised, given the incompetence, the lack of transparency, and the fact we've just seemingly lost our main funder. This is a fluid situation.

And what still perplexes me is, from Moshiri's point of view, it doesn't make business sense. His investment of £400M will not increase the value of the club by £400M… nowhere near. We will still be a mid-table Premier League club after that investment, only with an extra 13,500 newer seats.

Future owners will look at our revenue generating capacity after the new ground, and it still won't come near any of the London teams or our local rivals.

Kevin Molloy
22 Posted 28/05/2022 at 14:53:21
Alan,

Yes, those pillars have shielded us from some truly shocking displays. They may come at a premium in next year's prices. “I'm afraid we've only got unobstructed views left for Leeds.”

Brian Murray
23 Posted 28/05/2022 at 14:54:37
It's a moot point, I know, but a while back, When Skies Are Grey, the Everton fanzine, actually paid £6,000 for a feasibility study to turn Goodison 180 degrees to create more room as it's obviously land-locked.

Not sure if that meant doing away with the school and terraced housing. We always had strong opposition to getting rid of the school, I remember that.

Peter Mills
24 Posted 28/05/2022 at 15:48:12
It’s coming out of the ground. It’s happening. We will move.

None of us knows the impact. The only thing we supporters can do is turn it into what Goodison has been for so long - never, ever, more so than the past few weeks.

Tony Abrahams
25 Posted 28/05/2022 at 15:57:51
First they will build a stadium, and then the whole area will start to be massively redeveloped, and this is something that you can see little glimpses of already, if you drive past the area around Bramley-Moore Dock.

It's massive for the city, those Tories are not fine-tooth combing Liverpool City Council, for the sake of it. (It's all about the money and what they can grab for themselves – thinks cynical me!)

Our city has got more scope than most to be developed, especially around Bramley-Moore Dock, and this means it won't have only one bus route for long.

Michael Kenrick
27 Posted 28/05/2022 at 16:47:26
Kevin,

Part and parcel of the Planning Permission package for the new stadium at Bramley-Moore Dock were detailed proposals for what will happen to Goodison Park – I seem to recall "giving it back to the Community" somewhere in there.

Well before that, the club decided the redevelopment of Goodison Park was "not feasible" – despite the efforts by independent supporters groups to show that it could be done, as Brian says. They never wanted to do it, pure and simple.

Kings Dock, The colliery, Desperation Kirkby... finally Bramley-Moore Dock. The intention was always to move to a new location, the intention was never ever to redevelop Goodison Park.

And yes, once construction work began, I think you could say that was the very final nail in a very dead coffin that bore the words, thoughts and dreams craving the 'Redevelopment of Goodison Park'. But in truth, the idea was always a non-starter.

Do you know they talked seriously about sharing a stadium with the Devil's Spawn in Stanley Park? Perhaps you'd like to resurrect that one too?

Brian Murray
28 Posted 28/05/2022 at 16:52:17
Michael @27.

May be the project left behind at Goodison, with all the community work and emotional input involved, it needs someone specialist in that field and someone who is apparently emotionally involved and invested in the area.

I know just the pair.

Michael Kenrick
29 Posted 28/05/2022 at 16:59:16
Kevin,

Sorry, my incredulity was that you didn't seem to acknowledge either the impressive design of the project, nor that it was well into construction already. And that you thought we could still redevelop Goodison Park.

I'm not incredulous about you or anyone having doubts that the project will be completed. In the current crazy circumstances of this mad mad world, that is sadly entirely possible.

But it's conjecture that runs opposite to the current course of events. Just look at the latest puff pieces on the project at the official website. It's going full-steam ahead. (Okay, not steam... that's an anachronism.)

But, needless to say, work could stop tomorrow. And all we could end up with is a half-finished eyesore on the banks of the murky brown Mersey, as a painful memorial to Moshiri's malevolent munificence every time you jump on the ferry.

Michael Kenrick
30 Posted 28/05/2022 at 17:09:25
Brian,

Let me guess... maybe a double-act? The Professor and the Impressario.

They'd be falling about in the aisles.

Tony Abrahams
32 Posted 28/05/2022 at 17:13:35
Keep him away from Goodison, after the disgraceful way he was running it down, before Moshiri went and found some blue tarpaulin.
Anthony Murphy
33 Posted 28/05/2022 at 17:43:45
Interesting to note that Peel are now pushing ahead with plans for a 4.7 acre ‘Central Park' which, if it goes ahead (extremely likely given the council's net-zero policy) will take up a huge chunk of land once reserved for development on the Liverpool Waters site. A green space of sorts was always part of the plans, but this is a key change in direction.
Jerome Shields
34 Posted 28/05/2022 at 17:45:05
I think that the new stadium will be completed on budget and will be marvelled at financially on how to develop a stadium. This is already happening. The club will also ensure a large profit for Moshiri if he decides to sell after the new stadium is complete, even with the money he has spent. I did see that post on another thread, but did not comment thinking it completely off the wall.

Paul the Esk, like Tony Abrahams, has a source who says that Moshiri was prepared to sell the club. This would not surprise me under the threat of relegation, but that threat has now gone. Sanctions and FFP issues have been successfully addressed and the Leeds - Burnley legal letter will disappear down the hole it came up.

The current regime will be a drag, but not to the extent that it will stop the momentum generated by the new stadium. Actually, the momentum maybe will put them under pressure.

Everton have a young manager selected by the fans, so the momentum of the movement to a new stadium will generate more interest and reignite latent Fan interest, which never leaves an Evertonian once they become one.

Kevin Molloy
35 Posted 28/05/2022 at 17:52:35
I think we can definitely agree on one point, Michael, sharing a stadium with the Reds is an idea which has definitely come and gone!

Everything else though it seems to me is back on the table if we are knocked back to square one if the new stadium at Bramley-Moore Dock doesn't happen for whatever reason. We'll soon find out, anyway.

Bill Gall
36 Posted 28/05/2022 at 18:04:09
Brian #28

On your comments of what happens to Goodison Park, this is a statement released by the club on 26 July 2019.

DBB will oversea the work of Stadium Development Director, Colin Chong, and take responsibility for the new Stadium Project, including the delivery of the community-led legacy at Goodison Park.

Graham Mockford
37 Posted 28/05/2022 at 19:18:53
One can only assume there is a business plan supporting a £500M investment that details how the money is paid back. Otherwise why bother?

However unless anyone is privy to the assumptions in that business plan it is impossible to have an opinion on the financial viability of the new stadium at Bramley-Moore Dock.

John Zapa
38 Posted 28/05/2022 at 19:22:03
I think, with the estimated annual deficit of £12M+ after building the stadium, it would make the club less appealing for investors in future when the day comes that Moshiri sells.
John Chambers
39 Posted 02/06/2022 at 12:02:31
I can't see how there is such a projected deficit.

To start with, I don't believe matchday revenue at Goodison is only £14M. Taking a simple view of 38,000 people paying an average of £30 (assuming our limited hospitality supplements concessions) over 19 games give receipts of £21M.

Moving to the new stadium at Bramley-Moore Dock, we can expect an increase in average attendance to say 52,000 and let's say an increase in income of the same order to £40 per head (and I think that is conservative given the huge increase in capacity for corporate/premier packages), income from 19 games alone will increase to £39.5M.
Looking at naming rights, I agree a deal with Usmanov would likely have been very generous. Even without him, I will take a “pessimistic” view we would only get £5M per year, Spurs are looking for £25M. That would significantly bring any deficit down.

I'm sure the new stadium will be used for many other events, eg, Anfield can't be used for Euro 2028 as it is too short so, as long as we build the pitch at least 105 m long, we could expect some of those games.

Using it for concerts, day-to-day use of the facilities for conferences, restaurants etc would I'm sure make up the difference, and hopefully provide some income. It may not be the cash cow we hope for but I'm sure it won't be an albatross.

Brian Murray
40 Posted 02/06/2022 at 12:29:02
Chelsea's new owner wants their new or existing ground to be an all-round yearly venue. That has to be our aim that I'm sure a competent and innovative team behind the scenes will grasp with both hands. Out with the old, as they say.
Laurie Hartley
41 Posted 02/06/2022 at 12:49:03
You know what has me scratching my head – if Jimmy's numbers @ post 14 are correct, our owner despite loosing £300M last year is still worth £1.7Bn. He was worth £1.2Bn when he bought us.

So his wealth has increased by £500M in the past 6 years despite the schemozzle of EFC and his recent losses. Granted he may be useless at owning a football club but he is very good at making money. I suspect he will continue to do so.

Jamie Sweet
42 Posted 03/06/2022 at 00:05:54
Just seen the video update on the official site.

We've got stairs. Actual proper stairs!

They don't go anywhere yet obviously, but I was surprised how excited I was to see stairs.

Stairs!!!


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