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This blog is a way for me to collect interesting stuff into one place. I'm not planning on making this a confession booth of any sort, just post random interesting web sites if I feel the need to comment on them (otherwise I just add them to my del.icio.us page) and comment on other stuff that is worth it (books, TV programs, games, CD's etc).

Knowing myself I doubt I will be updating this too often but we'll see...

Location, location, location

Deep Thoughts and Shallow RamblingsPosted by Marko Poutiainen Monday, July 23 2007 17:33:59

This article was published in Toffeeweb on 23/7/2007.

Any business-owner knows location is the key. You want to have your business in a place where people want to come to. Of course this has to be offset by the costs of buying or renting the space but location is still a critical factor.

It is said that that's why the McDonald's restaurants didn't use to go bust. They are always located in prime locations. Of course these days the company is in a different kind of trouble with people being made aware of the poor quality of their offerings but they managed to go for decades without a single restaurant going bankrupt. The first one, allegedly, in Germany was closed because the council built a new major road in a location that drew the customers away from the restaurant.

After this prologue I'd like to ask if Kirkby really is such a great place for a football club? I can see several problems:

1. Logistical issues

There will only be 1000 parking spaces for match-goers.

There is only one rail going to Kirkby, it will not be nearly enough.

People leaving the area by car will mostly use only one road, which will certainly be congested. The number of roads is much less than around Goodison Park and there's isn't a big shopping centre next to it.

2. Business issues

Will Kirkby really be a location that will draw the business-people? Would you take your clients to a stadium in the outskirts of the city located in a giant shopping centre?

How will it affect the match-goers? The whole area is totally different from Walton that you won't be going to the pub before the match and walking in just before the kick-off. I know many find these "non-match" issues important.

3. Image/Brand issues

This is the difficult one: how will it affect the club in the long run that it is not located in the City of Liverpool any more? You can say all you want about Kirkby being the Merseyside, but this is an issue our dear neighbours will ram down our throats from the point a decision to build the stadium to Kirkby is made. And they will make sure everyone knows Everton is not in Liverpool any more, with great glee. Will you enjoy reading articles starting like “Everton Football Club has severed it's ties with Liverpool where they played for over 120 years by moving to the small town of Kirkby...”? That's what every Reds supporting reporter will write, even some that now are writing pro-move articles in the local papers.

That's the business side of things. Then comes the really scary part.

Our Board.

I know a lot of people think they are doing a great job. I don't. These are just some of the things I wouldn't expect from a competent board:

- Quadrupling the debt while selling every saleable asset the club had and getting 20+ million for Rooney, 8 million for Jeffers, 6 million for Michael Ball and so on. In fact the club has spent something like 10 million net in players over the past five years. And to blame it all on Goodison Park is ridiculous. GP is hardly the worst stadium in the country.

- The NTL fiasco.

- The FSF fiasco.

- The failure to deliver the King's Dock stadium.

Managing to make a loss on merchandising and not being able to fix it by themselves, but rather outsourcing the whole thing to JJB. I find it completely incomprehensible when you think a shirt cost £5 and they sell them for £50 and should have a good idea on how many shirts they sell every year – they have the data from past years.

Without the miracles David Moyes has produced I fear where the club would be.

And now the information we hear about the new stadium is vague at best. The stadium has cost £50 million, £75 million, £100 million and £150 million. It will have 55,000 or 50,000 seats. There will be 4000 or 1000 parking spaces. It will create maybe up to 10 million extra revenue while the fittings might cost as little as 10 million and the club needs to take maybe only 10-15 million more debt.

The last point is a major sticking point. The cost to the club depends on how much the sale of Goodison Park will generate and how much the club can gather from naming rights. Wyness has stated that the sale of GP will create 15 million pounds. To me it sounds an awfully lot in Walton. Naming rights should generate 35 million, which also sounds quite a lot considering Arsenal got about 50 million from Emirates.

If the club can't make that much money from those two sources it means it will have to take on more debt on top of the existing one, which is somewhere around 50 million. I think Wyness is deliberately playing down the numbers. Also, I can't see how revenue would increase by ten million in the new stadium, and neither does Wyness, or so it seems. The club finds it hard to sell all it's 11 corporate boxes currently, how will it sell 40 in Kirkby? And considering a number of fans will stop going to Kirkby, it will require an awful lot of new fans to increase the capacity by any meaningful numbers. And will this increase be long-lasting? And what makes the club think they will be more attractive to out-of-towners after the club moves to Kirkby? No doubt revenue would increase some, but is it really worth moving for, say a 4-5 million increase?

But it wouldn't sound so good if extra revenue was only 5 million while the club had to increase it's debt by 25 or 30 million and that's why we get these vague numbers.

I also have an issue with the land value. The value of the land now is pretty much nothing. That's because its not in a good location. Just because it might be surrounded by shops won't make it worth 50 million to a football stadium. It could make it worth that to some other business that benefits from those shops but I can't see how a football club could. So adding the 50 million to the total costs to make the deal look bigger is quite dishonest in my opinion. The actual cost of the stadium is quite low and that's why Wyness wants to use tricks like these. £75 million is not a lot of money on a new stadium and that's why our "world-class stadium" is now merely a "high-class stadium". And what will it actually look? The Ricoh Arena looks nothing like the original sketches, for instance.

There are a number of questions I'd like to have answers to:

1. What is the REAL cost of the stadium to Everton Football Club?

2. What is the business case for the move? Where and how much will extra income come? I want more detail than just "up to 10 million extra".

3. Is it really apt for a club of Everton's pedigree that a construction company designs the new stadium instead of an architect? Archibald Leitch and all that.

4. What is the role of Robert Earl, who was recently promoted to the Board, in all this? How much will he and the other Board members benefit personally from the move? As far as we know, his only input to the club so far has been to bring Sylvester Stallone over for a match. Now, on the eve of the biggest decision this club has done for over a hundred years he is suddenly elected to the Board.

5. How on Earth can Tesco get Barr to give a 25 million discount on the building costs? It would be hard for a construction company to get that sort of money back because in effect it would mean taking a loss on the project.

Don't believe the hype. There are always alternatives. The Board blew the first one (King's Dock). Others will come.

And don't believe the spin. Just today there was an article in Liverpool Daily Post by Mark Thomas which ended with the sentence “Would you rather watch a Riquelme in Kirkby, or a Brett Angel in Speke?”. That is an absolutely ridiculous statement. Almost parody-like. The new stadium isn't a magic wand that suddenly allows the club to sign the best players in the world.

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