INTERVIEW WITH ROBERT ELSTONE
Mickey Blue Eyes
To Goodison Park for a half yearly interview with CEO Robert Elstone.
MBE: As always, thanks for meeting with me, Robert. Can we start with the Everton V Everton match before the league season began? What is your take on the whole experience?
RE: It went fantastically well. I have to admit it exceeded expectations enormously. The Ruleteros Society had repeatedly tabled the idea and I would have to admit we were sceptical, but, to their great credit they didn't take no for an answer. They kept telling us we were underestimating it and that they felt it was going to be a lot bigger than we thought it would be. I'm glad they stuck to their guns because they were right. We're glad we went with it because it was a great occasion in many ways. It generated a lot of great PR for the club, allowed us to tell a part of our history to a new audience and gave us the chance to develop a great relationship with CD Everton. It brought some new friends to the Club and the City and we're still in contact with Chilé on a number of fronts to see if we can maintain the relationship. It also packed in the biggest pre-season friendly crowd I can remember. It ticked a lot of boxes.
I can remember on the afternoon of the game, going on Radio 5 Live and talking to Gabby Logan. It was a great opportunity to get the match out to a wider public. It was great credit to the team here at Everton who got behind it, but most credit goes to John Shearon and Tony Heslop and all the Ruleteros Society who pushed us so hard to take the challenge on. Well done to them.
MBE: I bet they frightened themselves to death when the club said, "Yes, we'll do it," and they came face to face with the possibility of it nose-diving!
Do you think there's any future possibility of a return visit?
RE: It would be very easy for me to sit here and say we would never rule it out and we will always look at possibilities. There's virtually no chance of travelling during the season of course and the reality is we have a very small window of opportunity every year to plan and deliver pre-season football. Pulling together a pre-season tour focussed around preparation for a forthcoming English season, as well as taking into account the Chiléan season wouldn't be easy.
And of course we have to take account of the financial situation. It has to be worth our while, as it was for the tour of Australia. To go to Chilé would need us to tick all the boxes, including playing and training conditions, climate, travel - meet all David's demands, and generate funds. As matters stand, I think the challenge of meeting these demands makes it extremely unlikely for the foreseeable future.
What we are talking to Chilé about is the possibility of youth team visits and their coaches coming to Finch Farm, maybe Chiléan and English Everton Ladies matches too, and continuing the relationship at junior teams levels.
MBE: If a Chilé visit ever came off maybe it could be tied in with a South America tour to take in other countries to fill the finance gap?
Doesn't this notion tie in rather well with David Moyes's recent public self-questioning that, given our poor start, maybe he would think about a more competitive pre-season?
RE: Well, David is the only person who could comment on that. He always prepares meticulously for every game whether it's pre-season or during the season. The quote you mention just demonstrates how relentless he is in looking for improvement. What he has concluded about this pre-season I don't know.
MBE: Meetings with fans groups. How is that going? Do you get many inquiries from groups asking for such meetings?
RE: A couple of weeks ago myself, our commercial director, Dave Biggar, Sharpy, our communications team and Leon Osman visited the recently-formed Chorley Supporter's Club. As always, the group was hugely committed to the Blues and gave us a very warm welcome. Leon's was very well received and was a credit to the Club but, as goes with the territory, I had a slightly rougher ride! Seriously though, it was a pleasure to meet another great bunch of Evertonians.
The Chorley visit was followed up by a visit to Wrexham, which unfortunately I was unable to attend. We are on the road regularly and it is something we value, something we learn a lot from and something we intend to continue.
We had a management team meeting this morning and are tightening our efforts on four areas, one of which is fans engagement - giving all fans a sense of ownership. We've also got a team looking at all our sales channels, to make it easier for fans to buy from us. We're looking at how we can improve match day and improving our knowledge of fans. We're still sending too many emails and sometimes to the wrong fans.
Fans have only to ask us for a visit and we will do our best to accommodate all groups. In other words it is "inquiry-led." It is easier to engage with self-organised groups but we don't want to lose sight of informal or unrepresented fans such as season ticket holders and others. We want to avoid a tendency to work just with our supporters' clubs because they're easier to deal with.
MBE: Are there any plans to introduce open training sessions the way some clubs have?
RE: One of the things we have taken from fans contacts is how important it is to allow fans to "access all areas", though naturally we have to be careful with it. However, we are planning to give access to the training ground on a selective basis at certain times of the year to fans groups. At the moment there are no plans for open training sessions but it's something we will work on for later in the season.
MBE: Can we move on to the latest UEFA Club Licensing and Financial Fair Play Regulations? I have read the document three times and each time I was left with an increasing sense of dissatisfaction.
I do believe it is a start and a step in the right direction, but that is strictly a relative term. In fact, badly handled, it might have the opposite to the intended affect and exacerbate the situation.
Where I think it fails is in the ratios in the Bonus and Market Pools, especially in the 5:1 differences between the Champions League and the Europe League and the economic anarchy of TV rights. This is surely both an imbalance and impractical if the goal is to achieve financial fair play. It seems to me that if we are to make progress more possible, then that 5:1 ratio should be changed. Also, the TV rights should be looked at. In general, I cannot see why we don't move closer to - of all places! - the American model, where certain elements are paid into a common pool and shared out equally. The winners and runners up in a competition could get prize money, but current grading of prize money below that level, again, only exacerbates the situation. Wouldn't that overall achieve a much better ratio of shared finance? Do you have any strong feelings on that?
RE: I think it comes down to the individual fan or commentator's philosophy on how football should be run. My strong view is that clubs should be allowed to run their businesses as they see fit. I absolutely agree that UEFA objectives are laudable, but there are several issues in it that I do find difficult. Having said that, it is coming in and we don't have a choice.
MBE: Well, you won't get a European license without it, will you?
RE: That's correct. And I have said before that it might well favour Everton over some other clubs. I think your point is right. What the UEFA regulations will do is consolidate the established order of the Clubs with big fan bases and big stadia. It could be argued that that is the way it should be, that they have a financially robust business. But I think it is more complicated than that. I still believe that a wealthy benefactor wishing to invest in a football club and take it further should still happen, but the UEFA regulations will rule that out. As a measure to introduce greater financial prudence it may work, but at a cost of armies of accountants and lawyers pouring over everything we do.
MBE: But that's the consequence of any legislation that requires checks and balances. Somebody has to ensure it is being adhered to, otherwise anarchy and opportunism rules.
RE: Well, it's going to happen. We'll have to get on with it. But as I said, in the fullness of time I think it is going to suit a club like Everton, in fact most English clubs.
If we were to allow our paranoia to run loose a little it could even be claimed it was being introduced to lessen the overall economic power of English clubs. But it is the English clubs who have the big stadia and the big crowds to enable them to get high ticket prices. And, when you add good TV revenues and sponsorship, the Premier League should dominate.
MBE: That's my point, Robert. In many cases it might well exacerbate the differences. That links in nicely to how the game is structured.
I am an admirer of the German model where the local community owns a controlling 51%. People can come and go on the other 49%, but they can't force an issue, especially if they are just a financial chancer. There were attempts to reverse the percentages but the fans banded together across the Bundesliga and blocked it, I am delighted to say. In England we are nowhere near that at the moment. And the German game hasn't suffered because of that model. They build much better stadia than we have, their gates are still high, their ticket prices relatively lower, their national team is always formidable...........
RE: .......You can see I'm smiling here. The media love to criticise the Premier League and love to throw German football at us as an example of how we should be doing it.
Now, I'm not an expert on German football, but last week there was a double page spread comparing Bayern Munich with Manchester United and how United were doomed etc. etc., which I just found frustrating.
In my opinion the Premier League has some challenges, and there are some clubs where the debt levels are of concern but our stadia are nearly all full, at solid ticket price levels. We command phenomenal worldwide broadcasting fees. And when you add it all together, it is difficult to see what is so wrong with the English game. English clubs dominate UEFA on-field rankings, miles ahead of their German counterparts. The game has to decide whether it wants to continue to have the ability to dominate the 'European Stage', which of course fuels so much of the value in our broadcasting deals.
At the end of the day it depends on what we want our football to look like, where we want it to be positioned, what success we want. We'll all have different views on that. For example ownership of clubs by fans is incredibly important, but I don't necessarily think that needs to be ownership in a strict legal sense. Fans can affect the way the club is run by participating in the ways I described earlier. That can provide a sense of ownership too as long, of course, as clubs listen.
MBE: But they can't actually affect things unless the ownership framework is in their favour, can they? That's a bit like saying the price mechanism can run a national economy, which is basically the monetarist position - which I disagree with. It's raw Adam Smith all over again.
RE: But if we get it wrong, if we don't listen, then it will bite us hard. Hopefully what Everton demonstrates is that we DO listen, that we ARE aware of different aspects that concern the fans and that we ARE attempting to put them right.
For instance, ultimately the board of directors sign off on season ticket prices. But the prices have been previously reviewed and commented on extensively by our fans.
Notwithstanding anyone's views, I see it as highly unlikely the Premier League will go down the road of substantial fans ownership or fans taking majority shares. But, I am not sure that is as big an issue as some fans might think. Ultimately, if we get it wrong they tell us by voting with their feet. Then the club suffers. We are very much aware of that dynamic at Everton, as we have to be.
MBE: I think that would apply whatever system we had.
However, the whole idea of community ownership links to very strong local feelings, almost tribalism. People have that feeling and it cannot be quantified with money, anymore than can any other emotion. It is raw indeed, but then so is monetarism, as present economic cuts show.
I am not for a moment suggesting the subject is an easy one. I can only speak for myself when I say most fans I know consider it an inevitable and desirable step. I have no empirical evidence to show it dominates their football thoughts, though.
What I can say with complete confidence, empirical evidence or no, is that fans universally reject the idea of their club being used as a cash cow, where it is treated purely as a commodity, the shares value increased, and then sold at a profit. God knows we have seen enough examples of that over recent years. In my view this can only be countered by a more enlightened understanding of community ownership, how it works and what are realistic expectations. In which case I think the German model has a lot to offer - not entirely, but it's a start.
RE: I find it difficult to see examples where ownership and fans interests are not almost perfectly aligned. Owners of any club seeking a return on their investment have to achieve success on the field. You ask any football fan what they want and they want to win trophies, and I believe shareholder value is intrinsic with the same thing. The link is inescapable.
MBE: Well, let me take the worst example I have heard recently.
Harry Redknapp was recently quoted - I assume the quote is accurate - that fans couldn't care less if Saddam Hussein owned the club if it was successful or he put millions into it. Now, isn't that the logical conclusion of what you just said? So where do you draw the line?
RE: Redknapp was, of course, being "proactive." But, putting the extreme to one side, I suggest almost all fans would welcome "increased spending power." The nature of the owner and the way in which he runs the Club is very important. It's particularly important that he understands the club, its fans and everything the club stands for. It's also important he can communicate, and does communicate on a regular basis with credibility and passion. No fan wants his club to be owned by someone who doesn't understand that.
Having said that, I have the misfortune to live in the heart of Man City country - well at least it's become that way over the past couple of years, and, I have to say, they're not losing sleep about whether the guy paying the cheque is or was a City fan or whether he'll be with them in 20 years time. Harry's point, disregarding the extreme, does underline that we're in a short term business, where everyone demands quick wins and immediate success. Like it or not the billionaire is probably the easiest solution.
MBE: Talking of transfers, is the agreement still in place for us to get a percentage of the profit of any sell-on of Wayne Rooney? Has it been run down in any way via transfers between the clubs?
RE: The agreement is still in place and hasn't been diluted in any way.
MBE: Our wages ratio. Last time we spoke on this issue it had gone over the 60% mark. Has that improved? It was after all a bench mark you set when you were in private accountancy practice.
RE: We continue to invest in our playing squad. We have signed several new contracts for our senior players during the closed season and this has put greater pressure on the wage bill. Of course, it reflects our ambition, our faith in a great manager and our desire to push forward at the top of the Premier League.
Fans looking at the wages to turnover ratio should take account of the fact that our turnover is deflated by outsourcing our retail operation. So we don't record all our retail sales as almost every other club does. We take a guaranteed royalty from Kitbag. On that basis, our wages ratio is overstated. If we were to adopt the former approach we could probably add another £5+ millions to our turnover. That would probably provide a more accurate comparative ratio.
MBE: How have the new stores and merchandise lines performed? Has that made a marked difference to revenues?
RE: I can't speak highly enough of Kitbag. Their commitment has been phenomenal. We knew they were very, very good at online, but we were a little uncertain of their High Street retailing experience. Their investment in the two stores has been fantastic. It shows through in sales figures we are extremely pleased with. They are exceeding their budgets and we receive an increase in royalties with it too. To date it has been win-win.
I'm also delighted to say Kitbag have been a major contributor to the proposed new development in place of Club Everton. They have brought the development much closer to reality.
MBE: Can we move on to the issue of new stadium proposals? Has there been any contact with the new city council leadership?
RE: Yes, quite a bit, and positive. We are currently talking to them to identify new opportunities. We're at an early stage, but the same central problem remains, that of financing any new stadium development. That said, we have definitely noticed a change in outlook and spirit with the Council. We now feel the cup is half full, not half empty. Whilst I am pleased with this new outlook, I must emphasise it remains a very difficult challenge and all work is at a very early stage.
MBE: Are you comfortable with the liaison with the new city council?
RE: Absolutely. It's been excellent. The new stadium project is a huge challenge for everybody. We are looking again at available sites, including some previously ruled out.
MBE: You may recall we sometime ago discussed the possibility of a site in the north docks in the ownership of Deutschebank/Peel. Are they still discounting the possibility of a stadium in their overall planning strategy?
RE: Yes, that's the line we have received from them. So it's not currently on our radar.
MBE: Of course there are many sites of varying possibility throughout the city. But some of them are salutary and continually surface in the local property gossip mill, which is not unlike a shark pool in an aquarium. One of the sites is the proposed retail redevelopment at Edge Lane; actually, there's nothing new about it, it has been on the table for years.
However, any development at Edge Lane is dependent on the related activities of Albert Gubay's property interests. Also on acquisition of a strategically important corner site, which has caused local political waves for years. Indeed the local press reported Joe Anderson, Labour leader, on a flying visit to Gubay's home in the Isle of Man. If that is true, it is difficult to see how the Edge Lane development could be avoided as a topic. Have Everton been involved in such discussions either directly or indirectly?
RE: Only in so far as it's one of the sites under consideration. I don't know of any detailed discussions from an Everton point of view. Yes, we would be interested if we could see a viable financial model, but then that applies to any site.
MBE: Groundshare. Has it come up at all?
RE: It comes up on a daily basis! But not in any meaningful way either from our friends across the park or from the City Council.
We're watching with interest what happens when the 2018 World Cup bids are evaluated. That may well "up the ante" as far as the City of Liverpool is concerned. It will be a travesty if our city can't deliver a World Cup venue.
MBE: I would be amazed if eight years from now, both clubs in the same stadia, if the city ended up with any World Cup games. The stadia and their surroundings are simply not world class. It would be foolish to pretend otherwise. And it would be a terrible blow to the city's international reputation if we fail to get any matches. It's unthinkable.
RE: I agree. The powers-that-be must avoid that embarrassment.
MBE: The proposed development to replace Club Everton. What is the timeline on that one?
RE: Our plan is to occupy in late summer 2011, which is extremely tight.........
MBE: .........You can say that again! Wouldn't Autumn or Winter be a more realistic target?......
RE: .........It means starting work before Christmas. The development is in for planning approval shortly. We might not occupy the whole of the building. Late summer is our target but you're right, it will be difficult.
MBE: Are all the uses sorted, is all the floor space allocated?
RE: The ground floor is Kitbag's new shop. The first floor is will be a museum/visitor attraction which we are presently scoping and seeking partners for, plus a café. The second floor will be our new offices. We're very excited at finally getting our entire operation under a single roof, including the ticket office. The top floor will be a new match day hospitality facility and a non-match day conference area.
MBE: Will that absorb all the present facilities?
RE: The new hospitality will accommodate around 400 on a match day, an addition of 125. It will be capable of accommodating greater numbers on a non-match day.
MBE: Bellefield. What is the current position?
RE: We have reached resolution after a long, drawn out process. We have now received planning approval and can realise a substantial amount of money on the proposed residential development. The timeline for development has yet to be finalised.
MBE: Goodison Park. The new development restricts the site to an even greater degree - if that was possible! Is that the final nail in that coffin?
RE: Expansion at Goodison remains difficult and we're yet to see anything substantial that's economically or commercially sensible. We've looked at a number of options but we can't get any of them to work. So the new development has taken priority. The very fact that options have been looked at so many times should tell us of the scale of design and finance difficulties of the existing site. It just doesn't stack up commercially, not within present boundaries. We have to make the best of what we've got. Meanwhile, we will continue to make cosmetic improvements in the appearance of the stadium.
We've also had very positive discussions with the city council about improving the local environment, pavements, roads etc., around the stadium. We can only improve matters within our responsibility, so it has to be a two-way process.
MBE: Do you anticipate any problems with renewal of the stadium safety certificate?
RE: No, though in an old building you never know what you'll find until you start stripping out. We can't guarantee there will be no surprises.
MBE: Are maintenance costs increasing?
RE: To the building fabric and structure generally, no. Or probably more accurately, they're in line with our expectations. Of course, this spend is likely to grow in years to come as the stadium ages.
MBE: The Everton Collection. What is its present status and what proposals are there for its future use?
RE: I have always said that the Collection belongs to the fans and that all efforts should be made to provide access to as many fans as possible for as much of the Collection as is relevant. This process isn't straight forward and the Collection Trust needs support to make it happen. Our new development presents a fantastic opportunity to achieve the Collection's objectives and I'm sure it will be seized with both hands.
MBE: Football museums have a poor reputation for visitors numbers. The Scottish Football Association closed theirs after barely a year and now the English National Football Museum is being moved from Preston to an empty building in Manchester, which I think is a scandal and an insult to Preston.
What it illustrates is that while fans often talk big about their heritage and history they rarely support it in viable numbers when it comes to exhibitions etc.
Will it be included in the new building?
RE: Some of it will, yes, but there isn't enough floor space for all of it. We want to make the museum a place for families on non match days, where they can come to make a day of it and soak up the Club's history. It's a great way to entrench the loyalty of young fans, especially. At the moment, we are currently seek an experienced, specialist partner in the field. We are only at the beginning of that particular task.
MBE: Thanks again for your time, Robert.
RE: My pleasure.