INTERVIEW WITH ROBERT ELSTONE
Mickey Blue Eyes
Before flying out to warmer climes - in more than one way - to Goodison Park for an interview with CEO Robert Elstone.
As always, ignore the gossip.
Q: Thanks for seeing me at short notice Robert.
Can we begin with finances. The accounts are late this year.....why?
A: I'm not sure they are late. It was 30th November and 31st January in the last two seasons. They've been fully audited and there are no issues
. We're expecting the accounts will be released in the next four to six weeks. Certainly before the end of January. .
It's fair to say that the results for the 2011-2012 season are slightly disappointing. After the tough start we had to last season, attendances dropped significantly, the lowest in the seven years I've been at the Club. Every 1,000 empty seats costs us on average £25,000 per game or £0.5m per season and the cost of an average of just over 33,000 is easily worked out.
Even after the upturn in form after the signings of Jelavic and Pienaar on the day we beat Manchester City - the goal scored by Darron Gibson - the gates didn't come back to the extent we hoped.
The disappointing start also influenced Sky and ESPN Despite playing some of the most entertaining football in the Premier League from that night we suffered our lowest level of live TV picks under the current broadcasting arrangements. At half a million per game that also hit us hard.
But there's a positive in amongst all that which I think demonstrates the qualities in the Club. Despite those trading losses, there's been virtually no increase in debt and we have a stronger and more valuable squad of players than 12 months ago. It shows we make key decisions very well in a difficult economic climate. And we have had a real turnaround from December 2011. On the pitch it's self-evident the style of play we've seen this season has been exceptional. And that's been the catalyst for our gates, and I think a noticeable uplift in the buzz, the atmosphere and the general feeling around Goodison on matchdays. I also hope the fans have noticed our attempts to add to that - the roadshow, the food court - just more happening.
Q: Have operating costs varied?
A: Our cost base is under very tight control. The vast proportion of it is player wages. A large part of what's left ends up at the Training Ground and the Academy. It is now 86p in every pound we earn that is spent, one way or another, at Finch Farm. That's where the bulk of the money goes. As for the rest of the cost base of the Club, we run a very tight ship without frivolous or wasted expenditure. We'll be reporting a slight drop in other operating costs in the 2011/12 accounts.
To cement that further, we have also appointed procurement specialists to look even more closely at what we spend our money on, and they have already started to make further savings for the Club.
I hope if fans think about the scale and quality of what we do they realise that we get value from that money, that we really do stretch it. In really simple terms, the £500 season ticket has £430 of it supporting the work, resources, players and staff at Finch Farm. The remaining £70 pays for everything else. Nothing highlights the focus and priorities our Club has better than this.
Q: In terms of the national economy, generally if the UK catches a cold we on Merseyside catch pneumonia. This means football becomes a luxury item for our fans. And if the money isn't there, people simply can't come.
A: That's something we are very conscious of and we appreciate the financial commitment our fans are making. The economic conditions have hit our entire fan base - even our corporate clients, who are also finding conditions tough.
Q: How have season ticket sales and corporate sales held up?
A: Season ticket sales improved significantly. We are delighted. Sales beat budget and reminded us that we have a fantastically loyal fan base. Overall we are up to almost 23,000 - that's an increase of over 6% on last year.
We put this down to a combination of a good finish to the season and a positive summer transfer window. The Junior Offer did exceptionally well with over a thousand more youngsters becoming Season Ticket Holders compared to last season, and of course all those junior and infant school kids have to come with an adult.
This stands us in good stead for game by game attendances and, apart from Newcastle on the Monday night, so far this season we have beaten our budget attendances for every game
We are seeing a similar reaction to our Half Season ticket campaign - over six hundred sold thus far. I'd like to beat a thousand - which will be a record. That figure to date includes four hundred fans who have never had a season ticket before. Over two hundred of them are under-elevens. It's a campaign that has worked really well for us.
Whilst we can never be complacent about the financial circumstances of our fan base we seem to be holding up well despite all-round economic strains. And we owe our fans a big thank you for their loyalty, which they demonstrate time and time again.
Q: What is the break even average attendance?
A: Our budgeted attendances within that are around 36,500. 1,000 seats realise about £0.5m per season but there is no specific break-even attendance figure due to the main contributors of our income being a mix of broadcasting, commercial revenues and gate receipts.
Q: The new broadcasting income will obviously have a profound effect on the club's income streams. How big do you think that affect will be?
A: It will be quite significant. The domestic deal was announced several months ago. The international deal is almost complete and we pretty much know what the total pot will be. Of course distribution depends on our place in the league, number of broadcast matches and a few other factors. It will represent a significant increase. Speculation in the press isn't a million miles away.
One major effect will be to further cement the Premier League's position as the richest and I think best sports league in the world. The impact on Deloitte's Top 50 richest clubs will be interesting. I'm certain all 20 Premier League clubs will feature in that list.
Q: What is the club's policy position on the UEFA Financial Fair Play Regulations and similar proposals for the Premier League? Players' salary cap?
A: At the moment we are open-minded but we are heavily involved in the debate and have put forward our views forcibly. We definitely support measures to ensure the long-term sustainability of our football clubs and league.
Of course, whatever we do needs to be robust enough to stand up to scrutiny. It needs to be easily implemented and capable of being policed. The consequences also need to be fully thought through. There is still a lot of work to do to tick all those boxes.
Ultimately, there's a desire in some quarters to see Clubs operating without third party support - living exclusively off their ability to sell tickets, shirts and sponsorship. In our case, as far as this goes, we're definitely nearer the top of the pile than the bottom.
Q: What is the time line on it?
A: There have been two or three draft proposals over the last six months.
At the most recent meeting, Premier League clubs were asked if they'd like work to continue on these proposals. Sixteen said Yes, four said No. We were one of the sixteen. And there's another meeting before Christmas when we will look at further proposals. You need fourteen clubs to say Yes to get any measure through.
There are two proposals. The first is 'break-even', basically limiting the amount able to be spent to the amount earned through normal football activities - tickets, merchandise, sponsorship and TV. At first glance quite straightforward but sitting behind it are a raft of questions and challenges. The second is managing the pace of growth in wages, which seeks to limit the amount of money to be spent on wages.
In my opinion both of these issues need a lot more development before clubs can vote on them. Ultimately, the clubs pushing for wage controls want to see it in place for the 2013-2014 season. That means decisions must be made early in 2013 for implementation in that season.
People have described it as an "arms race." I suppose anything that breaks it has to be a good thing.
Q: But isn't there an additional factor in play here. If you only introduce wage controls in England and not throughout Europe, aren't you likely to get a player exodus to countries where they can and will pay higher wages?
A: It's a good point and one the Premier League is very aware of. But our position is that the new TV deal will keep the English game sufficiently ahead of its major rivals - and it appears that some Spanish and Italian clubs are struggling financially - to view that risk as low. It's true however that the virtuous circle of clubs signing the best players, attracting the best TV monies and filling the stadium, facilitates even better players is a feature the league must retain.
Q: That is probably true. But my point is that for any such policy to work in the long term all clubs must operate on a level playing field, even globally, not just European. Domestic regulations are a good start, but that's all they are, a start. Once embryo football nations have matured the economic stresses could become unbearable.
A: Well, implementation on a global scale would be hugely challenging. For example it looks to me as though UEFA see their proposals as a softer way to depress wage growth.
On the exodus point, we could look at what the rise of Manchester City has done for the game. Whether you agree or disagree with the principle of it, they have undoubtedly played a major part in generating the new broadcast deal. The new players they have introduced have helped create that virtuous circle of talent supporting future economic growth. It seems unlikely, without being complacent or arrogant that such players will return to Spain or Italy given the financial challenges in those countries.
Russia seems to be developing an emerging force but I would suggest it would not be a move that would be right for or suit every player.
Q: And another obvious conclusion to draw is that ticket prices will simply keep going up. There may be a short term panacea in the new money that will sponge up some of the problems. Eventually, though, that will wear off and we will be back to the same inflationary system. If that is the case, then we are back at square one. Why can't the new money help to stabilise ticket prices or even reduce them? Which also begs the question - are we going to have a rise next season?
A: That question was posed to me at a recent supporters meeting. I don't agree that prices will go up and up and up. Everton's prices were increased this season for the first time in a number of years. We are first and foremost driven by ensuring we represent value for money. That will always be the basis upon which ticket price decisions are made.
Q: So you're not going to say there'll be no ticket price rises?
A: All I can say to you at this stage is that we are not unaware of the financial constraints impacting our fans. We cannot afford to be. It controls all our pricing policies.
Q: How are merchandise sales doing, Evertonians being notoriously anti-merchandise?
A: Our retail business is very healthy and strong and stands up well in comparison to other clubs. My Commercial Director told me this morning that retail sales were up twenty three percent, which is fantastic. Generally our fans seem to like what Nike have produced, despite a few initial production problems. So we are quite pleased with the merchandise side.
Q: Any news at all on the possibility of a new stadium? Really, we can't progress substantially until we get a new one.
A: Nobody is more aware of that than I!
We are in regular dialogue with the City Council. And it's fair to say over the last few months we have had positive moves on a couple of sites including analysing one site in more depth. We also have continued to work on developing our new stadium brief, defining what we need in a new stadium. As always, the greatest challenge isn't sites or designs, it is money. As we've said in the past, like all new stadia developed over the past 20 years or so, it will require third party support. It will need an external boost of one sort or another from the private or public purse.
Q: Is a shared stadium completely dead?
A: There appears to be no life left in that debate. Our standpoint hasn't changed. Everybody can see the economic sense of it - if it is adopted by both sets of fans. However, for it to have any chance of working, it has to be a truly equal partnership and a location and design that works for us.
Q: Well, the new stadium affect speaks for itself. For instance, take Brighton. About six or seven years ago they were flat broke and on their backs. Now they have a new stadium that attracts an average of 26,000, after many seasons of less than 10,000. I have no doubt whatever that a new stadium would hugely increase our average. It wouldn't fill every week but we wouldn't fail to do much better.
A: Every time I go to a new stadium and compare it to our potential and possibilities I get excited. It's a hugely significant project for us but one that is tough to fix.
Q: Is the development at the corner of Goodison Road completely dead now?
A: We still have the same challenges and needs. We need a better club shop and office facilities. It would be great to have space for the Everton Collection. We have a couple of projects that we're working hard on to bring to fruition. Like a stuck record, I'm afraid. All these needs start with creative ways to find the money.
Q: Fans liaison, are you still meeting supporters groups?
A: Yes. And the Fans' Forum and fans in general. I think our fans feel they have a voice and we listen and we respond. I know I get a lot from the meetings. I hope the fans do too.
We had a meeting in Mid -Cheshire recently where I went with Darron Gibson. We met with perhaps a hundred and fifty people with the front three rows occupied by young Evertonians sitting cross-legged listening intently to Darron.
Our Fans' Forum is working well and helps shape our decisions. Our Communications department is serving up informative and interesting news on evertonfc.com and social media. Plus, of course there is day-to-day dialogue between our Community team and our fans.
We have also recently held two meetings with long term season ticket holders which were also attended by first team players.
I am pleased that the dialogue is regular and intensive. But we can always do more and we will continue to listen.
Q: Which brings me to the Shareholders Association and their call for an extraordinary general meeting. What is the club's position on that?
A: Let's be clear with why we stopped. The meetings had become negative and had been hijacked. There was very little positive about them.
Company law changed and we had the option to avoid that scenario.
On a personal level, I don't think I have ever turned down meetings with shareholders. I have suggested quarterly briefings with the shareholders' association. I am more than happy to meet shareholders to discuss the Annual Report and Accounts when published. I even offered to re-instate the shareholder forum.
As for the reasons for the EGM, I don't think any Club has explained its finances and strategies more comprehensively than Everton. And as I said we have a continuous dialogue with as much of our fan base as we can. We clearly want to have good, effective liaison with our shareholders and we value goodwill and constructive suggestions. Meanwhile, my door is open to any sensible dialogue and proposals.
Q: Do we need to sell a star player in January?
A: No. We don't have to sell.
The fans are aware we did some good business in the summer with Mirallas, Oviedo and Naismith. We tried to bring in Vadis Odjidja-Ofoe from Bruges. As we didn't, there is budget, albeit modest, available in January.
Q: Everton in the Community, anything further to announce there?
A: There's always something new to say about them! They continue to be an absolute beacon, winning awards. They make us all very proud. They're a tremendous bunch of committed high-energy people working in very difficult circumstances. The city should be proud of them too. Every match day when I arrive they're already here radiating positivity. I can't speak highly enough of them. I think all Evertonians should be proud of them and the loyalty they show to the club and what they do. But I think the same can be said about so many areas of the Club and so many of the people that work here.
Q: The BBC TV website reported an incident of racism in the Norwich game after their late equaliser. What is the situation on that?
A: So far as we know two people were investigated for racist tweets. One claims to be an Arsenal fan. There is no evidence the other Tweeter was an Everton fan.
Q: Finally, the report that m. Platini of UEFA has proposed an expanded Champions League of sixty-four clubs and abolition of the Europa League.......
A: ......as long as we're in the sixty-four, bring it on!
More seriously, we seem to be one of the few clubs who like the Europa League. It also makes us decent money. Last time we were in it, it generated about £5 million. But I accept there's a growing feeling that it is just games for games sake and it needs a change. That change can't be to reduce the number of English teams.
Q: Which in my opinion takes away the entire feeling that European games should be special, not just money treadmill games. I would still like to see a return to a champions-only European Cup, a Cup Winners Cup and a UEFA Cup - all of them on a two leg knock out basis. The way things are at present European games merely devalue the domestic leagues and that can only lead to loss of interest at grass roots level. Moreover, I think there is a real danger of the European Clubs Association (ECA) splitting the game in similar fashion to the USA.
A: I don't see it that way. It's only a minority of clubs involved in European competitions and that doesn't pose a threat to the domestic game.
For me it is important Everton Football Club is in regular European competition. I would strongly oppose a small allocation for obvious reasons. That said, I think we need to look closely at how the Europa League is organised. Thursday night games are having a knock on affect on Saturday domestic games.
Q: Thank you for your time, Robert, and good luck to us all for the rest of the season.
A: My pleasure.