WHO OWNS OUR CLUB AND WHY: THE REALITIES OF POWER.
By
Mickey Blue Eyes.

In the past I have written about how power is exercised in football. It is time to examine how this applies to our own club. The following piece is basic information which you should supplement with your own research.

Everton Football Club is a privately owned company, not a plc. At the time of writing the board of directors of Everton Football Club comprises: Philip Carter (chairman), Bill Kenwright (vice chairman), Keith Tamlin, Arthur Abercromby, Paul Gregg and Jon Woods.

But this tells nothing about where real power lies and how it is executed within the club. For that you must look a lot deeper.

Ownership of the club is spread across 35,000 shares. There is only one class of share and all have the same voting rights. Each has a nominal value of £1.00. At present, they trade at about £1,300 - 1,600 per share in the "rough market." The present owners True Blue Holdings bought the club at £850 per share in March 2000. This is about what they would go for if the club went up for sale tomorrow. Thus, the club is valued at about £30 millions.

Table 1 below explains how shares ownership was spread at May 2001. It may well change by the time the next set of accounts is issued.

TABLE 1. Approximate ownership of shares at Everton Football Club.

Plainly, the centre of power is in True Blue Holdings. Table 2 shows how those 24,850 shares are owned in TBH:

TABLE 2. Approximate division of ownership of EFC shares in True Blue Holdings.

*Part loan from Paul Gregg.

So Paul and Anita Gregg's effective share in the club is about 26% and Bill Kenwright's effective share in the club is about 25%. Together they control a crucial 51% of the club. Rumours persist that Kenwright has an option to buy if Gregg decides to sell out.

It can be seen from the above figures that the other directors on the board have little real power except where conceded by the majority owners. For instance, Philip Carter owns 721 shares (2%) and Keith Tamlin 119 shares (0.3%). Therefore the other directors are little more than figure-heads, though Philip Carter's status in the game still carries some weight. Tamlin and Abercromby merely make up the numbers. Jon Woods might one day be in an unlikely position to do something but don't make book on any day soon, not unless there is an unexpected injection of cash into his efforts.

Outside of Gregg, Kenwright and Woods the most significant figure remains Grantchester and his link to the Moores family fortune. The Moores family has been involved in ownership of Everton and Liverpool through John Moores since the latter half of the last century. Originally Moores tried to buy into Liverpool ownership until he was resisted by the then owners led by T. V. Williams. After this he turned to Everton while retaining a steadily-mounting shares holding in Liverpool. The rest, as they say, is family history. One of the few times this got out to the general public was during Robert Maxwell's unsuccessful attempt to own both Oxford and Derby when he quoted the Moores family as precedent.

But Grantchester has steadfastly refused to buy out the club and there is no reason to suppose he will change his mind in the future. It is likely he could buy and sell it many times over if he so chose. In the circumstances one is mystified as to why he continues to own shares even in the face of consistent wild rumours of his imminent take-over. There is no question he attends games and is an Everton fan to supplement his other passing interests. And there's the rub. He doesn't appear to have the necessary oomph to become a serious player. It is likely he is no more than a rich dilettante.

There are persistent stories of strong antipathy between Everton's present owners and older members of the Moores family. This seemingly originates from the days of the transfer of power when the Moores family put the club up for sale after the death of John Moores. It may be a classic case of "Old Money" versus "New Money."

Back in the real world unlikely alliances between shareholders could conceivably tip the balance one way or the other. For instance, suppose Gregg and Kenwright fell out badly and sought to exercise control in favour of their different policies. Both of them would be obliged to get enough support to get them the magical controlling 51%. In which case they would be battling to appeal to the 74 -75% theoretically outside their control.

The reality of course is somewhat more complicated. Gregg presumably could call in his loans to Kenwright and Woods if he so chose and exercise pressure that way. Though extremely unlikely, the terms of the loans might even dictate how the borrowers voted in designated circumstances, all of them in Gregg's favour.

The fact is, though, that Gregg and Kenwright badly need each other for different reasons. Both are self-made men. Gregg is a richer individual than Kenwright, which means he has greater capital reserves and greater borrowing powers. This suggests it would be no contest in the event of financial confrontation. Paul Gregg has openly said he is not really a football fan and wants a return on his money in two years from the date of the take over……………so he is at least six months off programme. Bill Kenwright is acknowledged as a fanatical Evertonian who wants to restore the club to its former sporting glory. Therefore much hinges on how these two men relate to each other and how they fuse their interests.

Paul Gregg has been featured in the Sunday Times "Rich List," albeit in a relatively lowly position. Estimates have placed his personal worth at between £125 -130 millions but this should be viewed warily. He is a career executive who gradually worked his way up through Apollo Theatres until he owned Apollo Leisure. About five years ago he sold this on to the American group SFX but retained a position as European director. In turn, two years ago SFX was replaced by American group Clear Channel with Gregg retaining shares worth about £125 -130 millions. He left Clear Channel sometime during the last eighteen months but when and why remains obscure.

Bill Kenwright has made his living through a privately-owned company, Bill Kenwright Limited. His background in the performing arts eventually led him into an impresario career promoting productions in the West End and on Broadway. It is a precarious, fly-by-the-seat-of-your-pants business. The terrorist attacks in New York on September 11th last year have seriously affected his commercial position on both sides of the Atlantic. This is exacerbated by his self-funding of the vast majority of his productions. In other words, almost all of what comes in goes out on future productions. If there is a drop in this flow Bill Kenwright is as vulnerable as any small business to the closure of a nearby factory. The affects are made all the more potent by the likelihood that he mortgaged his business and homes to help buy Everton Football Club. Nominally, his personal wealth is estimated at about £5 - 10 millions.

That is the background to the balance of power. As fans we are entitled to examine any factors which may affect exercise of that power.

First, let's deal with motivation. Like it or not, nobody could accuse Gregg of hypocrisy. He's in it for profits. He said so himself. But exactly WHICH profits? Let's leave aside for the moment the various accounting definitions of the term. He wants to make money, period. He bought into a football club so in theory that means he wants to take surplus money out of its activities. Football, right?

Okay, let's look at the accounts for the first full year of his part-ownership, 2000-2001. In doing so, let's also not quibble over esoteric accountancy terms or a few millions here or there. After all, our annual turnover was "only" £32.8 million and on that we made an overall LOSS of £3.7 million. That's the bottom line. But wait, it gets worse. The equivalent figures for the two previous years were £11.2 and £10.8 millions. Clearly, he knew what he was getting in to. If the figures are roughly the same for the following financial year then Paul Gregg has made a very bad business judgement.

But in fact it is likely Everton Football Club will have made a surplus in this year's accounts after including incomings from the transfers of Jeffers and Ball. However, relatively speaking it is unlikely to be the kind or level of profits sought by a man like Paul Gregg.

These same questions apply to Bill Kenwright, fanatical Evertonian or no fanatical Evertonian. The fact is, neither of these men are altruists or so rich that they can afford to pour good millions after bad. Nor are they stupid or callow. Both of them have made good livings out of the most precarious business in a civilised society, show business. In fact it appears that is how they met. Gregg, so the story goes, was managing a faltering Southport Theatre at the time and Kenwright was in a position to help him out with one of his shows. Then both went on to better things. In business you never forget a moment of trust at a vulnerable period in your life.

Then they teamed up to form True Blue Holdings to buy Everton Football Club after various TBH partnership proposals failed during negotiations, including one which allegedly involved Grantchester.

It is common to debunk Bill Kenwright as "Luvvy" because of the way he gushes when he talks publicly, especially about Everton Football Club. The implication is that somehow he is a business pushover, a sheep in sheep's clothing. Gregg's reluctance to get into the public limelight, and his expressionless visage, have given rise to the general perception he is much more the hard-nosed opportunist business man of the two. This impression was reinforced when Gregg apparently insisted on the sacking of Walter Smith.

It is likely these impressions are fatuous over-simplifications. A partnership in such a precarious business could not exist on such a basis. In fact there may not be much love lost between the two men and it is the tension of self-interest which holds it all together, a not uncommon business arrangement. More likely they are just different human personalities. This would square with their different career methods.

But it doesn't square with continuous rumour-mongering that True Blue Holdings will eventually have acquired the club for nothing. According to the rumours, True Blue Holdings loan to buy the shares is paid for by the club and thus in ten years TBH will have acquired the club for nothing, that the TBH holding company enables decisions to be made separately and secretly from other shareholders, and that the club paid Peter Johnson £750,000 when he left, not TBH. If all of this is true (and it is not at all unusual in company dealings) then it hardly paints a picture of a pair of naïve waifs at the beck and call of the "free market." And until proof is offered, rumours remain just that: so much hot air. People who spread this kind of thing are obliged to put up or shut up. If they can't prove it then they shouldn't be surprised if they are regarded with contempt as malicious poujadist liars.

The tantalising question lingers……………………WHICH profits?

Perhaps part of the answer lies at Houston Securities, the development company at the heart of "our" successful bid for the Kings Dock arena.

According to a North West Insider magazine article of March 2002:
C O M
" In fact Houston is simply the Gregg family's property venture, a small-time investment operation whose interests - valued at a total of £1.8m - include a cinema in Llandudno, a hotel in Caernarvon and a house in Oxford, all mortgaged to Midland Bank. This property - acquired a couple of months after it was created in July 1999 - seems to have been purchased from Apollo Leisure Group and its pension scheme, operations in which Paul Gregg and his wife Anita, are respectively majority shareholders and beneficiaries/trustees.

Houston's cash needs have been met by substantial injections from Anita Gregg, who advanced £258,000, and son Simon, who advanced £45,000. They are both directors, as was David Gregg who lent another £45,000 but who is no longer on the board. Paul Gregg himself lent a further £132,000. Another £30,000 was lent by non-family shareholders and directors. All loans are unsecured, interest free and with no scheduled repayment terms.

Neither Everton nor SFX are shareholders in Houston. The majority shareholder in the family business is Anita Gregg. Paul Gregg, a minority shareholder in Houston, provides the link with Everton and with SFX………………..

……………If Gregg wasn't father of the stadium idea, he was certainly its uncle.

The city council explains the stadium's arrival in the Kings Dock formula like this: Storey and Henshaw decided Liverpool needed a major attraction and fixed on an arena to rival Manchester's. At some stage an approach was made to Gregg at SFX/Clear Channel to see if they would be interested in becoming involved, says the council. They add that the stadium was "injected into the discussion" as talks progressed.

Gregg, who was then in charge at SFX Europe, agrees. "We were approached to see if we could do a 10,000 seat arena. We went back to them with the stadium scheme. They said they couldn't do a deal with us, and it would have to go to competitive bids. They asked if we would submit a bid for Kings Waterfront and we did. Everyone saw the vision and recognised it," he says."

The article clearly claims the original idea for the stadium/arena came from Storey and Henshaw, that Gregg developed it from there after an approach, that in the formal sense at least, Everton Football Club and its other directors have simply gone along with the initiative.

Is this where the profits lie? If so, what KIND of profits? Property development profits? Company sell-on profits? Showbusiness/events performance profits? Where do True Blue Holdings figure? Where does Bill Kenwright figure? What formal agreements are in place to protect the well being of Everton Football Club and its fans? Where do the other directors figure and why have they merely gone along with it? Que bono?

Or do the profits lie in inflated EFC shares value after a high profile move to Kings Dock? At which point, cynically, the club gets put up for sale again at the inflated price? Or do they lie in ownership or shares of events promotions at the Kings Dock? After all, it is public knowledge that Clear Channel have been helping in design of the stadium/arena, and have said they would be interested in promoting events there.

It's all a far cry from paying your twenty quid and sitting in the Lower Street End to berate the latest turn of events out on the pitch. It isn't a pretty story. Exercise of power never is, not in any system. Which is why you should know what's going on. And if you don't, you should get off your backside and go find out yourself. Don't take the word of this or any other article, still less unsubstantiated witterings on the internet.

But this is the system which presently runs the game and there is no reason whatever to assume it is much different, or "better," at any other club. Probably those who castigate Gregg and Kenwright would be no different if they were in the same position. Probably they would be a good deal worse. You pays your money, pays the interest, and takes your choice. In true commerce criticism on the grounds of disliking somebody's personality is rightly dismissed out of hand. A deal's a deal. Welch on it and you're never trusted again. Maybe this is why Paul Gregg and Bill Kenwright somehow make it work. When people jeer at Gregg and Kenwright they are telling you more about themselves than they are about the owners.

Once the game deteriorated to its present commercial level, and given the present state of football and our place in it, I believe overall we have been lucky so far to have Gregg and Kenwright in control. Even the other directors will have played their part. Without them all it is likely we would have been bought by an asset-stripping carpet bagger or an incapable dreamer and suffered the fate of Manchester City. Instead, we have stayed in the top division; our financial position - though still parlous - has steadied from the dire affects of previous ownership by Peter Johnson; and we have the prospect of moving to the best club stadium in the world. For all the silly day-to-day mistakes we still have a lot of hope for the future. That isn't a bad record in two and a half years of control.

Given the volatility of chance it could all still go badly wrong. Paul Gregg could still turn out to be one of said carpet-baggers, or Bill Kenwright could suddenly lose his notorious self-indulgent temper and sell up. The latter has already publicly offered to sell if someone came along with a viable offer. Since when has life, let alone football, offered any cast-iron guarantees?

None of it is ideal and hardly any of it matches my own aspirations for our club or the game, all of which have been explained elsewhere. But it is what we are stuck with for the time being. We don't have much short-term choice. Only a boardroom coup, complete revolution or a take over can change things.

Think about that before you mouth off in your local or on the internet. That is the reality of power. All the wittering and cheap rumour-mongering in the world won't change it.