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Commercial Clarity

@Everton

Everton held its first General Meeting for five years on Wednesday as the Club’s shareholders and proxy holders convened at the Liverpool Philharmonic Hall.

Chairman Bill Kenwright opened the meeting, after which Chief Executive Officer Robert Elstone addressed the 300 in attendance with a detailed report on the Club's finances, its operational activities and its plans for the future.

Mr Elstone followed up his presentation by speaking at length to evertontv on Thursday morning, clarifying misconceptions over the Club’s commercial operation and how ongoing work is allowing Everton to move forward both on and off the field.

“We are often criticised on commercial performance and if you look at the plain numbers as they appear on the annual report and account, they are what they are. That is our commercial turnover. But if you do want to compare that to some of the other clubs around us then it is only fair that you compare apples with apples,” he said.

Everton are one of only two clubs in the Premier League – the other being Manchester United – to outsource its retail operation. As a result, the CEO explains it is unfair to compare like-for-like with the accounts of other Premier League clubs in that area.

He continued: “All those other clubs run their own shops and run their own online retailing, therefore their turnover is different to ours in its makeup. What we have done is spoken to our auditors Deloitte who provided us with an estimate of how much retail turnover ought to be reflected in our accounts in order to compare them to the other [clubs].

“When you do that, we hover between seventh and eighth best in the Premier League in terms of our commercial operation, which is good. It’s an area we want to improve and drive forward. Cumulatively over a ten-year period our income has been the seventh best in the Premier League. It would have made us the 23rd richest club in the world in 2012, so it’s nowhere near as bad as people think. We are holding our own commercially.”

Elstone also explained how many of the Club’s commercial deals will allow Everton to remain on a sound financial footing moving into an exciting era under new manager Roberto Martinez.

He added: “The Kitbag and Nike [deals] take away a phenomenal amount of risk from our business. The retail sector is still struggling and lots of retailers are going out of business. I suspect a lot of football clubs are not retailing very well and not making much money out of it. We’ve got an arrangement with a good retail partner that isolates us from all that risk and all that downside. It gives us a really nice, healthy profit.

“But we also want to push on for more – of course we do – and within that commercial [sector] there are two or three really good deals.

“The Chang deal is a great deal – we are going into the 10th year and we are hoping to extend it. Every time we have extended it we have managed to increase the value. Chang are really happy with what we give them and a lot of clubs within the Premier League would envy that long-term relationship, stability and the value of that deal.

“Stubhub, our secondary ticketing partner, [provide] a fantastic commercial deal that we did really well on in order to squeeze a lot of value from it. We have got the Football Dream which is a really exciting project out in China. It’s a reality television show and we are getting good cash from doing that with our partner over there. There’s the lucrative pre-season tour to the United States against some fantastic high-profile opposition.

“The commercial team is doing a lot better than a lot of people think.”

He was also pleased to clarify misconceptions regarding the Club’s other operating costs and the rental situation with Finch Farm.

He added: “Other operating costs are going to be less in 2013/14 than they were in 2008/09. And any business which has managed to slice £700,000 out of its overhead base probably does deserve some credit.

“Part of that comes from a big saving in our Finch Farm rent – that was another [agreement] that has been badly reported in the past couple of weeks. It’s a fantastic deal for the Club and a deal that the council were really pleased to do and support us with. It was a deal that the previous owner of the site wanted to do and our rent is now a third less. It was a big number so it’s a third of a big saving, without disclosing any of the commercial issues in it.”

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