Keioc P3 Proof Of Evidence (everton Egm)

Public Inquiry into application for: mixed-use development including a new football stadium, retail, residential and leisure uses on land in Kirkby

Proof of Evidence of KEIOC Campaign Mark Grayson – Everton Football Club Shareholder

Reference: KEIOC/P/3 Planning Inspectorate Reference: APP/V4305/V/08/1203375

December 2008

KEIOC/P/3 Proof of Evidence - Mark Grayson Contents

1.0

A Personal Background and Recent Events

Pages 1 to 5

2.0

A Background to the EGM

Pages 5 to 6

3.0

The Objective of Convening an EGM

Pages 6 to 7

4.0

The Process of Convening an EGM

Pages 7 to 9

5.0

The Outcome of the EGM

Pages 9 to 12

6.0

Conclusion

Pages 12

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Page 1 of 12

1.0

A Personal Background and Recent Events

1.1

In order to understand my contribution to this inquiry I believe that it is important that the inquiry reflect upon the events that have occurred at Everton Football Club over recent years and also consider the future consequences for Evertonians who, as potential users of the proposed new stadium, will be directly affected by the outcome of this inquiry.

1.2

My name is Mark Grayson, I am a 38 year old, degree qualified, Quantity Surveyor living in Mossley Hill, Liverpool. I am an Everton Shareholder and Season Ticket holder. I am the son and grandson of Evertonians and my children are currently undertaking the initiation to become fully fledged Evertonians in the family tradition. I have been attending football matches at Goodison Park since the mid 1970’s and for several years during the 1990’s I also worked as a Crowd Steward for the club. Over the years I have watched Everton at Goodison Park from almost every possible vantage point including the pitch, the press box and executive boxes. Whilst I have fond memories of Goodison Park I realise that the club needs to upgrade its stadium facilities to bring it in line with its contemporaries in the Premier League. However I am far from convinced that the Destination Kirkby proposals are befitting a club of Everton Football Clubs standing nor in the interest of Evertonians, Everton Football Club, the town of Kirkby and its residents.

1.3

As a committed Evertonian, I have become increasingly frustrated and concerned about the decision making and direction that has been taken by the football club since the collapse of the Kings Dock scheme 1 . There have been a number of well publicised events over the years that have led me to observe the off-field affairs of the club as well as the action on the pitch. It is apparent that the off-field financial performance of the club has a fundamental bearing on the quality and quantity of playing staff and therefore the quality of football and excitement viewed on the pitch and as such I consider the off-field affairs as essential to the future success of the club.

1.4

Much of Everton Football Club’s financial problems today can be traced back to the failure of the Board of Directors to realise the Kings Dock opportunity. The Kings Waterfront Stadium was an opportunity for Everton Football Club to own a half share in a truly world class £150m, 55,000 seat stadium through the guise of Houston Securities for a contribution of just £30m 2 . The stadium was to have a number of innovative features including a retractable roof, moveable pitch, moveable stand and an underground car park and was to be located on the very accessible world heritage site adjacent to the River Mersey and Liverpool City Centre. A ballot took place in which Evertonians were given the opportunity to choose between the redevelopment of Goodison Park or a new

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Appendix I –

2

Appendix II –

Guardian Article ‘Hopes Fade for Everton Stadium, dated 22nd February 2003 BBC Sport Article ‘Everton Fail in King’s Dock Bid’, dated 11th April 2003 BBC Sport Article ‘Vital backing for new Everton home’, dated 20th June 2001 Liverpool Echo Article ‘Dream Comes True for Bill’, dated 23 Jul 2001

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stadium at the Kings Waterfront. The outcome of the ballot 3 was overwhelmingly in favour of relocating the club to the Kings Dock site with over 86% of those taking part 4 , including myself, supporting the Kings Dock scheme. There was no doubt that the club had a clear mandate from its fans given a choice between redevelopment and the new stadium at the Kings Dock.

1.5

Unfortunately, despite offering assurances 5 and being given extensions to provide financial assurances 6 Everton Football Club was unable to raise its share in the development and the opportunity failed to materialise 7 . Sadly, the failure to raise finances stems from the fact that the Board of Directors at Everton had regrettably wasted funds on new player signings during the summer of 2000 on the assumption that they would secure monies through a media deal with cable television operators NTL 8 . Unfortunately the NTL deal, which was expected to yield up to £30m of investment in the club, was not concluded 9 and as a result the club had to restructure its finances to accommodate the existing £20m combined long and short term debt left by the previous board of Everton and the new debt accrued when signing new players with money that the club did not have. This resulted in a precarious financial position and subsequently led to Everton being unable to raise the £30m required to fund the club’s stake in the stadium. Having witnessed the club reject the proposed reverse mortgage 10 offered by then director, Paul Gregg, it appeared that the club was about to engage in a boardroom battle 11 with Mr Gregg and his considerable resources attempting to move the club forward whilst Mr Kenwright, backed by Mr Woods, with their relative lack of resources, appearing to be holding the club back.

1.6

To compound the precarious financial situation the club continued to register substantial annual loses despite significant increases in TV revenue and the sale assets and having noted that there was little accountability from the 4 man Board of Directors Evertonians became concerned by the clubs lack of ambition and investment 12 , insufficient and uncompetitive transfer budget and the increasing level of debt. This situation led to tension between the board and shareholders culminating in the EGM 13 of September 2004 during which Bill Kenwright assured shareholders stating “ttonight we’ve got gathered together some of the most passionate Blues. That’s why you own shares, I own shares, and we own shares. Not for profit or involvement. So, it might amaze you to know this but I welcome tonight’s meeting because I know the sole reason it has been called

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Appendix III – Appendix IV 5 Appendix V 6 Appendix VI7 Appendix VII 4

8 9

Appendix VIII Appendix IX -

10 11

12 13

Appendix X Appendix XI Appendix XII Appendix XIII-

Kings Dock Ballot Brochure ‘Moving to a Vision in Blue’, November 2000 Liverpool Echo Article ‘Blues’ Fans Yes to Kings Dock Move’, dated 27th November 2000 Liverpool Echo Article ‘ Kenwright Calls for Trust’, dated 4th December 2001 BBC Sport Report ‘Everton Revive Stadium Move’, dated 18th December 2002 Property Week Article ‘Cash Query Catches Everton Stadium Plans Offside, dated 6th September 2002 Daily Post Article ‘Everton FC’s £30m Stadium Challenge’, dated 30th August 2002 Liverpool Echo Article ‘The Deal that got away by two hours’, dated 5th October 2001 Daily Telegraph Article ‘Smith to Stay at Everton’, dated 13th November 2000 Liverpool Echo Article ‘A Most Untimely On-Field Crises’, dated 3rd January 2002 BBC Sport Report ‘Everton Bid For More Time’, dated 5th December 2002 Daily Post Article ‘Gregg Must Step Out of the Shadows’, dated 4th September 2002 Daily Post Article ‘Everton Kings Dock Bombshell’, dated 25th October 2002 Daily Post Article ‘Blues Share Plan Backed’, dated 14th January 2004 Transcript of the 2004 EGM

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is to improve Everton Football Club”. Sadly, off the field, Everton Football Clubs situation has not improved but has continued to worsen despite claims from the club to the contrary. 1.7

Subsequently problems emanating in the boardroom of Everton FC came to the fore most dramatically in the summer of 2004 when the newly appointed CEO Trevor Birch mysteriously left the club after just 6 weeks 14 whilst the relationship between the Directors appeared to have become strained. This led to attempts by Paul Gregg in July 2004 15 to seize control of the club by offering to buy out Mr Kenwright’s and Mr Woods’ shareholding for a reported £15m with the offer to invest a further £15m through a rights issue 16 . Mr Kenwright and Mr Woods declined the offer stating that they wanted to know who was behind the offer and wanted to see proof of funding 17 . A PR war subsequently ensued with Mr Kenwright initially claiming to have found investment through Anton Zingrevich 18 then miraculously through the Fortress Sports Fund investment proposals. These proposals appeared within a few weeks of Mr Gregg going public in his attempts to buy the club and this despite years of Mr Kenwright previously claiming to have been unsuccessfully searching ‘24/7’ for investment. Sadly, the issue with the Fortress Sports Fund was allowed to drag on 19 and on 20 until eventually most observers had began to realise that the Fortress Sports Funds proposals was just a tactic to prevent Paul Gregg from seizing control of the club. To date, I do not recall any official explanation as to why the proposals failed to materialise.

1.8

It later transpired through an email 21 issued by Ian Ross Everton’s Head of Communications and External Affairs to an Everton Shareholder that the Fortress Sports Fund proposals were actually a ‘means to an end’ in order to prevent Mr Gregg from acquiring the club. The whole Fortress Sports Fund episode was a sad and sorry episode in the history of Everton Football Club. It was a bleak demonstration of the lengths individuals would be prepared to go to control Everton Football Club.

1.9

Unfortunately, having just avoided relegation the previous season and despite having a relatively small squad the board of Everton failed to invest significant funds into the team with the acquisition of just two lower league players for a modest sum of just £2m. This was a tremendous gamble by the board considering the perilous performance of the club the previous season and yet against the odds the relatively threadbare first team squad miraculously managed to rally together and produce some outstanding results culminating in a fourth place finish and qualification to the Champions League qualifiers. It was a phenomenal performance considering the boardroom turmoil that had seen a CEO depart after 6 weeks, Mr Kenwright fending off offers for the club from Mr Gregg whilst also negotiating the sale of the clubs most valuable asset, Wayne Rooney, who was sold to Manchester Utd for a fee rising to £27m on the last day of the transfer window.. The timing of the

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Appendix XIV - BBC Sport Article ‘Everton Chief Birch Resigns’, dated 16th July 2004 Appendix XV - Independent Article ‘Kenwright Gives Himself Four Days to Save Everton’, dated 27th July 2004 16 Appendix XVI - Independent Article ‘Gregg Pledges Cash for Moyes in Battle of Goodison’, dated 1st August 2004 17 Appendix XVII - Daily Post Article ‘Everton Man in the Middle Does a U-Turn’, dated 3rd August 2004 18 Appendix XVIII - Sunday Times Article ‘Geneva Financier Mounts Takeover Bid for Everton’, dated 19th September 2004 19 Appendix XIX - Liverpool Echo ‘Blues Wait for Fortress Money’, dated 21st December 2004 20 Appendix XX - Liverpool Echo ‘Gregg; I’m Not the Issue in Fund Farce’, dated 5th April 2005 21 Appendix XXI - Copy of Ian Ross’ email to Everton Shareholder Colm Kavanagh 15

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sale left the club with insufficient time to invest in the playing staff however it was interesting to note that within a few days of the sale of Rooney, Everton FC paid off an outstanding £10m loan to Singer and Friedlander 22 ; a loan that Mr Kenwright had previously described to concerned Everton shareholders 23 as an ‘advance from Sky’.

1.10 The years following 2004 have seen dramatic increases in TV revenue and this has allowed the club expand the level of borrowing to mask the financial concerns at the club. The club made great play of the situation that saw Everton enter Deloitte and Touches top 20 clubs with the greatest turnover however these stories drowned out the concerning issue of record levels of losses. On the field the team has been successfully managed by David Moyes despite the lack of investment in comparison with our contemporaries. The last published accounts for the period 2006/2007 stated that the club had combined long and short term debt liabilities in the region of £60m 24 however this figure fails to include the £11m spent to sign Yakubu Ayegbeni in August 2004. At this point it is worth noting that the board had allowed the manager to break the club transfer record four times in recent seasons however it is also worth noting that 2 of these record signings were subsequently sold to help finance the further record signings.

1.11 Having resisted calls for investment it would appear that Bill Kenwright and his fellow directors have not and have no intention of investing additional funds directly into the club. It is concerning that the 3 or 4 Directors that have been managing the club in recent years have been reluctant to implement a rights issue to generate much needed funds. A £15m rights issue 25 was implemented in 1996 by the much maligned previous custodian of the club, Peter Johnson, who already held majority control of the club and who had nothing to gain personally by effectively diluting his shareholding to raise funds for the benefit of the club. His rights issue was supported by the 10 Directors of the club at that time. It is important to stress that a rights issue does not have to be underwritten by a wealthy benefactor as Norwich City 26 demonstrated by generating funds without the requirement for the rights issue to be underwritten. There is nothing to prevent the 4 Directors of Everton Football Club implementing a rights issue and tapping into the clubs greatest remaining asset - its fans. Given the apparent reluctance to implement a rights issue to raise funds Evertonians have became increasingly suspicious as to why the club have not utilised this route to generate revenue. Some Evertonians are uneasy over the lack of progress with this matter and believe that it is unhealthy for the future of the club to be dictated by a small group of individuals rather than a broad, diverse and accountable Board of Directors with the clubs best long term interest at heart. Sadly, the current board have managed the club without providing any direct investment into the business, they have relied on the systematic sale of existing assets, including a reported £45m worth of youth talent, and

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Appendix XXII - Companies Form 403a, dated 2nd September 2004 Appendix XXIII - Toffeeweb Article ‘Finally the £10.4m truth’, dated 14th January 2005 24 Appendix XXIV - Everton Football Club Company Limited 2006/2007 Annual Report and Accounts 25 Appendix XXV - 1996 Six for One Rights Issue of 30,000 new shares of £1 each at £500 per share 26 Appendix XXVI - Norwich City Official Website ‘Share Offer and Annual Accounts Announced’, dated 5 Dec 2003 23

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increased borrowing in order to provide modest investment into the playing staff and maintain their position at the helm of Everton Football Club.

1.12 Evertonians, including myself, consider that the current board of Everton Football Club have deliberately overlooked external investment in order to retain a large controlling stake in the club. The conclusion in doing so is that Everton Football Club is being denied much needed investment and the suspicion is that the current board are doing so for their own purposes, perhaps in order to maximise the return of their shareholding when the club is eventually sold on to new, external investors.

2.0

A Background to the EGM

2.1

Having followed the debate on the Kirkby relocation issue I became deeply concerned about the information being provided by the club 27 and by the wisdom of relocating Everton Football Club to Kirkby. Furthermore I was concerned why the club failed to offer an alternative to the Kirkby proposals as was the case with the Kings Waterfront ballot 28 . As a result, in August 2007, I decided to attend meetings and become an active member of the KEIOC group.

2.2

I believed that the information being provided by the club at the time of the ballot was at best inaccurate and at worst deliberately misleading. I felt that the local media coverage, perhaps influenced by commercial agreements with the club, was biased in an attempt to influence the outcome of the ballot. I even contacted the editor of the Liverpool Echo to complain about its coverage of the whole affair and he admitted to me that they had published articles in the midst of a ‘fierce PR campaign’.

2.3

As a shareholder I felt that I was in a privileged position in the sense that I was able to pose questions to the Board of Directors that Everton fans were beginning to ask in private. I felt it would be beneficial to have a public debate about the situation with the ground move as it had become apparent that Evertonians en masse were now concerned with the reality of the situation and the fact that the club was pursuing something vastly different to that what was originally promised. In essence the board promised Evertonians a ‘world class’ and ‘effectively free’ stadium with the best served transport infrastructure of any stadium in the UK. The reality, if it ever transpires, will be something completely different. The planning application described the stadium as a ‘mid level quality’ stadium, the cost to Everton football club we be in the region of £78m and the transport proposals are very concerning with plans for fans to walk for up to 45 minutes (each way) to get from their cars to the ground. I have yet to see any reference to how disabled supporters will get to

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Appendix XXVII - An Extract from the Official Matchday Programme, dated 11th August 2008 Appendix XXVIII - Destination Kirkby Ballot Literature ‘The Future for Everton’

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the ground. The idea that supporters would be penned into supporter queuing reservoirs with a density of 4 people per m2 for over an hour was something that was abhorrent to me.

2.4

Another factor in my decision to pursue an EGM to discuss the Kirkby issue was the fact that 40% of those who voted in the Kirkby ballot registered their opposition to the Kirkby proposals and this at a time when Destination Kirkby was portrayed as a ‘once in a lifetime opportunity’ pleading with Evertonians to ‘Not Let the Club Get Left Behind’. It is somewhat ironic that Evertonians have been exposed to two ‘once in a lifetime opportunities’ within the space of a few short years. In contrast to the Kings Waterfront ballot and given the stark choice of facing a bleak future at Goodison Park or progression with the Destination Kirkby stadium many Evertonians still chose to reject the clubs proposals. It was clear to most observers that the club could not sensibly claim to have a mandate when such a large proportion of our fan base was opposed to the move. Furthermore, the result of the ballot was not conclusive and the Destination Kirkby proposals would not have been carried had just 2,382 fans voted to reject the Kirkby proposals rather than support it.

3.0

The Objective of Convening an EGM

3.1

The purpose of the EGM was to allow shareholders the opportunity to discuss the proposed move to Kirkby once the facts concerning the ground move had come to light through the planning application. Evertonians and Shareholders had numerous questions about the reality of the Destination Kirkby scheme whilst an EGM afforded the Board of Directors the opportunity to praise the benefits of the scheme and allay Evertonian concerns.

3.2

The intention was for the board of Everton to allow shareholders a traditional ‘show of hands’ vote at the end of the evening as had been the case on previous occasions. We expected that the club would welcome debate on the issue after all it was an issue of utmost importance as the club and Evertonians will be affected by the move for many years to come.

3.3

Our objective was to request that the club go back to the fans and hold a fresh ballot now that the notion of a ‘World Class’ and ‘Effectively Free’ stadium had been disproved by the information detailed in the planning documents. As discussed in Section 2.4, I felt that the club had a very weak mandate which was obtained through aggressive public relations tactics and frankly, what many perceived to be emotional blackmail. We had also noted the results of internet polls which showed that people no longer favoured the move to Kirkby and we anticipate that if a new ballot was conducted the result would be dramatically different. We expect that if the club went back to the fans with another ballot over the issue the fans would resoundingly reject the Destination Kirkby proposals.

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It was hoped that if the Board of Directors were exposed to our concerns during the EGM then they may agree that the proposals were not beneficial to Evertonians and Everton’s long term prosperity and as such would withdraw from the scheme. We hoped that a rejection of the scheme by shareholders would give the company the opportunity to free itself from the restrictive exclusivity deal with Tesco and Knowsley Council.

3.5

We had also hoped that the media attention generated by the EGM would alert other Evertonians and the wider community to the concerns with the Destination Kirkby proposals.

3.6

I understand that KEIOC would be prepared to pay for a further ballot should planning approval be granted and should the club wish to re-consult with fans. Unfortunately, I do not believe that the board will approach the fans again having fought so hard to secure their ‘mandate’.

4.0

The Process of Convening an EGM

4.1

Prior to issuing correspondence to shareholders both Tony Bennett, the co-sponsor of the EGM petition and myself met in private with representatives of the two shareholder associations in order to gain universal support from the committee’s of both associations. Unfortunately, as a result of a disagreement, members of the original 1938 Shareholders Association felt compelled to set up an alternative shareholders group, the 2006 Shareholders Association. I believe that this event was detrimental to the well being of the club and was influenced by the Board of Everton Football Club in order to create a division amongst shareholders and weaken any potential opposition to the current board. Having discussed the situation with prominent members of both associations we thankfully received the support of the committee’s of both shareholder groups to press ahead with our petition for an EGM to discuss the Kirkby debate. As a result of this process we hope that the two shareholder associations will soon be reconciled to offer shareholders a united and powerful voice.

4.2

In order to raise support for our petition to shareholders I wrote and issued a 6 page document 29 addressing both mine and Tony’s concerns regarding the Destination Kirkby proposals and we included a requisition form to all shareholders that were identified on a shareholder database at the end of June 2008. The packs went out with stamp addressed envelopes for shareholders to return their completed requisition forms.

4.3

In order to force the club to convene an Extraordinary General Meeting we required the support of at least 20% of the shareholders of the company. This meant that we required the support of at least 290 shareholders of the 1,400 or so shareholders. We issued approximately 1,200 packs but given the costs involved we refrained from issuing packs to those shareholder accounts held in the

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Appendix XXIX -

Copy of the Pre EGM Requisition Form and Literature, dated June 2008

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names of trustees and executors. Unfortunately, our records were also outdated and we had numerous problems with EGM packs being returned to us as some shareholders had since moved since the list was compiled. In addition, it later transpired that we were unaware of the 100 or so new shareholders that had acquired shares in the company since our list was produced. Despite this, I believe that the level of support for the EGM was very good and we had over 330 signatories endorsing our petition when it was submitted to the club and at the last count, we had received the support of over 400 shareholders.

4.4

The petition was presented to Martin Evans, the Company Secretary, on the morning of the 18th July 2008. The document was carefully hand delivered to the club in a waterproof Tesco carrier bag for added protection and the individual paginated requisition forms collated in alphabetical order with a referenced summary sheet to make verification of the validity of the document much easier for the club to check.

4.5

Upon submission, the club provided a receipt for the document and advised that they would respond to us in due course. On the 5th August 2008 I received a call from Robert Elstone who had just been appointed Acting CEO following Keith Wyness’ sudden and unexplained departure 30 from the club. Mr Elstone confirmed the date when the EGM was to be held and also suggested that both Tony Bennett and myself attend Goodison Park to discuss the etiquette to be observed on the night of the EGM.

4.6

A meeting took place between Robert Elstone, Acting CEO of Everton FC, Sue Russell from Halliwells LLp representing the club, myself, Tony Bennett and Philip Treanor from Pannone LLp who was representing both Tony and myself. During the course of the meeting Mr Elstone made it clear that the EGM was convened purely to discuss the Kirkby issue and warnings were given that the EGM would be cut short should the meeting stray to other matters such as the delay in David Moyes signing his contract, lack of investment etc.

4.7

During the course of the meeting Robert Elstone and Sue Russell made it clear that the Board of Directors would not allow a traditional ‘show of hands’ vote on the Kirkby issue but would rather go straight to a poll vote which would lead to guaranteed success for the 3 major shareholders with their combined 75% shareholding. We argued that the clubs own Articles of Association 31 state that a “A resolution put to the vote of a meeting shall be decided on a show of hands unless before, or on the declaration of the result of the show of hands a poll is duly demanded.” but this was dismissed by the Club. We believed that the club could not go to a poll vote until there had been a show of hands however the club was adamant that the meeting would move straight to a poll vote.

30 31

Appendix XXX Appendix XXXI -

BBC Sport Article ‘Everton Chief Executive Resigns’, dated 30th July 2008 Articles of Association (since amended)

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As minor shareholders we were advised that we had little influence over proceedings and that our only recourse would be to inconvenience the Board into attending further EGM’s. In light of the clubs intransigence and as we were powerless to take any further action we duly advised the club that if they failed to offer shareholders a ‘show of hands’ vote we would be forced to issue a further petition to discuss the general off-field running of the club. We subsequently issued a further petition 32 with further literature updating shareholders of the events since we submitted the original EGM petition. 5,000 copies of an extended version of this document were circulated amongst Evertonians at the home game with Portsmouth on the 30th August 2008.

4.9

As Liverpool City Council passed a unanimous, cross party, resolution to endorse the proposals that Liverpool City Council would do everything it could to help Everton Football Club find a solution to its stadium needs within the city boundaries, we invited both Warren Bradley, Liberal Democrat Leader of the City Council and Joe Anderson, Labour Leader of the Opposition to speak at the EGM to which they both agreed to do and both attended. Their contribution to the EGM can be found in the transcript.

4.10 The process of convening an EGM appeared to be a contributing factor to the mysterious and as yet unexplained departure of former Chief Executive, Keith Wyness. Arcadia Retail boss Sir Philip Green 33 has long since been linked with a behind the scenes influence at Everton FC however recently published articles have attributed Wyness’ departure to the growing influence of the Arcadia Retail Billionaire 34 .

5.0

The Outcome of the EGM

5.1

The outcome of the EGM was a formality with the wishes of the majority shareholders carried on a poll vote basis. The votes of Bill Kenwright controlling 8,753 shares, Robert Earl (8,146), Jon Woods controlling (6,622), Arthur Abercrombie (1,935) and Sir Philip Carter controlling (714), with their combined shareholding of 26,170 shares won the day and the result was 26,553 against our resolution with 622 for 35 .

5.2

Regardless of the fact that our motion was defeated it was clear that the moral victory was ours. The majority of returned voting forms endorsed our calls for the immediate withdrawal from the Destination Kirkby scheme. Had there been a traditional show of hands vote as we requested our resolution would have been passed. The Directors of the club are now under no illusion that shareholders do not support the Boards Destination Kirkby proposals. Sadly, the use of the poll vote

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Appendix XXXII - Copy of the 2nd EGM petition and Accompanying EGM literature Appendix XXXIII - Evening Standard ‘Green at Heart of Everton Battle’, dated 27th October 2006 34 Appendix XXXIV - Daily Mail ‘Wyness Exit Leaves Green to Hold Sway’, dated 2nd August 2008 Liverpool Echo ‘Everton FC, Blues Fans and the Credit Crunch’, dated 5th August 2008 The Times ‘Disquiet Grows over Keith Wyness Exit’, dated 6th August 2008 35 Appendix XXXV - Everton FC Official Website ‘EGM Resolution Defeated’, dated 3rd September 2008 33

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makes a mockery of the notion that Everton FC is ‘The Peoples Club’ and it was disappointing to see Robert Elstone exploiting the result the following day to imply that the Club have a clear mandate 36 . The Board of Directors gave themselves the mandate to continue with the scheme, not the majority of shareholders who voted at the EGM. Everton Football Club is clearly the property of the major shareholders who will do with it whatever they see fit. They are clearly prepared to push these proposals through against the wishes of the majority.

5.3

With regards to the events of the evening, the club produced a well choreographed EGM in which Mr Elstone consumed 30 minutes of the allotted time with a presentation to explain the business case for Kirkby and why Goodison Park could only be redeveloped at a cost in excess of £200m. As a Quantity Surveyor I believe that it was clear that what the club were proposing was not ‘like for like’ with that being proposed in Kirkby. It is apparent to me that the club or at least the clubs advisors, notably Mr Kierle of KSS, whose company will be awarded up to £30m worth of fit out work if Destination Kirkby is given planning approval, are trying to play down the prospects for the redevelopment of Goodison Park, perhaps to ensure that they and their business’ benefit from the Destination Kirkby scheme?

5.2

I remain unconvinced by the figures presented by Mr Elstone at the EGM and believe that it is questionable how the club can build a 50,000 seat stadium in Kirkby for a sum in the region of between £2,000 and £2,600 per seat when what was being proposed for the redevelopment of Goodison equated to £6,000 per seat. I have asked Mr Elstone to provide a cost sum analysis explaining how these figures have been calculated but he has declined to provide this information. I see no reason why the club cannot provide this information to the inquiry unless of course it is deeply flawed.

5.3

Upon completion of Mr Elstone's presentation and a short statement by Mr Kenwright I was invited to commence the questioning of the board. Mindful of Mr Elstone's threat to cut short the meeting I decided to ask a question which I firmly believe is at the heart of this whole affair but associate it within the parameters of the stadium debate. I posed a question 37 to Mr Kenwright suggesting that the board are pursuing the Destination Kirkby proposals for their own benefit rather than that of the club and that should the club be taken over by a new wealthy benefactor as had been the case twice in the past 18 months with Manchester City, the new benefactor would not even consider moving the club from a central site to an inadequate location on the fringe of the urban area.

5.4

Mr Kenwright responded passionately and convincingly when he stated that he would sell the club tomorrow if a billionaire 38 investor was to show an interest in the club. Furthermore, Mr Kenwright

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Appendix XXXVI - Everton FC Official Website ‘Elstone on Clear Mandate’, dated 4th September 2008 Appendix XXXVII - Extract from the verbatim minutes of the 2008 EGM 38 Appendix XXXVIII - Official Everton FC website ‘Kenwright’s Billionaire Wish’, dated 3rd September 2008 Daily Post Article ‘Everton Pledge to Fight on for Kirkby Stadium’, dated 4th September 2008 37

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admitted that both he and the club have no money and that he had found it difficult to raise the funds to buy players during the summer transfer window. Mr Kenwright also admitted that he does not want to be standing before shareholders in another 12 months, stating that he would sell the club within weeks if it were possible. Finally, Mr Kenwright stated that he had instructed Mr Keith Harris of Seymour Pierce to find a buyer for the club.

5.5

Other issues were raised by different individuals during the course of the EGM most notably concerns were raised over the quality of the stadium and with the business plan as shareholders remain concerned that the business model will fail once the ‘new stadium effect’ diminishes. Fundamental concerns were also raised over the inadequacies of the transport proposals and the issues associated with spectators being expected to walk for 45 minutes to get from their cars and to the ground. In addition, a more interestingly, questions were asked about Sir Philip Green‘s association with the club and the possibility that Arcadia will be involved with the retail side of the Destination Kirkby scheme.

5.6

Having reflected on what was said during the EGM, it is clear to me that the Board of Everton have nothing to offer Everton FC, they cannot take this club any further and I believe that the club is now on the limits of its borrowing. I absolutely believe that the board of Everton are now just loitering in anticipation of selling the club with planning permission 39 and at a premium price 40 obtained through the £52m subsidy that will add value to their shareholding. In my considered view, this is what the major shareholders of Everton FC find so appealing about the Destination Kirkby proposals, increasing the value of the club prior to its sale. Furthermore Section 8.6 of the ‘Proposed Stadium for EFC’ report by DppLLp confirms that ‘the Directors of the club recognise the need to strengthen the balance sheet in the short term’. Why would they wish to strengthen the balance sheet just in the short term?

5.7

Robert Elstone’s comments to this public inquiry, that to the ‘best of his knowledge’ there are no buyers for the club, fail to address the issue. Let us be clear, Robert Elstone is not selling the club; the major shareholders, Bill Kenwright, Robert Earl and Jon Woods will privately negotiate the sale of their own shares. They will do so behind closed doors, in private and away from this inquiry. It is perfectly logical to conclude that these individuals will benefit by many millions of pounds should planning permission be granted for this scheme and sadly this benefit will be gleaned from the taxpayers of the deprived area of Kirkby.

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Appendix XXXIX Appendix XXXX -

The Observer ‘Everton Sale if Stadium Gets Go Ahead’, dated 3rd August 2008 BBC Sport ‘Everton on the Verge of Sale’, dated 10th October 2008

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As a result of the EGM, it is alarming to note that the five major shareholders, identified in Section 5.1, with their 75% stake in the company have since amended the clubs Articles of Association 41 in order to stifle any further debate on this issue.

5.9

The club have also recently delayed the publication of the clubs accounts to the end of May 2008; these are usually issued to shareholders by late October, early November. Furthermore it would appear that the Board of Directors have no intention to convene an Annual General Meeting to discuss the clubs accounts and off-field performance. These meetings are usually held in the first week of December. This is somewhat disconcerting given the clear instruction from Mr Elstone that the EGM would only encompass debate on the relocation issue. It would appear at this present moment in time that the Board of Directors are denying shareholders the opportunity to discuss the accounts and off-field performance of the club during the 2007/08 financial year. As stated in 5.6 I believe that the board of Everton Football is exhausted and appears to be running from the fact that they are acting against the wishes of the majority of shareholders. I would reiterate my conclusion that the major shareholders of Everton Football Club are awaiting the decision of this inquiry prior to selling their shares.

6.0 Conclusion

6.1

I do not believe that the Destination Kirkby proposals will be in the best long term interest of Everton Football Club and its supporters, nor the town of Kirkby and its residents. I believe that the main beneficiaries of the Destination Kirkby proposals are the major shareholders of Everton Football Club.

41

Appendix XXXXI -

Official Everton FC website ‘Club Statement’, dated 10th September 2008 Liverpool Echo ‘Everton EGM Ruling Grounds to Make a Point’, dated 12th September 2008