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With the prospects of confirmation of a brand new stadium on the site of the Bramley Moore Dock arriving very soon, I thought it would be interesting to examine the potential costs, what it means for the fans in terms of future costs and how we could fund the stadium.

I’ll start with an assumption that we’re going to build a state of the art “iconic” stadium housing 60,000 spectators of which 6,000 would be executive or premium seating of one form or another.

How much will the stadium cost?

It’s obviously difficult to give an accurate estimate of costs but based on some research, and a helpful tweet from Dan Meis, I’m going to suggest that the build cost of the stadium is £6,000 per seat, and that the land cost is £30 million giving an estimated cost of £390 million. Of course all major projects risk overspend so, I’ll also make a provision for a total cost of £500 million as well.

Income

Everton to their credit have been very effective in keeping match day costs as low as can be reasonably expected, mainly driven by recognition of the socio-economic profile of the majority of support, plus a desire to attract as many young people to the game through heavily discounted season ticket offers. I am going to assume that those policies would continue even in a new stadium.

One of the keys to keeping regular ticket prices as low as possible is maximising the selling of premium seating. Based on 6,000 premium seats being sold in a capacity of 60,000 it’s reasonable to expect the premium seats to contribute at least 50% of the match day revenues.

It is unreasonable to expect prices to remain static for the next 20 years, so for ease of calculation I’ve assumed a 10% increase every 5 years over the next 20 years.

Earlier last year I created a model which I’ve adjusted slightly in line with increased capacity:

We build a 60,000 seat stadium with 6,000 executive/premium seats and 20 additional boxes

Season ticket prices remain the same, executive/premium seats cost an average of £200 per game, other tickets average £50 per game and executive boxes cost £75,000 per season

The model uses the existing ratio of junior, young adults and seniors among our season tickets

Assumes we would sell out each game and have 39,000 season ticket holders.

Assumes 2,500 away supporters at each game paying £30 a head.

12,500 non season ticket holders and “turn up” supporters at each game.

No consideration of cup games/European games for ease of calculation

No consideration of merchandising income

This model produces an average match day income of slightly more than £700 per head per season – again to keep things simple I’ll use the figure of £700. It has to be stressed this would not mean any price increases for the average fan, the uplift comes from the increase in premium/hospitality spend.

This figure is still hugely below the average per capita figures for our peer group:

Club Average matchday income per spectator (2014/15) Chelsea £1709 Arsenal £1667 Liverpool £1276 Manchester United £1155 Tottenham Hotspur £1147 Manchester City £947

On the basis of a 19 game season and capacity crowds this would produce £42 million in revenue, average attendances of 55,000 would produce £38.5 million (as against less than £18 million in 2015/16).

10% increases in prices every five years would grow revenues to £51 million after 10 years, £56 million after 15 years and £62 million after 20 years.

Funding

Quite reasonably everyone must wonder how we can fund a stadium costing anything from £390 million to £500 million. Farhad Moshiri is a wealthy man but no-one, least of all me is expecting him to fund the stadium. There are 3 key components of funding for the stadium (i) the club and third party grant and other funding (ii) naming rights and (iii) debt.

Naming rights

I’m going to start with naming rights. The assumption is that the stadium naming rights partner is also the main shirt sponsor – certainly the highest profile deals in the UK work in that manner with Emirates and Etihad. I think it’s reasonable to assume the same for Everton.

I’m also going to make another assumption that the naming rights/sponsor partner is associated with our major shareholder, Farhad Moshiri. Given the club has already announced USM as the naming rights partner for Finch Farm, and tied the value of that deal in with the major shirt sponsor (£75 million over 5 years), I’m going to suggest that this will naturally extend to the new stadium at Bramley Moore.

How much can is a naming rights deal worth? Again based on some research in the US naming rights market, I’m going to suggest that the naming rights for the new stadium will be worth a minimum of £100 million over 20 years. In terms of contributing to the cost the assumption is that it is paid up front. It is possible it is funded in a separate debt deal guaranteed by the sponsor, but I’m going for a single contribution of £100 million. There may be bonuses for future success and European participation but they may be discounted against the single upfront payment.

For the purposes of this discussion I’m suggesting a 20 year naming rights deal will contribute £100 million to the costs.

Debt:

On the base case of £390 million, I’m going to suggest £225 million of debt over 20 years.

At an interest rate of 5% that requires annual repayments of £15.8 million, (£316 million in total). Whilst this seems an enormous amount, in terms of the increased revenues that a new stadium creates, and the enormous increase in broadcasting revenues, this is very affordable.

Club & third party funders

From the contributions from naming rights and debt, the club is still £65 million short. Interestingly the City Council revealed the level of contributory funding it made to Liverpool’s recent development (£27 million). I’ve no idea on what basis or whether it was cash or in other forms, but it seems reasonable to assume some contribution, be it directly into the stadium or other funding in terms of infrastructure etc.

Regardless, in these inflated and income rich times, this level of contribution (£65 million) is no longer beyond the reach of Everton football club, be it from income, or in the form of borrowing from Farhad Moshiri – personally I believe it will be from the club itself.

I mentioned earlier the prospect of cost over-runs – a cost overrun of up to a total cost of £500 million could still be absorbed by an increase in debt, increase in stadium revenues or increased funding from the club itself.

Conclusion

The long-held dream of a move away from our beloved Goodison Park as a necessary means of developing the club and allowing us to compete with the clubs above us is eminently affordable and in fact should be cash generative. Through repairing our balance sheet, sensible debt levels and an appropriate naming rights deal we can afford a move to an iconic stadium, all without necessarily increasing the cost of match going to the ordinary supporter.

It’s going to be an amazing few years in the lead up to our first game on the banks of the Royal Blue Mersey.

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