Everton FC’s cashflow problems, dependence on a US backer and now, talk of entering administration, show yet again that even in the Premier League it’s hard for football clubs to balance the books.
Affectionately nicknamed the Toffees, Everton has only played four seasons outside the top flight since 1888. Sadly, in more recent years, it has stared relegation in the face three times, not helped by a hefty points deduction earlier this season after exceeding the level of cumulative financial losses permitted by the League. This week’s threat seems to be failure to close a takeover deal with US private equity group 777 Partners, a party rumoured to have its own financial difficulties.
Will these events dampen perennial US interest in the Premier League? Probably not. Arsenal (Stan Kroenke), Manchester United (Glazer family) and Liverpool FC (Fenway) have all seen US control. Bankers to the sector have estimated that each of these and Chelsea will be worth more than $10bn before too long.
Turning the top tier of British football clubs into global brands has been surprisingly successful in recent years, supported by China’s demand for sports media content, as well as assistance in growing its own football industry from the grass roots up. However, any investor under the illusion that the Premier League is guaranteed to make them more billions is seriously misguided – even in the top third of the table.
I know the game pretty well: I was Vice Chairman of Tottenham Hotspur (fifth in the table) in 1991 and again from 2001 to 2006. It was at Spurs that I began my working relationship with fellow Buchler Phillips Director, Paul Bobroff. Paul was chairman of the club for seven years, during which time Spurs became the first football club to float on the Stock Exchange. I first became involved in football club restructuring more than 30 years ago, when Buchler Phillips was appointed administrator to Harrow and Wealdstone FC. During the 1990s I advised Luton Town FC, Millwall FC, Oxford United FC, Swindon Town FC and Barnet FC, as well as, of course, Spurs.
So, to many, Buchler Phillips is synonymous with football finance. Our team’s success rate in restructuring and securing the future of troubled football clubs is unparalleled, always underpinned by a rigorous methodology for increasing revenues and turning losses into profits. This is a hard slog, as Chelsea’s previous owner, Roman Abramovich, knows very well, having supported the club through losses totalling billions over 20 years.
The same tight grip is an approach that is often needed across all areas of sport, which is dogged by business interruption, brand reputation and issues of health and safety more directly than many other sectors. For example, the impact of adverse weather conditions could be catastrophic before a major sporting event, incurring huge cost. Equally, a health and safety problem at a large stadium can or could severely damage the value of its owner’s brand. In addition to uncontrollable risks, there are corporate risks presented by poor management, which should be well within the control of the boardroom, not least in football clubs.
Buchler Phillips has a multi-disciplinary, experienced team that is highly skilled in all aspects of corporate finance advice and turnaround for the sports sector. Our specialists provide a broad spectrum of operational and advisory services to a wide range of clubs, leagues, governing bodies, agents, sports marketing companies, government agencies, lenders and investors in the sector. We are also leading advisers to individual sportsmen and women. Our services for organisations include expert witness services; turnaround and debt restructuring; advice on stadium financing and real estate issues; valuation of intangible assets; and guidance on rights, royalties, licensing and commercial agreements. Businesses in any area of the sports sector wishing to explore strategies for financial restructuring and recovery are welcome to contact Buchler Phillips for a no-obligation discussion about suitable next steps.
Written by David Buchler, Chairman at Buchler Phillips, UK based independent boutique firm with an impeccable Mayfair heritage, specialising in corporate recovery, turnaround, restructuring and insolvency.