Everton, their business strategy and their response to the loss of USM as title sponsor

The final months of last season proved to be among the most difficult in recent memory for Everton.

Mired in a relegation battle few had anticipated, they – like many other clubs – have also been forced to deal with growing financial uncertainty brought on by the pandemic and Russia’s invasion of Ukraine.

Given the nature of their ties to Uzbek billionaire Alisher Usmanov, a close associate of club owner Farhad Moshiri, the latter has hit Everton harder than most. Ties had to be severed – or in some cases suspended indefinitely – with a host of Usmanov-linked sponsors.

As these deals are worth around £20m a year, a significant hole was left in the finances of a club which had already suffered three consecutive losses of over £100m.

There were question marks around Everton’s finances before those partnerships were put on hold. Without them, even more.

For the 2019-20 financial year, at least £42m of Everton’s £64m sponsorship revenue came from USM Holdings (the company in which Usmanov has a 49% stake) alone .

Usmanov has had his assets frozen due to his ties to Vladimir Putin (Photo: Mikhail Svetlov/Getty Images)

Then there is the anticipated loss of USM as a potential sponsor of the club’s new stadium. Included in the same set of accounts was a £30million sum from USM which granted him first option naming rights in the new Bramley-Moore Dock facility. The direction of travel at present is that such an option is highly unlikely to be exercised.

Everton knew that existing revenue streams needed to be improved and partnership portfolios needed to be diversified. With the USM arrangement suspended indefinitely and unlikely to be reinstated, it is almost certain to include finding a new stadium naming rights partner as well as a new training ground sponsor. .

The first formal hint of a pivot in the strategy came from chief executive Denise Barrett-Baxendale in April.

“In difficult times, it means recognizing the need to be pragmatic in order to serve the club as best we can,” Barrett-Baxendale wrote.

Richard Kenyon, director of communications, revenue and international growth for Everton, put more meat on the bone soon after.

“Throughout the club we are looking for areas where we can generate more revenue,” he said. “We need to bring more revenue to the football club so that we can compete with top-end clubs.

“We are more focused on maximizing trading revenue.”

“Pragmatism” has been a buzzword for Everton ahead of a summer in which they are looking to drive growth and are expected to announce a number of new business partners.

They have reviewed all of their existing partnerships in a bid to maximize revenue opportunities, with the decision made earlier this season to reinstate the break clause in their deal with current senior partner Cazoo.

This deal with the car sales company is ending soon, with a new shirtfront partner expected to be finalized in the near future and on improved terms.

By necessity, however, the approach and tone have changed significantly in recent months.

Where Barrett-Baxendale once said that “in an ideal world” the club would not be sponsored by a gambling company, in particular referring to the decision to part ways with Sport Pesa, there is now the feeling internally that very few sectors can be excluded. completely – that, simply put, getting the maximum amount possible for the 2022-23 season is the priority.

This opens up the possibility of Everton working with a gambling company again, or even moving into a new space with a crypto partner.

There is also clear room for growth elsewhere.

Everton were the only Premier League side without a leg sponsor last season. Despite the interest, no party has yet reached their rating for this patch of their kit. The chances of them moving on their price are minimal, for fear of potentially devaluing other trading assets.

This is one of many strands that will be explored as they seek to fill the gaps left by the loss of USM funds.

The internal focus has been to lay the foundations for growth ahead of the move to the new stadium in 2024.

Over the past 18 months, a new structure has been introduced to Everton’s UK-based commercial team, with a tiered strategy setting out plans for growth over a five-year period.

Informed by industry experts, the strategy will be implemented by dedicated staff across multiple continents. Everton now have bases not only on Merseyside, but also in North and South America.

They have also followed other North West England sides Manchester City, Manchester United and Liverpool in having a commercial presence based in London, which is solely focused on securing partnerships. Everton’s London office staff have been instructed to draw on their experience working with/at other clubs including Paris Saint-Germain and Manchester United, as well as other sports such as the NFL and Formula 1.

In the United States, Everton works closely with Miami-based Pulse Sports and Entertainment, led by Jurgen Mainka, a former CONCACAF commercial director who also worked with new MLS side Inter Miami.

Everton are set to secure a tenth partner for their international affiliate program as they plan to hold soccer camps in around 20 US states this summer. Both reportedly brought in seven-figure earnings.

As part of a wider international growth plan, strategic partnerships have also been entered into with consultants across South America to increase Everton’s media presence and fan base in countries such as Brazil and Colombia. Globally, the number of Everton fan clubs has grown to over 250.

Much closer to home, Everton announced their first season ticket price increase in a decade earlier this year. With annual retention rates above 98%, this increase is expected to generate up to £1.5m in additional revenue.

Despite a season of gross underperformance on the pitch, demand for match tickets continues to be high. Over the past three seasons, Everton’s season ticket waiting list has grown from zero to over 25,000.

A quarter of Goodison’s matchday capacity is now taken up by fans under the age of 22.

everton fans

Everton fans celebrate their survival in the Premier League last season (Photo: Visionhaus/Getty Images)

Yet the need to diversify and further stimulate business growth is evident here as well.

Goodison, for all its appeal, does not offer the same business opportunities as other top flight stadiums. It has far fewer corporate boxes and lacks the ability to sell premium packages as, for example, Tottenham’s new stadium does.

Nor do Everton have the same commercial punch as some of the clubs they seek to emulate. They were 18th in the last table of the Deloitte Money League, with a turnover of 218 million euros. Not only were they far behind some of the traditional Premier League top flight, but they also finished behind West Ham, Leicester and Wolves.

Even with these USM sponsorship deals, there was an acceptance in some quarters that Everton were commercially only “at par” for a club of their status and tradition. Without these funds, important questions remain.

The hope is that the Bramley-Moore Dock move could be a game-changer, as Kenyon puts it.

“The biggest benefits will be when the stadium opens but, in this period, we are already seeing a lot more interest in Everton and the partnership opportunities the new stadium presents,” Kenyon said.

Before that, the objective is to find more solid financial ground.

In all aspects of the club, especially football and business, a great summer awaits.

(Top photo: Emma Simpson/Everton FC via Getty Images)

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