Is now a good time to invest in Everton FC’s shares?

Following Everton FC’s successful planning application for their new stadium at Bramley Moore Dock, Neil Blankstone, Director of Blankstone Sington, looks at how the news might affect the smaller shareholders. 

With a new stadium one step closer to reality, the predicted post-pandemic economic boom and the club’s much improved performance on the pitch, has there ever been a better time for fans and more serious investors alike to consider buying shares in Everton FC? 

New stadiums have forged part of history for many football clubs. New grounds tend to mean increased stadium capacity, allowing their clubs to be home to more fans and in turn, this increases a club’s matchday revenues. 

West Ham left Upton Park in 2016 for the London Stadium and since then have sold out to 52,000 season ticket holders. Their overall income for the 2018/19 season was £7million more than preceding seasons at Upton Park – highlighting a link between capacity and financial gain. 

Similarly, when Tottenham Hotspur played at Wembley for two years when their new stadium was under construction, their Premier League matchday revenue more than doubled from £19million to £42.6million due to playing in a larger stadium. The increase from 36,284 to 90,000 had a significant impact on the value of the football club in just two years. 

Stuart Lucas, Founder & Executive Chairman of Asset Match who facilitate trading in the shares of Tottenham Hotspur FC, comments: 

“The completion and opening of the Tottenham Hotspur stadium was an exciting moment in the history of Club. It instantly made them “more than football” and gave them international exposure with the hosting of big events such as NFL and future plans to host music concerts and boxing matches etc. 

“With other major clubs with single-use stadiums being valued at more than £2bln, the £750m investment in the new multi-use stadium (with an attractive 23-year debt deal for £525m of that) clearly adds value to the Club – and they are yet to sell the naming rights to the new stadium!” 

Everton FC has an extraordinary opportunity to increase revenues when they move from Goodison Park, a 39,000 seater stadium, to their new home at Bramley Moore Dock, with the capacity of 52,000. 

As the country now begins to see light at the end of the tunnel due to the vaccine roll-out and Boris Johnson’s recent announcement regarding the UK’s road map leading the public out of the current lockdown, the Bank of England is predicting an increase in household spending as the economy begins to unlock. This will have a great impact on the sports and hospitality industries as it is anticipated they will see revenue streams return to at least pre-COVID levels. 

For Everton, these developments look set to go hand in hand with improved performance on the pitch. Their performance in the Premier League in particular as well as progression in the FA Cup could have huge implications on the club’s finances by opening themselves up to bigger revenue streams as well as increasing their profile both domestically and abroad. 

The club and manager have both stated a clear objective of Champions League qualification and that seems increasingly possible given recent performances. Revenues associated with qualification are in the tens of millions and have a huge impact on a club’s financial standing. 

As it currently stands, 17 percent of Everton FC is owned by small shareholders and despite speculation, the new majority shareholder and owner has given assurances there are no plans to buy out small shareholders. 

This assurance comes despite plans announced of a debt for equity deal that has been proposed and which shareholders will vote on shortly. The result of that will mean existing shareholders will be diluted in percentage terms, so their stake will be smaller, but the pie will be bigger, as a result, share value is likely to increase from the most recently traded process of £3,500 per share. 

We do however appreciate that for some fans the current entry price of £3,500 per share – a price determined by what shareholders are prepared to sell for – may be prohibitive for some. 

For this reason, starting an Investment Club is relatively straightforward through which friends, family and colleagues can group together. There are some excellent guides online, including one from Time to Trade that covers everything you need to get started as well as the necessary legal documents and accounting paperwork. 

So now could be a good time for fans and serious investors alike to invest in a football club that offers growth potential in terms of a new stadium, the post-pandemic economic boom and improved on pitch performance. 

With all this in mind, we anticipate that interest in shares will remain high.