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The Guardian report today that Everton require loans totaling £78m in order to fund their new stadium at Kirkby.  With a bit of math and a few assumptions, we can guess that the Toffees will be giving the proceeds from 14,000 paying fans, every game for the next 25 years.

Given that the new stadium will only hold and extra 10,000 fans (if it is completely full), I’m struggling to see the business sense behind the new stadium - especially when you consider the risk the club is exposing itself to.

Let’s get the numbers out of the way.  I have no idea what mortgage rate you get whacked with on a £78m loan, so I’ll peg it at 10%.  The Guardian article mentions the loan is over 25 years.  A bit of Excel magic tells me that Everton need to find  £8.5m a year to pay back the mortgage.

Another assumption: Everton will play five home cup games a year in addition to their 19 Premier League matches.  That gives us an expense of £350,000 per home game.

One more assumption: The average ticket price is £25.  That gives us the figure of 14,000 tickets sales per home game in order to pay back the mortgage.

The remaining 36,000 fans - again, if the stadium is completely full - will have to sholder the cost of maintaining the ground, stewards and other staff, police, etc, etc.  That doesn’t leave much left to, say, pay the wages of Yakubu and company (but I suppose that’s what TV revenue is for).

What makes me nervous for the Blues are all the things that could go wrong over the next 25 years:

• Periods of so-so performances that impact attendance figures.  In the fifteen years from 1992-2006, Everton only finished in the top-10 just three times.
• A back-lash against the distance to the new Kirby site.
• A drop-off in TV revenues means that ticket money is required to pay for things like players’ wages.
• Increased media coverage - i.e. the ability to watch any game live on TV - that undermines ticket prices.

That last one is something I see as very likely - overdue in fact.  The way I see the future playing out is that us fans will be able to watch any game, anywhere, at any time.  People won’t stop going to games in person, but they will stop paying £25 a ticket.  I think £10 is about right to fill the stadium and provide a good atmosphere for the fans at home.  If this happens, the clubs with the biggest fixed-costs will suffer the most.

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