 Welcome to Toffy TV today. I am joined by John Blame. We're going to have a little chat about, obviously, Everton's kit deal, which was revealed yesterday, and be chatting to John regarding some other finance stuff and how he thinks COVID-19 may affect Everton. John, how are you? I'm okay, thanks, and I hope Ped is as well. He's looking good. I hope you are. I'm all looking good, rather. It's good to see that we've finally got the planning permission for Bramleymore, and you're down there at the dock. It looks... It's a bit chilly there. Well, it will be. You haven't got a coat on, so, you know, what can you do? Let's kick off with, obviously, the big news yesterday. The waste kept secret around these parts for a while, that Everton were moving to Hummel as their kit manufacturer. Some of the details out there, although some of them are... I don't want to say guesswork, but there's estimates, or what have you. But it's a three-year deal thought to be worth between £8 and £10 million a year for Everton, which will be the record kit deal. So, I mean, what are your initial thoughts on moving to Hummel and on the figures that you've heard? I think you've alluded to it. It's old news, isn't it? I mean, we spend a period of time with the football clubs denying that they're even changing and just blanking you when you talk about Hummel. Crikey, it must be three, four, five, six months ago. It seemed to be quite general knowledge that we were going to replace Hummel with Hummel. I think when the club announced at the end of the primary term with Hummel, they said, was it March last year? The club said they'd entered into a multi-year deal with Umbro, but wouldn't go any more specific than that. We now know that multi-year just meant some of it would be in 2019 and some of it would be in 2020, but it wasn't much longer than a year, was it? And as has been the trend since the days of Robert Elston, every deal is a record-breaking deal, but we never get any absolute numbers. And so, yeah, I mean, clearly some of the mainstream media have been briefed, it's eight to ten million. They've also appeared to have been briefed. It's double what Umbro was, but beyond that, there's a lot of spin around it, I suppose. I mean, we're seeing, we saw obviously Dominic King was the latest one to talk about. He was adding more towards ten million a year. So, whether or not that's with, I don't know, a couple of bonuses or whatever, or whether it really is kind of £30 million across three seasons. Let's assume it's £27 million and we'll go right in the middle of the two estimates and say that it's £9 million a year. Do we look at this as supporters saying, well, you know what? The club is doubling up on its deals. So, if Umbro was between four and five million and this is between eight and ten million, is that signs that as a club we're starting to get smarter with the deals we're doing or we're starting to be a bit more aggressive? Or do you just think it's simply just the way the market is more so than what the club are doing? No, I think the club are working hard. I also think that perhaps through lack of confidence that it might be, we don't achieve the commercial performance that the brand justifies. I think it's a bit of a shame to be honest that we lack transparency typically around the size of these deals. I have some understanding of that if it's perceived to be some degree of commercial sensitivity and those sorts of things, often you would expect at this stage, say the football club would be quoting a larger number and the other side of the coin in this case, Hummel would be quoting a smaller number because they want to see that they got good value. I think the key is what is the deal really worth. When I was doing big deals then I used to get paid a commission. I wouldn't get paid on what a deal could be worth. I would get paid on what it was guaranteed to be worth. So instead of quoting high watermarks, quote minimums, and I have no idea what the minimum is here, what I've been told and I've validated this with some of the national press type guys is that the club have been saying it's almost double what Umbro was. Well, that's assumption upon assumption because no one knows what Umbro was. But if people have got long memories and they go back to the original Umbro deal, which was when was that 2014 or something, by recollection that magic word double was used then to say that the Umbro deal was double the Nike deal. I think it was reasonably well accepted that the Nike deal was on or around three million a year. That means the Umbro deal must have been on or around six million a year. And if this one is double, that's on or around 12 million a year. But that's not the number that people are quoting, the quote in eight to 10. So it's all a bit of, you know, we don't know what we don't know to use what I say on everything business matters. But what seems to be consistent in the validation I've done is this number or numbers that have been thrown about. They are the baseline numbers. They're not with the kickers. So we may not in the past have been comparing apples with apples because as I said, if we have a propensity to quote the big number, maybe the six million for Umbro included, you know, bonuses for selling shirts or whatever it was. I think I tweeted yesterday that the guarantee element was perceived to be around four to five million. Or be it, you could easily go back to what Elston said about it being double the Nike. It could be six, but there's so much disinformation around that. You don't know what you don't know. And the club are clearly saying this is much better than what we had with Umbro. And that is a step in the right direction. As anyone who listens to urban business matters will know, I talk about the foot race and it's good that we are running a little bit faster. But we're still running slower than our competition. And I think that's the real challenge for the leadership team, that there's a big gap to close. But as in any race, the first thing to do, I guess, is to make sure the guy behind you can't catch you and then try and catch the guy in front. And certainly, I mean, we just talked offline, didn't we, about where a club like Watford are. We're probably three or four times per an in what they are. But in absolute numbers, they're not neither compared to what a Liverpool or a Man United or a Man City might get. And they have different reasons. One is perhaps the biggest club in the world and the other two are reasonably successful at the moment. So big challenges, big challenges. I mean, it's interesting, isn't it? It's such a difficult, kind of like argument, not argument, argument's not the right way, but it's a difficult kind of thing to grasp, isn't it? If you're saying that, we need to be running faster to catch the six in front, if you want to call them six. I mean, I think this latest share deal, I think put seven, I think seventh. I don't think we've caught up to any of the top, the big six, as they like to be called. You've got to be, have been in or aspire to be in the Champions League to get those numbers up. Definitely. And that's difficult, isn't it? That's a challenge that, as you move forward. But I suppose what I took from it, I mean, first of all, I don't think the night deal was three million a year. I thought it was 1.5 over the two seasons. That was where three million overall. Well, that's the point. You're back again whether it was three million including incentives. And the point is here, whether you're Dominic King, working for a national newspaper or you and I talking on, you know, the number one YouTube channel for Everton, we're all basing it on the same facts which are a bit thin on the ground. They're all assumptions. I mean, some of it will flow out even when we would typically expect some of it to flow out when we see the accounts. And maybe we'll talk about C19 in a minute, but the finances of most football clubs are going to be all over the place anyway. But we've got some forensic guys out there whether it's Swiss Ramble or the Esk and people like that who will find out under the covers what these things really are. But it won't be until perhaps 2021 before we see the outflow of that. I mean, I suppose just looking at it then with just casting a broad brush view of it as you like to say as well. It's good that the numbers are going up in terms of how much it's worth. Without going, you know, we can scrutinise or whatever, but just for a fan like me, that just looks at the numbers and will go right. Excellent, that's better than what the last one was. And that's what we have to do, don't we? If we are to, you know, coincidentally, this deal finishes as we are due to move into Bramley Mo, which we will be moving into Bramley Mo when this deal finishes. So whether Hummel then have done well enough to remain our kick manufacturer or whether we've got someone else coming in, then this is the baseline then for the next deal to be much bigger than this one, isn't it? Surely that's got to be the challenge for all of the marketing team. It is, and maybe that's why the club wanted to finish the Umbro thing. We wanted to do this last year, I guess, and then we had a bit of a stop gap year with Umbro. We've stopped Sport's pace, of course, and I think the club has said that's got nothing to do with it being a betting company, so maybe the new one will be a betting company. But trying to get the calendar lined up, if these deals are typically three years long, a bit like players, I suppose, three years has become the new contract average, hasn't it? Then we want to be 12 months out from Bramley Mo, knowing the things physically getting built, being in a position of being able to tease, be it front-of-sheet sponsors, manufacturers, naming rights holders, and all those sorts of organisations that, hey, you could reflect in the glory of this magnificent new stadium on the banks of the Royal Blue Mersey, and that will get huge amounts of publicity throughout the world. So we should really worry, even if they are only relatively short-term deals, if we don't have some stonking deals in and around the time that we go into Bramley Mo. It's got to be the aim, we can see it behind you there, offering these manufacturers the name on the side of that, and all the shots it's going to be getting as it gets coming to completion, and the face games on Sky and everything, so everything could be in a very good position coming that 2023 time when it's the next deal. We're also seeing some information. Should we be on Amazon or Netflix by then as well? Definitely, John. Nothing but the best is what that streaming show should be called? Well, it should be. Let's see where we go with that. I hope Amazon and Netflix are listening. It's Sunderland till I die or something. Sunderland till I die and the top. The Everton wants really needs to be nothing but the best. The one thing I'd like to say, John, is there's more information coming out now that the deal with Rovio, so Angry Birds, that's ever going to move away from them. They had given them the option to renew. It was a short-term deal. They gave them the option to renew. They've been talking to them, but now it seems that Everton are going to go in a different direction. So, again, the opportunity to get someone new on that sleeve and try to maximise that revenue and you'd like to think that that revenue coming in for that deal would be bigger than what Angry Birds deal was on Rovio. Yeah, I think so. I'll stand corrected, but I think when we debated this a year or two ago on Everton business matters, one of the things we did, it might have been me, I'm not sure, me or Paul obviously, was to bundle together those things to be complementary. So, perhaps what we should do, if in the next number of months we're going to replace the shirt manufacturer, the front of shirt sponsor and the sleeve sponsor, then in aggregate, those three numbers add together, if they're significantly, as they should be now, if they were to believe about what Hummel is, if they're significantly higher than what the three previous ones were, then that's clearly progress. It'd be interesting to see what we do get on the front of shirt, maybe it's possible, probable, that'll be another betting company. If it is another betting company, one might assume considering on having finished a betting company early, then the deal has to be better than we had with Spore Spacer. And or it's a stopgap because who we really want either isn't ready or is unknown at this time. But then, that again then presents some challenges if we talk about the calendar work we talked about because do we really want to have a front of shirt sponsor, whose last year is the year after we arrive at Bramley Moor rather than the year before or the negotiating period is. So it would be interesting because maybe we'll break the mould there and have quite a long-term contract and somebody will be second guessing what the value is of it being in and around Bramley Moor. But of course negotiating will be easy once planning approval has been granted. Or not easy, easier because clearly we can have some sort of within our control, not necessarily some certainty, but it would be within our control whether the thing got built or not then. And certainly if the club have got themselves lined up to say we get planning approval, we show that we've got the money and we start building, then that will make the work of our commercial team a little bit easier than it has been in recent years. Yeah, just touching on the front of shirt sponsor there, John, obviously the club had made the decision to move away from Sport Payser once this season was finished. I think there was a general feeling that we'd be moving towards a non betting company, whether that was real or not. That kind of seemed to be the you're reading between the lines and hearing stuff. But obviously the pandemic happened, well it was happening anyway, but I mean it's escalated and it's happening very real now in Europe, certainly in this country as well. So do you feel as though the playing field will have moved and therefore the club may be looking. So companies, one time I say, companies who were potentially looking at sponsoring us with big budgets for sponsorship, all of a sudden we're getting talked about, the waste recession ever and everything else, a lot of these companies might be going actually we can't do it now and therefore the people who we're left with are betting companies with big budgets because let's be honest, if it's how it's looking to be projected at the moment that we ain't going to be in football stadiums before 2021 and potentially if at all next season, then I think that then plays into more people betting, if you know what I mean, because people will be at home, will be going on the maths and stuff, again just lining the pockets of betting companies so therefore their expendable income is more than what other companies have got at the moment. Does that make sense? Not at all mate, I don't know what you are talking about. I think what you're trying to say is and you did is the world's changing and does that mean perhaps decisions we made in January, February we wouldn't make today? Yeah, and it's easy to see that why would anybody sponsor a football club at the moment unless their own customer demographic was attuned to the fact that the games will still be televised whether there's people in the stadium or not and you rightly say getting brand access and advertising on Sky Sport and BT Sport, then lots of that in and around games as you rightly say is betting companies and so there becomes a bit of a I think it's where business and morals bump against each other particularly for our football club with all the blue family, people's club, people's place all those sorts of things and whilst the club didn't say back in whenever it was now when they announced Sports Pacer that they would never go back to a betting company obviously they had to leave their options open what we don't know is how influential was the fan concerns around having a betting company in the decision that was made in the first place because the sentiments of the fans won't have changed even if the business environment has so I guess sorry we don't know what we don't know let's see what comes out but the paradigm and stuff is all going to change anyway because it will be really interesting through time to see how bold the competition managers are say the Premier League and therefore the stakeholders or shareholders within that which are the Premier League clubs whether they take the opportunity to impact maybe even across Europe take the opportunity that this brings to change things in a manner that make the financial aspects a little more controllable and that you and Eversley then start getting into salary caps and that sort of stuff because we will see reasonably quickly I guess how Premier League clubs are thinking when players come out of contract and whether they get picked up or not because I suspect we may see some mature Premier League footballers who perhaps don't really get offers they want to accept trying to hang on for jobs in China or something or maybe even the MLS or wherever but as clubs say well no we're not going to pay your 100 grand a week anymore because we can't afford it and this is something that needs to happen I think John and let me ask you this it's needed to happen for a while without a shadow of a doubt and what I'd like to see come out of this and it's something me and Perth have been banging on about certainly on our football daily show we do now when we look at the whole range of football not just everything is that you know this could be the time the football could reset probably not the right way but certainly pull things back get transfer sorry get salaries back down so that players aren't getting ridiculous money at 28 and 29 and average players aren't in 100 grand a week all really gets its finances together but let me ask you this John because this is an interesting one that me and Perth have been mulling over and going back and forth on do you see what's your opinion on transfer fees because we've been speaking and I know Perth's made some really good points the last couple of weeks of life we often pick these numbers out the sky for these players without being able to hold them to any kind of scale so is there an argument for transfer fees to just go like America and that money be well not all of that money but part of that money just be used on salaries or is it better to have like a salary cap so say say it was £100 million for every club and you paid if your top striker gets £25 million a year fair enough on the other the rest of your squad is divvied up you know is that either of those ways something you could see happening in football or do you think transfer fees are here to stay regardless? I think it's a long relatively short question but I think it would be a long answer and it's almost where you'd want four or five people sat round the table because I think it is such a diverse question really a personal view would be transfer fees are quite in the sense that they were just about attracting a player from club A to club B but they almost came about at a time when maybe slavery might not have been too strong a word with the control that football clubs had over the actual player so they literally were buying selling the player then Bosman comes along and says well even though I you can't control me when I no longer have a contractual agreement with you hence you've got the freedom of contract and all those sorts of things but the underpinning driver for all this is always supply and demand and I think what's got lost with football clubs and perhaps Everton in the past of we've been like this there's a confusion that well hang on a minute Everton have just bought Barry Cass for 55 million quid 150 grand a week and there is some correlation between though as I'm pretty sure if I'm the intermediary and I'm debating with Sasha Ryse Ansep or whoever it is Bill Kenright how much we're going to pay Barry I'm going to say but you've just paid 55 million quid for him that alone suggests his value to you and a player who's worth 55 million quid should earn around 150 and the debate but nobody else wanted to buy Barry Cass the demand was not there so how has the valuation done and I think maybe some smart financiers and analysts and the like need to think well and football clubs have done this of course and obviously we can play the money ball analogy about baseball but ultimately you need to be bold and say and this is what brands I think has quite tried to say early on in his tenure if we don't think a player is worth it we're not going to pay so that was almost a challenge to try and break this outside of supply and demand we're not just going to play to the tune of an agent who maybe he gets a percentage cut so he's personally motivated to drive all the numbers up but that's a brave decision to make if it means Barry Cass says no thank you then I'll stay where I am but of course what we're getting now is environmental conditions are changing because of C19 the finances will change and I think for the first time in many a long year perhaps decades there could be at least in the short period of for a short period of time almost back to the old days the power is not in the players it's not in the agents it's in the football clubs because they almost for the first time in a long while I suppose plead poverty we can't pay that because we haven't got it we're losing quite modest in evidence terms but we're losing 20 million a year simply because no one's in the stadium and some of our sponsorship deals are related to things being in the stadium inevitably BT and Sky Sports will see viewing figures go down because the games are going to be nowhere near as thrilling and exciting without the fan base in there I mean we are potentially approaching the first Merseyside Derby in history played behind closed doors it becomes people like me who go home it's a non event I might look for the score but quite frankly here and now I don't give a damn because football is without fans for me nothing and the danger is if those skirmongers we're not going to get inside stadiums to season 22-23 this game will be gone by then clubs won't be there I personally think it it will the game will be gone I personally don't think we'll be in the stadium before February I really don't at the moment I don't see it there's not going to be a vaccine ready so we're going to have to get used to very quickly if I'll be watching I watched every Bundesliga game last Saturday with no crowd it's your day job though isn't it your day job though I like to watch the football side of it anyway but it was different of course it was and there's things I'd do differently if I was in charge of the production because you've got to switch from actually being a football game to being a television game so you've got to cater to your audience and that includes for me background noise and making the stadiums look slightly different so it tricks your mind into not thinking there's nobody in there and stuff like that and I feel as though that's how football's got to looker if for certainly the next eight months until we can all get back where we love and being back at the stadiums but just on that anyway John just very sorry I was just going to say sorry before you move on I don't know if I'm atypical but I've CGI fans into the stadiums well that's something you've mentioned isn't it and that's what I'd do as well it's going to be better than cardboard cutouts isn't it it's got to be better than empty seats when you have empty seats in a football stadium and you can hear the players shouting each other immediately your mind switches off so your mind switches to pre-season friendly or under-23 game or training game so your minds are a different thing and this is what I'm saying for us for Sky and for BT and for NBC and for Amazon and everybody else they've got to create the illusion to us that the stadiums have fans in it or certainly there's fan noise and I know it'll be difficult to do and I get that there'll be a good percentage of people probably will lose interest I think you'll get your diards will watch their team and probably won't watch much else but if the TV companies can make it as appealing as possible in very difficult circumstances then I think it'll maintain people's interest and by that I mean making it look different CGI would be great for a green screen right the way around in the stadium and project crowd or certainly have noise or if it's ever to have the blue those blue like tarp all and things so you can't just see blue seats it just looks different and there's noise try to make it different so they've got real challenges as well not only have the players got challenges playing behind closed doors and making themselves get up for it which you should be able to do I mean you've played Sunday League or whatever playing behind closed doors you give your best doesn't matter to the crowd they're very different they've got to do it but just on to back on to the evidence stuff and the finances and you touched on it really there with the clubs having to almost cut the cloth accordingly with our revenue streams are down so therefore we thought we were having this money this has got two questions to it really also let's leave it at two separate questions first and foremost it's got an impact on evidence spending as in this summer the fact that things you know revenues will be down and revenues will be down for next season as well would you expect the club to not just evidence probably do you expect the transfer market to be a quieter one or deal structured differently this summer well one would expect is certainly going to be structured differently I mean as you're alluding to if the finances change let's have a sunny day plan yeah so just for our conversation now in our sunny day plan the only revenue that a football club loses is match day revenue they still get the TV money blah blah so Everton drop 20 million quid a year so maybe 5 or 6 million quid this year or this season and Liverpool or Man United are 4 or 5 times greater than we they will drop you know 5 times more so we'll drop this season maybe 5, 6, 7, 8, 9, 10 whatever it is let's give it a high number we dropped 10 million quid this season we dropped 50 Man United dropped more so materially their buying power is greater impacted than ours but that supply and demand thing will also kick in so transfer fees one would expect will be lower you know players who 5 or 6 months ago might be worth 100 million who's going to buy a player for 100 million now that's just not going to do it so it may be the status quo in the short term is maintained because the reduction in income is compensated for by a reduction in outgoings that we're talking about player salaries and transfer fees so I guess the players who have done best are the ones who signed new contracts in March or February so in our cases you know that would be DCL and whole gates and based on whole gates players who are about to sign new contracts or are coming to the end of contracts they're the guys who are going to have the problems and it will be those taking so-called lesser deals because they want to keep playing who will drive down the markets you know so you know if they I was about to say Theo or Tosan they both came in together so let's say they both go out together but I might have reasonably thought I can get out of Everton with a relatively low transfer fee because of my age and because of the length of time left on my contract and all that good stuff and I can go play for somebody on 50 grand a week because I've been used to more but I know I'm getting older and all those sorts of things but it won't be that now will it If he's lucky probably so an agent is going to steam in for this mythical Barry Cass and say we want this amount of money for Barry and they're going to say well we got we got a seasoned Premier League player here you know who's better older than Barry currently probably is going to play more often and he's only costing us 25 grand a week so what makes you think we should pay you 100? and even though that only shaves little bits off the deal yeah it does shave little bits off the leadership teams within football clubs can really make a difference now if they're up to performing in a more exciting market if you will a challenger market where there are no rules at the moment one might suspect the things which have been established over many years of the transfer fee is X therefore you expect the salary to be roughly about Y it's not going to be that anymore because every transaction is individual and God only knows what happens to players who are in and around contract renewal time who for very good reasons don't even want to play yeah because of family circumstances and all those sorts of things and there's so much guess work and we don't know what we don't know type cliches you could throw around this that it's not true but what I do know is at times like this those who are bold and have good insight which means they've got the process internally if you like to forecast the impact of decisions and therefore allow people to make decisions they're the ones who will come out the other end stronger and therefore now is the time for a Marcel Brands and a Carlo Ancelotti one because he's perceived to be good at talent spotting and all those things the other because his reputation with the track players and it might be those intangibles those almost subjective type reasons for going to a particular club might actually become more influential because the amount of money being paid might level off a little bit so you may get I mean you were talking about salary caps or whatever but we may find that happens naturally there will be a new levelling of what the right amount of money is to pay and because the top clubs in financial terms particularly those with the larger stadiums may take the bigger hit they may find a dilution of their buying power which is put it a different way those at the next level may find their buying power become more influential so being the top of the rest getting right back to the interview when you talked about you know Hummel doesn't compete with those other clubs sorry or deal with them doesn't compete with those other clubs but it is better than all the others then that could actually turn out to be reasonably significant not in financial terms but just a mindset where it puts us that was good you circled it there and a quick answer to this one should FFP be suspended relaxed for whatever for this year due to the pandemic in your opinion or does it need to stay in place stay in place okay okay that's fine I want a console that we can buy some midfield players but we'll see that's based on a potentially naive assumption that the largest shareholders pencil dip into their personal wealth if you got told that they're not prepared to do that would you still want it to be relaxed no but then I'd be questioning I'd be questioning what went on in the meeting with Carlo Ancelotti how they got him here and that's a conversation for a different day isn't it obviously but we can finish off briefly as a teaser for whenever the different day is that Carlo Ancelotti didn't know that scene 19 was happening and now they did the football club I think more important for our football club was to secure the new stadium and frankly if there's a choice between spending bucket loads of somebody else's money making sure that Brandon Moore happens I know which one I would prefer it's a long game How about one bucket load and two bucket loads on the stadium I just want to centre them if you feel that John to go home I think we have the ambition that we have in the owner and some of the people who are in his ear Usmanovs I guess of this world I'd like to think let's finish on a positive in my half full source of way we are potentially prepared to take risks because that's fundamentally what it is that other clubs may not be able to and other clubs will choose not to so we should get an advantage if we do that which is your point really that's a great way to finish John listen thank you so much for taking the time out mate to have a chat with us today so I'll let you get back to going and looking, choosing your seat in that stadium behind you cheers John stay safe have a good day big thanks there to John Blane from Everton Business Matters podcast make sure you check that out for joining us today make sure you give this video a thumbs up subscribe if you haven't already and if you want more great videos join us over on 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