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Good stuff Esk, the comparison chart really goes some way to displaying how far off we are from competing financially with those teams.
When looking at the comparison chart it is hardly surprising that we lag so far behind in Commerical income. We receive far less money from our shirt sponsor (Chang) and kit manufacturer (Umbro) than any of the other 6. Then add in the fact that we have sold the right for our merchandising and retail operations to Kitbag in exchange for a flat 3 million pounds a year profit, royalties from sales, and a town center retail outlet owned and operated by Kitbag.
Now the first two sources of income(Sponsor and Kit Manufacturer) are inherently tied to the last (Kitbag retail) as outside of the market penetration and visibility that we receive as a result of international broadcasting the next most visible tool we have for building brand awareness and reaching foreign markets is through the kits.
That means that moving forward, given that increasing commercial income is a priority and an opportunity to be exploited, I believe we are going to see that Kitbag deal ended before it is due to run its course in 2019.
When we signed the kitbag deal we were in a tenuous financial position given the restrictions Barclays was placing upon us regarding our use of an overdraft account. We had previously lost money on merchandising for a whole number of reasons, poor forecasting of demand leading to unsold stock being the largest of them. We also lacked the finances to be able to invest in opening a new club store in Liverpool One and required the Kitbag deal in order to do so. One of the major reasons the Kitbag deal was signed was because it took the risks associated with managing a retail operation and placed them into the lap of Kitbag. The thing about risks in business is that they are usually a reflection of an opportunity (the worst-case scenarios versus the best-case), sticking with this Kitbag deal has become a missed opportunity.
With Moshiri's takeover we are no longer hamstrung by our inability to invest in growing our operations and we are better able to accommodate the risks that are inherent in a retailing operation. Given that Moshiri made his money as a management consultant for Deloitte (and later Usmanov), I would be willing to bet that Moshiri knows the right people with the right expertise to manage a retail operation on a global scale such as Everton's would be. So now that we have the financial ability to accommodate those risks and access to the management expertise required to properly forecast demand and manage inventory I would hope that Moshiri will be seeking to end this deal prematurely and to capitalize on this opportunity. I believe that, if properly managed, we could see profits for this sector of Everton's commercial income greatly exceed the 3 million allowance in the accounts currently.
Regaining control of the retail and merchandising operations is to be seen as vital in marketing the club and growing our brand globally. One of the first things new fans here in North America do is buy the shirt to show off their support for the team and we should be exploiting that opportunity as much as possible and reaping the profits and benefits for ourselves.
Further, if we do get rid of Kitbag and manage to outperform their sales figures by moving retailing and merchandising in house we will see increased in the Sponsorship and Kit Manufacturer deals in turn grow to reflect the larger value of Everton's increased market penetration in global markets.
