The recent announcement that Alisher Usmanov and his company, USM, has been sanctioned by the UK Government has left many Everton fans wondering how the club’s suspension of its sponsorship agreements with the Russian-based operation will affect things in both the short and long-term.
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We’ve seen the effects of the Russian invasion in Ukraine spread far and wide into the sporting world. Manchester United recently announced they were ending their sponsorship with Russian airline Aeroflot and, more significantly, Chelsea owner Roman Abramovich announced he would be selling the club, bringing to an end his 20-year ownership.
I place Everton’s position somewhere in between those two scenarios. The club’s decision to suspend the sponsorship agreements with USM is not just the removal of an easily replaced partner as with the United situation, but equally the reality is that Usmanov is not, unlike Abramovich, the owner or major shareholder of Everton.
Everton manager Frank Lampard says the club are trying to support Ukrainian player Vitaliy Mykolenko as much as they can.
The club’s owner, Farhad Moshiri, is an extremely close friend, former business partner and confidant of Usmanov. The two are intrinsically linked and so too was the relationship between club and USM. It wasn’t just a commercial agreement; it was, before recent developments, a strong and close partner with long-term ambitions.
Usmanov’s insatiable desire for sport in its many forms, from athletics to fencing, along with Moshiri’s love of football in particular, has been a huge driver in their relationship and was what made them want to be involved in the most lucrative and exciting league in the world.
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How does the decision impact the club in the short term?
The USM sponsorship package of Finch farm, Everton’s training ground, is worth around £6 million per year, although the contract expires in the summer. Megafon, another company connected with USM, also sponsors Everton Women’s team as does YOTA, a Russian-based internet company also linked to USM. Together with further commercial agreements such as LED pitch advertising, branding and match day initiatives, their support added up to a sizeable chunk of revenue for the club.
Image: USM, owned by Alisher Usmanov, has sponsored Everton's training ground since 2017 until ties were severed this week
With Everton already in a ‘prudent’ financial climate due to indifferent recruitment within the £500m Moshiri has invested in his time at the club, this loss of income will impact the business, of that there is little doubt. Everton, not unexpectedly, would not put a ball park figure to their Russian-based sponsorship value, but together with the Cazoo main partner deal, it is hugely significant in commercial terms.
Then, too, there is the matter of the £30m paid by USM to secure first option on naming rights for Everton’s proposed new stadium at Bramley Moore Dock.
That money will already have contributed, at least in part, to the preparatory work already in progress at the site of the new ground, which is due to be completed for the start of the 2024/25 season. That money won’t be paid back, but USM’s first option on naming rights cannot be delivered in the current climate or going forward.
To summarise, in the short-term there will be a significant impact as a result of the action taken this week. How far that affects the club’s profit and sustainability position within Premier League regulations is unknown, but I understand other revenue strands are currently being worked on in order to increase the commercial strength of the club.
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What is the long-term outlook for the club?
The answer to this question is as unpredictable as it is in the real world at the moment. It’s difficult to imagine a scenario where Russian investors, or ‘oligarchs’, can return to the table in this country any time soon. That means after the loss of a favourable and lucrative partner, there follows an uncertain time for those at the club charged with guiding it through these troubled times.
Prior to Moshiri’s arrival, Everton experienced many financially challenging times and came through them – and they will need to do that again here.
Image: Construction has already begun on Everton's new home at Bramley Moore Dock
As far as the new stadium is concerned, there is no suggestion of anything but it continuing along the path it is currently taking. My understanding is that Moshiri is as committed to it more than he’s ever been, as the project is hugely important not only to the club but also to the city of Liverpool.
The financing of the ground, away from the naming rights issue, was always going to be coming from the external financial marketplace and that remains the case.
The project is a commercially viable one and exciting too for whoever ultimately completes it. There is no suggestion Moshiri will not see it through, and he himself made the decision on Friday to step away and distance himself from USM, in which he has a shareholding and was chairman. It is a company he helped to create – he is the M in USM.
Practically, the club will need to go out and find new partnerships and rethink their relationships going into a new era and a new home. That has never been easy, and quite possibly will be more difficult in the months and years ahead. With the USM partnership as good as over and main sponsor Cazoo due to be changed in the summer, the commercial department will have challenges ahead of them in an already competitive market.
Moshiri is not someone who communicates frequently, but he is a shrewd businessman in his own right and has talked passionately about his ambitions when it comes to his ownership of Everton. My information is that ambition remains strong and resolute. Crucially, after several failed managerial appointments, Moshiri and the board, together with the fans, are united in their belief that Frank Lampard represents a bright future for the club, one which needs to build.
The building of the new stadium is key to achieving that success – albeit without the assistance of Usmanov, and the name USM, adorning the stands on the banks of the river Mersey.
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