Everton face troubled future as new stadium plan rejected

Kenwright's search for buyer is hit as Government blocks scheme led by Tesco

Everton's plans to relocate from Goodison Park to a new 50,000-capacity stadium in Kirkby, which the club considered crucial to its attempt to keep pace with the Premier League elite, were dashed last night as the Government refused to give them the go-ahead.

The club had been hopeful that the proposals would be approved, creating a huge increase in potential matchday revenues and making Everton far more attractive to the prospective wealthy investors which chairman Bill Kenwright so desperately wants to find to maintain them as a force. But following a public inquiry the Government ordered into the project – a venture led by Tesco who would have built a 15,000-square metre store at the heart of the site – the Communities Secretary John Denham will announce today that it is to be rejected. The stadium, he will argue, will breach local shopping policy designed to discourage major supermarket chains sucking business away from town and city centres.

The decision leaves Kenwright's future plans for the club uncertain and it may become clearer this afternoon whether Everton, unwilling to comment last night before the Government's decision is published in full, have an alternative strategy. The news seeped out ahead of the defeat at Hull which leaves David Moyes' side four points off the relegation zone. "I have nothing to say," was Moyes' response on the stadium news last night.

The decision took some local MPs by surprise last night, as they had assumed that potential new investment amid tough financial times on Merseyside would weigh against retail planning policy. The Knowsley North and Sefton East MP George Howarth said: "I deeply regret this decision in a time of significant economic challenge to the whole of Merseyside during a recession."

The timing is grim for Everton, whose troubled start to the season suggests that the effects of possessing a sparse squad and lacking spending power is finally beginning to hit home.

The new stadium forms the core of Everton's "facility model" business plan. With Arsenal and Manchester United raking in triple the £900,000 matchday takings that Everton get from each game, the earnings gulf between the big clubs is growing by the week. Goodison, an ancient stadium with a mere 40,000 capacity, offers no prospects for expansion.

The Everton chief executive, Robert Elstone told The Independent last year that delays in the approval of the stadium were hampering the search for the buyer Kenwright seeks. "The green light will enable this club to compete at the top end of the Premier League far more than it would if we stay at Goodison," he said. "Any investor will look at that equation very closely." Tesco anticipated such profit that they were willing to subsidise the cost of building the stadium, by £52m, leaving Everton to find only £78m, to build the stadium.

The merchant banker Keith Harris, who was enlisted by Kenwright last year to help find a buyer, has said he has struggled because investors expect the value of a club to increase by 5 to 10 per cent every year, without them having to spend cash investing in facilities.

Knowsley council granted planning permission last year, but two months later the Government called in the scheme for a public inquiry after Sefton, West Lancashire, St Helens and Liverpool city council said it would suck trade away.

Denham's decision comes as Liverpool – who visit Goodison on Sunday – continue their pursuit of new investors to raise £100m needed to get their own Stanley Park stadium plans off the ground. It is equally critical to Liverpool's own model and though the rejection of Everton's stadium will raise the issue of a groundshare again, there has been no mood in support of such a proposal at Anfield.