Everton FC - Finances

[Kiwi]

I do hope folk aren't placing too much faith in some Twitter accounts that give as much opinion as they do fact.

If we give Twitter transfer rumours caution, then I suggest we do the same with financial digging on Twitter also.

If we're talking re @Watched Toffee, he does some good stuff with regards to finding and using specific publicly available resources on the clubs finances and stating facts. But he goes off into opinion and conspiracy driven by coincidence or speculation which I disagree with and think is unnecessary. The facts are a condemnation in itself

 

[terraloon]

Not sure from where you have derived that assertion...prepaid items might appear in operating revenue (and cash flow report) but I cannot see where this is specifically referenced

Page 30 of the 2013/14,accounts a sum of £12.2 million-in respect of 2014/15 season tickets is shown In the accounts.

 

[deipnosophist]

Page 30 of the 2013/14,accounts a sum of £12.2 million-in respect of 2014/15 season tickets is shown In the accounts.

well spotted...effectively this prepayment constitutes a favourable movement in working capital manifesting itself in a positive cash flow. It is booked to P/L in the season to which it applies. Assume (for simplicity) that no such recurring prepayment occurs going forward then gate receipt booked revenue will be greater than actual cash received by that 12.2 mio amount. My projections presume similar prepayment levels going forward. So, yes you are right in saying that the projections carry a 12 mio favourable 'presumption'. Even greater reason for fiscal prudence/conservatism!

 

[The Esk]

Assume (for simplicity) that no such recurring prepayment occurs going forward then gate receipt booked revenue will be greater than actual cash received by that 12.2 mio amount. My projections presume similar prepayment levels going forward. So, yes you are right in saying that the projections carry a 12 mio favourable 'presumption'. Even greater reason for fiscal prudence/conservatism!

However, you are right to assume similar prepayment levels going forward as the club always attracts season ticket holders on the "early bird" deal.

I suspect if the balance sheet looked better then the considerable discounts offered on early purchase of season tickets may not be so great in future years and therefore the prepayment levels may fall. However that would be less of an issue because of balance sheet strength.

 

[deipnosophist]

However, you are right to assume similar prepayment levels going forward as the club always attracts season ticket holders on the "early bird" deal.

I suspect if the balance sheet looked better then the considerable discounts offered on early purchase of season tickets may not be so great in future years and therefore the prepayment levels may fall. However that would be less of an issue because of balance sheet strength.

Any ways you cut it, the refrain remains the same : the TV money has been a massive boon in righting Everton's (necessarily) 'selling club' profile. But, (and given uncertainties beyond 2019) that is all it has has done....it has effectively bought time. Yes, we can retain our talent but we cannot take any long term quantum leap forward.
My fear is that the Board do not recognise the TV money as the temporary chimera it is and try to 'blue sky' the value of their shares on the back of it, without taking cognisance of the very significant capital investment any potential buyer will need to sink into the Everton FC business.

 

[terraloon]

well spotted...effectively this prepayment constitutes a favourable movement in working capital manifesting itself in a positive cash flow. It is booked to P/L in the season to which it applies. Assume (for simplicity) that no such recurring prepayment occurs going forward then gate receipt booked revenue will be greater than actual cash received by that 12.2 mio amount. My projections presume similar prepayment levels going forward. So, yes you are right in saying that the projections carry a 12 mio favourable 'presumption'. Even greater reason for fiscal prudence/conservatism!

I read quite an interesting article about the risks involved when clubs increase their number of season ticket sales as clubs move toward achieving capacity at their stadiums.the number of sell outs at Everton is increasing year on year with no real noticeable up lift in gate receipts. Everton clearly took a major policy decision to push the number of tickets available and target youngsters. On one hand a sound move but in commercial terms the article suggests such an approach is far from savvy.
The evidence is that 'football tourists' spend by far the greatest on refreshments and club merchandise .In addition the profit per seat is greater when sold on a game by game basis.
There are clearly some positives in front loading your income and yes it's cheap money but it masks the true cash position in that in Evertons case for instance approx 60+% of a seasons gate receipts are recived before the season starts meaning even greater reliance on TV money
I know some see the increasing TVmonies as being a game changer and yes as the clubs debt position changes but all that's going to happen is that those dealing with PL clubs will demand more and players will likewise make greater demands the dilemma for Everton is that there is no noticeable growth in other income streams so nothing will change in terms of pecking order or indeed the market that Everton trade in .the projected £19 million pa available for player purchases is not likely to fuel progress and over reliance on devopling your own is a huge risk
The Stones saga is a watershed. The next 12-24 months are probably far more critical than many realise

 

[The Esk]

I know some see the increasing TVmonies as being a game changer and yes as the clubs debt position changes but all that's going to happen is that those dealing with PL clubs will demand more and players will likewise make greater demands the dilemma for Everton is that there is no noticeable growth in other income streams so nothing will change in terms of pecking order or indeed the market that Everton trade in .the projected £19 million pa available for player purchases is not likely to fuel progress and over reliance on devopling your own is a huge risk
The Stones saga is a watershed. The next 12-24 months are probably far more critical than many realise

Glad to see another considered post on the true challenges Everton face financially in the next few years.

The idea that the increase in broadcasting revenues makes Everton a more competitive force in the Premiership is entirely false. Yes the increase in revenues provide some breathing room for a heavily stressed balance sheet but as you correctly point out the facts are:

1. We do not seem able to grow other incomes streams at a time when our competitors non-broadcasting income streams are growing like crazy.
2. The increase in broadcasting revenues in themselves will not be enough to meet the cost inflation of acquiring and keeping the very best players.
3. The performance payments of the new TV deals further increase the disparity of payments between top performing and poorer performing clubs.
4. The absence of any working capital on the balance sheet other than that provided by debt means we cannot develop the squad beyond any excess income generated by the businees (limited -see above) whilst our major competitors use their balance sheets to greatly enhance their squad.
5. With all of the above pressures we have no hope of funding any stadium developments or moves, nor make any investment in commercial activities.

All of the above means only one thing. We need investment. I'm sorry I keep harping on about this, but we need investment and we need it now. We need it now because (i) we need to spend now, and (ii) the value of the existing equity is unsustainable given the competitive pressures. Failure to attract investment in the next 12 months will prove hugely costly and dilutive to existing shareholders (assuming existing shareholders are not subscribing for new shares).

We passed the Stones watershed, but frankly there's an even bigger one coming up.

 

[bizzaro]

Glad to see another considered post on the true challenges Everton face financially in the next few years.

The idea that the increase in broadcasting revenues makes Everton a more competitive force in the Premiership is entirely false. Yes the increase in revenues provide some breathing room for a heavily stressed balance sheet but as you correctly point out the fact is:

1. We do not seem able to grow other incomes streams at a time when our competitors none-broadcasting income streams are growing like crazy.
2. The increase in broadcasting revenues in themselves will not be enough to meet the cost inflation of acquiring and keeping the very best players.
3. The performance payments of the new TV deals further increase the disparity of payments between top performing and poorer performing clubs.
4. The absence of any working capital on the balance sheet other than that provided by debt means we cannot develop the squad beyond any excess income generated by the businees (limited -see above) whilst our major competitors use their balance sheets to greatly enhance their squad.
5. With all of the above pressures we have no hope of funding any stadium developments or moves.

All of the above means only one thing. We need investment. I'm sorry I keep harping on about this, but we need investment and we need it now. We need it now because (i) we need to spend now, and (ii) the value of the existing equity is unsustainable given the competitive pressures. Failure to attract investment in the next 12 months will prove hugely costly and dilutive to existing shareholders (assuming existing shareholders are not subscribing for new shares).

We passed the Stones watershed, but frankly there's an even bigger one coming up.

@the esk

Reminds me of my '18 months' on the stadium post in January-ish.

It was derided on here. With the usual suspects mocking it.

But your echoing it pretty loudly I am delighted to see.

 

[The Esk]

@the esk

Reminds me of my '18 months' on the stadium post in January-ish.

It was derided on here. With the usual suspects mocking it.

But your echoing it pretty loudly I am delighted to see.

Yes, I remember it well.

But there is a difference - you see the stadium issue as the enabler. I see capital as the enabler. With capital the priorities should be (i) squad (ii) investment in commercial activities and (iii) assuming there is sufficient capital, the stadium.

 

[deipnosophist]

I read quite an interesting article about the risks involved when clubs increase their number of season ticket sales as clubs move toward achieving capacity at their stadiums.the number of sell outs at Everton is increasing year on year with no real noticeable up lift in gate receipts. Everton clearly took a major policy decision to push the number of tickets available and target youngsters. On one hand a sound move but in commercial terms the article suggests such an approach is far from savvy.
The evidence is that 'football tourists' spend by far the greatest on refreshments and club merchandise .In addition the profit per seat is greater when sold on a game by game basis.
There are clearly some positives in front loading your income and yes it's cheap money but it masks the true cash position in that in Evertons case for instance approx 60+% of a seasons gate receipts are recived before the season starts meaning even greater reliance on TV money
I know some see the increasing TVmonies as being a game changer and yes as the clubs debt position changes but all that's going to happen is that those dealing with PL clubs will demand more and players will likewise make greater demands the dilemma for Everton is that there is no noticeable growth in other income streams so nothing will change in terms of pecking order or indeed the market that Everton trade in .the projected £19 million pa available for player purchases is not likely to fuel progress and over reliance on devopling your own is a huge risk
The Stones saga is a watershed. The next 12-24 months are probably far more critical than many realise

You, my friend, have 100% nailed it ... you are a very astute Evertonian

 

[bizzaro]

Yes, I remember it well.

But there is a difference - you see the stadium issue as the enabler. I see capital as the enabler. With capital the priorities should be (i) squad (ii) investment in commercial activities and (iii) assuming there is sufficient capital, the stadium.

Maybe we can meet somewhere in the middle esk ?

I see stadium as priority (i).

 

[deipnosophist]

Glad to see another considered post on the true challenges Everton face financially in the next few years.

The idea that the increase in broadcasting revenues makes Everton a more competitive force in the Premiership is entirely false. Yes the increase in revenues provide some breathing room for a heavily stressed balance sheet but as you correctly point out the facts are:

1. We do not seem able to grow other incomes streams at a time when our competitors non-broadcasting income streams are growing like crazy.
2. The increase in broadcasting revenues in themselves will not be enough to meet the cost inflation of acquiring and keeping the very best players.
3. The performance payments of the new TV deals further increase the disparity of payments between top performing and poorer performing clubs.
4. The absence of any working capital on the balance sheet other than that provided by debt means we cannot develop the squad beyond any excess income generated by the business (limited -see above) whilst our major competitors use their balance sheets to greatly enhance their squad.
5. With all of the above pressures we have no hope of funding any stadium developments or moves, nor make any investment in commercial activities.

All of the above means only one thing. We need investment. I'm sorry I keep harping on about this, but we need investment and we need it now. We need it now because (i) we need to spend now, and (ii) the value of the existing equity is unsustainable given the competitive pressures. Failure to attract investment in the next 12 months will prove hugely costly and dilutive to existing shareholders (assuming existing shareholders are not subscribing for new shares).

We passed the Stones watershed, but frankly there's an even bigger one coming up.

Another massively astute Evertonian...great post

 

[bizzaro]

Another massively astute Evertonian...great post

Ermmm... lads? ???

 

[The Esk]

Maybe we can meet somewhere in the middle esk ?

I see stadium as priority (i).

If there's sufficient capital then all three can be enacted concurrently. However in the absence of sufficient capital, then I prefer my order, which whilst dependent upon success on the field to grow revenues, actually achieves the primary objective of Everton Football Club - 11 guys in blue winning football matches and silverware.

 

[bizzaro]

If there's sufficient capital then all three can be enacted concurrently. However in the absence of sufficient capital, then I prefer my order, which whilst dependent upon success on the field to grow revenues, actually achieves the primary objective of Everton Football Club - 11 guys in blue winning football matches and silverware.

Yes but is it sustainable?

My option is sustainable as it generates additional revenues in order to then do what you want to do