Everton FC - Finances

[deipnosophist]

I run businesses. I have a connection with all of them. Many time, over the years, I have recognised that some operations, for their progression, require some fresh infusion...(capital/ skin in the game) ...which necessarily I cannot/can no longer provide. I pass the business baton. Without wishing to harp on, Everton Football Club's proprietors do not seem so inclined

 

[deipnosophist]

Ermmm... lads? ???

nice to see you here in the finance section...rare is the GOT thread that does not enjoy your not inconsiderable company

 

[blueblue]

I run businesses. I have a connection with all of them. Many time, over the years, I have recognised that some operations, for their progression, require some fresh infusion...(capital/ skin in the game) ...which necessarily I cannot/can no longer provide. I pass the business baton. Without wishing to harp on, Everton Football Club's proprietors do not seem so inclined

Do you own the businesses you run because I have never come across anybody who has just passed on their business simply because they no longer have the ability to manage, usually they fight for the last penny they can get for the sale or transfer.

 

[deipnosophist]

Do you own the businesses you run because I have never come across anybody who has just passed on their business simply because they no longer have the ability to manage, usually they fight for the last penny they can get for the sale or transfer.

Acquaint yourself with marginal utility of capital and report back to me

 

[deipnosophist]

Do you own the businesses you run because I have never come across anybody who has just passed on their business simply because they no longer have the ability to manage, usually they fight for the last penny they can get for the sale or transfer.

apologies...my previous response might have come across a bit highfalutin : I meant that in businesses (pl), there is only so much dry gunpowder (i.e. capital) to go around and one has to allocate its apportionment respective to relative return...hence marginal utility

 

[Steve Wigan]

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.

The Stones watershed may well have been passed, and its a good way of describing the events from an Everton perspective, but you are right to say that greater problems will face the club in the near future. It is possible/probable(?) that the clubs stance on Stones was merely flag waving and that he will be gone in January or next summer....this summers stance will need to be repeated each window into the near future at least, because we have enough prized assets on the field to keep the big spenders interested for a while. Success on the field is becoming almost a critical neccessity, as this will generate income , and it would be a mistake for the board to think that there is no problem because they could simply sell a player to steady the ship. Everton are possibly reaching a crossroads ( more a T junction!)were one way is all, and the other way is nothing.

 

[peteblue]

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.

Agreed but I would change that to (i) investment in commercial activities (ii) squad (iii) stadium.......the commercial activities at Everton have been poor since I was a lad, a very long time ago. We have to fight and compete on all fronts and in no way do we compete commercially. I said it years ago that the best investment we could make is into the commercial team and I still believe it today........

 

[bizzaro]

Agreed but I would change that to (i) investment in commercial activities (ii) squad (iii) stadium.......the commercial activities at Everton have been poor since I was a lad, a very long time ago. We have to fight and compete on all fronts and in no way do we compete commercially. I said it years ago that the best investment we could make is into the commercial team and I still believe it today........

Its no good making an investment into the commercial side if we don't have the commercial infrastructure within the stadium to utilise to support it.

 

[The Esk]

Agreed but I would change that to (i) investment in commercial activities (ii) squad (iii) stadium.......the commercial activities at Everton have been poor since I was a lad, a very long time ago. We have to fight and compete on all fronts and in no way do we compete commercially. I said it years ago that the best investment we could make is into the commercial team and I still believe it today........

I agree commercials have been a shamble since they ran out of Dixie's 60 goal mugs in 1929......

The reason why I say we must invest in the team is because changes in league position are much more meaningful in revenue terms than commercial income and gate income.

The excellent Swiss ramble proves it with this chart:

Falling from 7th to 11th might have cost us approximately £10 million depending upon how many times we are on TV. The same fall in league position under the new deal (assuming similar distribution) would cost £18 million. A move from 11th to 5th would see an increase in revenues of £26 million (assuming same number of TV appearances).

The team are our best bet in the short term of generating additional revenues, the new deal rewards higher places at the expense of lower places.

 

[peteblue]

I agree commercials have been a shamble since they ran out of Dixie's 60 goal mugs in 1929......

The reason why I say we must invest in the team is because changes in league position are much more meaningful in revenue terms than commercial income and gate income.

The excellent Swiss ramble proves it with this chart:

Falling from 7th to 11th might have cost us approximately £10 million depending upon how many times we are on TV. The same fall in league position under the new deal (assuming similar distribution) would cost £18 million. A move from 11th to 5th would see an increase in revenues of £26 million (assuming same number of TV appearances).

The team are our best bet in the short term of generating additional revenues, the new deal rewards higher places at the expense of lower places.

I agree the movement in revenue could be large and I am not suggesting not investing in the team, but a couple of million thrown at the commercial aspect could give a much bigger bang for the buck.....the attached shows that our Match Day and Commercial are way behind those we would compare a club of our stature against.....

 

[hibbo'sclass]

Probably missed something as I've trawled through the posts up to this point, but has anyone looked at the apparent £6m loan the club (not the Group) was due to repay within 12 months that doesn't appear to be noted in the accounts?

In the 2014 company accounts (EFC) accounts, the loans to be repaid within in one year were noted at £26.924m of which £20.924m was Vibrac per the notes leaving a difference of £6m. Can't find anything in the notes to see what this is about.
In the 2013 accounts, the divergence from the Vibrac loan is 10m - company shows total borrowings of £22.868m of which £12.868m was to Vibrac, £6m was repayable in under 12 months to person/persons un-noted and £4m payable in 1 to 2 years to person person's unknown ie a difference of £10m.

This isn't an inter-group balance because it would be washed out in the group accounts borrowings analysis (it isn't), it can't be a mortgage on the freehold property owned by the club as this appears to be vested in Goodison Park Stadium Limited.

Anyone got any ideas?

The problem with looking at this, is it then makes you look at interest paid in the P&L.

We know what the figure for the season ticket mortgage interest, £2,767,000 repayment less £968,000 reduction in debt giving £1,799,000 interest

We know that the VIBRAC loan should not be any more than 20924000 x8.8% ie £1,841,312 assuming that the interest on the full amount is charged at the stated rate on the full amount on day one and is all taken into the financials as non-refundable. Big assumption and willing to be shot down in flames over this.

So on the above loans and assuming I'm not shot down we have total interest of £3,640,312 whereas in the accounts we are showing £4,800,000, a difference of £1,159.688 which is presumably due to the un-noted loan.

Hope someone can put me straight on where I've gone wrong, but just feels strange to me.

 

[Brennan]

I agree commercials have been a shamble since they ran out of Dixie's 60 goal mugs in 1929......

The reason why I say we must invest in the team is because changes in league position are much more meaningful in revenue terms than commercial income and gate income.

The excellent Swiss ramble proves it with this chart:

Falling from 7th to 11th might have cost us approximately £10 million depending upon how many times we are on TV. The same fall in league position under the new deal (assuming similar distribution) would cost £18 million. A move from 11th to 5th would see an increase in revenues of £26 million (assuming same number of TV appearances).

The team are our best bet in the short term of generating additional revenues, the new deal rewards higher places at the expense of lower places.

It wouldn't cost us close to £10m being realistic, as Everton will always be more of a draw on TV than Swansea due to the size of our fanbase and the historic ties with other sides.

 

[The Esk]

Probably missed something as I've trawled through the posts up to this point, but has anyone looked at the apparent £6m loan the club (not the Group) was due to repay within 12 months that doesn't appear to be noted in the accounts?

In the 2014 company accounts (EFC) accounts, the loans to be repaid within in one year were noted at £26.924m of which £20.924m was Vibrac per the notes leaving a difference of £6m. Can't find anything in the notes to see what this is about.
In the 2013 accounts, the divergence from the Vibrac loan is 10m - company shows total borrowings of £22.868m of which £12.868m was to Vibrac, £6m was repayable in under 12 months to person/persons un-noted and £4m payable in 1 to 2 years to person person's unknown ie a difference of £10m.

This isn't an inter-group balance because it would be washed out in the group accounts borrowings analysis (it isn't), it can't be a mortgage on the freehold property owned by the club as this appears to be vested in Goodison Park Stadium Limited.

Anyone got any ideas?

The problem with looking at this, is it then makes you look at interest paid in the P&L.

We know what the figure for the season ticket mortgage interest, £2,767,000 repayment less £968,000 reduction in debt giving £1,799,000 interest

We know that the VIBRAC loan should not be any more than 20924000 x8.8% ie £1,841,312 assuming that the interest on the full amount is charged at the stated rate on the full amount on day one and is all taken into the financials as non-refundable. Big assumption and willing to be shot down in flames over this.

So on the above loans and assuming I'm not shot down we have total interest of £3,640,312 whereas in the accounts we are showing £4,800,000, a difference of £1,159.688 which is presumably due to the un-noted loan.

Hope someone can put me straight on where I've gone wrong, but just feels strange to me.

It's a very good spot and there's nothing obvious to point to. Very expensive form of debt whatever it is, worth asking at the AGM should the chance arise.

 

[bizzaro]

Probably missed something as I've trawled through the posts up to this point, but has anyone looked at the apparent £6m loan the club (not the Group) was due to repay within 12 months that doesn't appear to be noted in the accounts?

In the 2014 company accounts (EFC) accounts, the loans to be repaid within in one year were noted at £26.924m of which £20.924m was Vibrac per the notes leaving a difference of £6m. Can't find anything in the notes to see what this is about.
In the 2013 accounts, the divergence from the Vibrac loan is 10m - company shows total borrowings of £22.868m of which £12.868m was to Vibrac, £6m was repayable in under 12 months to person/persons un-noted and £4m payable in 1 to 2 years to person person's unknown ie a difference of £10m.

This isn't an inter-group balance because it would be washed out in the group accounts borrowings analysis (it isn't), it can't be a mortgage on the freehold property owned by the club as this appears to be vested in Goodison Park Stadium Limited.

Anyone got any ideas?

The problem with looking at this, is it then makes you look at interest paid in the P&L.

We know what the figure for the season ticket mortgage interest, £2,767,000 repayment less £968,000 reduction in debt giving £1,799,000 interest

We know that the VIBRAC loan should not be any more than 20924000 x8.8% ie £1,841,312 assuming that the interest on the full amount is charged at the stated rate on the full amount on day one and is all taken into the financials as non-refundable. Big assumption and willing to be shot down in flames over this.

So on the above loans and assuming I'm not shot down we have total interest of £3,640,312 whereas in the accounts we are showing £4,800,000, a difference of £1,159.688 which is presumably due to the un-noted loan.

Hope someone can put me straight on where I've gone wrong, but just feels strange to me.

The club's overdraft facility with the bank?

@the esk

 

[The Esk]

The club's overdraft facility with the bank?

@the esk

No mate, overdraft has its own line in the accounts and in fact we had a positive cash balance in the bank.