Everton FC - Finances

[evo1878]

I think key to understanding a company's performance is the ability to reconcile the P/L statement and balance sheet to the cash flow statement.
So, starting at the beginning :
1) we booked 88.46mio TV revenue in 2014. But how much of this was physically received in the May 2014 fin yr? Are TV monies received in instalments or in a bulk amount (I've heard Aug 1)

2) what comprises the 31.5mio increase in intangible fixed assets (note 10 in the accounts)? McCarthy, Kone, Robles, McGeady cost 24.5mio (which reconciles to the 24.5 mio purchase of intangible assets in the Consolidated cash Flow Statement). So what was the residual 7 mio?

3)We sold Bidwell £1m, Amichebe £6m, Fellaini £27.5m and Jelavich £6m , totalling £ 40.5 m. The Cash Flow Statement describes us receiving 19.421mio. Presumably the 21mio is owed (and balance sheet debtors increased by this amount...). So that reconciles. But surely booked TV monies (some or all) were received after 31 May...where then is this debtor item?

4)Note 21 in the accounts (cash flow ) shows an increase in debtors of only 2,129mio. Pursuant of point3) above....Why ??

5) How are we treating loan fees/wages of loanees and compensation to wigan for RM and staff...in staff costs or other operating costs (to skirt FFP?)?

...that'll do for the moment

Surely we have someone within our fan base who has audited football clubs, if not Everton itself in the past and who could therefore exaplain what is permissible under accounting standards?

 

[deipnosophist]

My older brother went on Sat he stated it was £2.85 for a pie, and £4 for a pint of Chang - where's the food money going Bill?

Joking apart does the Sky money come in tomorrow on the 15th, the biggest cah payment ever in its history so how much do we owe on the Vibrec loan?

Everton earned 80.573 mio from the 2014/15 season. Does all this amount come in to Everton's bank account tomorrow (or Monday) ?

 

[Heathcliff]

Everton earned 80.573 mio from the 2014/15 season. Does all this amount come in to Everton's bank account tomorrow (or Monday) ?

IIRC Portsmouth were in big trouble paying wages and the PL leant them some of there tv/league money early one time so they could keep going and complete fixtures (the money they got was what they would have received in the next due installment)
Things have changed since then though so I have no idea if the system is the same. I suppose very few clubs can operate with having a full squads entire wages sat in the bank in full ready to be doled out through the year.

 

[terraloon]

this post was interesting giving a detailed breakdown thats easy enough to read.
http://swissramble.blogspot.co.uk/2014/12/everton-blue

this post was interesting giving a detailed breakdown thats easy enough to read.
http://swissramble.blogspot.co.uk/2014/12/everton-blue-sky-mining.html

the problem we have is cashflow. As you see in the post above we had 18.2(cash) in the bank before deals for lukaku barry etc. You can guarantee chelski would have demanded a fair whack upfront plus our normal add ons.
Our shirt sponsorship is 7th in the league, 5.3 mil compared to (fifth in the shirt league) spurs who get more than triple. Weve outsourced catering/merchandising, leading to futher imbalancing books. (those deals likely have merits i dont know)
Our credit rating 12/100 in feb 2011. Would likely stop us getting any decent loans of companies that do that sort of thing.
http://toffeeweb.com/sea

its not hard to see why we cant spend heavily on players.

In the commentary around the accounts I am sure I read that most of the cash held in reserve related to money received in advance namely season ticket purchases.

Again in the accounts there is a warning about the uncertainty in respect of maintaining borrowings at what was then existing levels

It's quite handy having the 2003 accounts available for they tell a story of just what a challenging position Everton is and how reliant it is on two major income streams broadcasting and transfer income

In view of the ongoing debate re big club small club thing I am going to use Some figures from both Everton and Chelsea. I use the football accounts not the groups accounts as in Chelsea's case their is income from I believe hotels so we wouldn't be comparing like with like

In 2003 Evertons income was £46,781k. Chelsea's was £75,135. Evertons turnover was about62% of Chelsea's

In 2014 Chelsea's turnover was £319million Evertons was £120.5 million . Evertons turnover was down to about 38% of Chelsea's


In 2003 Everton had gate receipts of £14.6 million, Chelsea's were about £35million. In 2014 Evertons were£19.3 million . Chelsea's were£71 million

We all know about the wealth that CL participation generates and that of course is reflected but the most telling area of revenue is sponsorship/commercial/advertising. In 2003 Evertons was about £6.9 million, Chelsea's was about £15-20 million.In 2014 Evertons was£12.7 million Chelsea's had grown to £109 million. So from about 30% of what Chelsea received in 2003 to about 11%now

 

[deipnosophist]

Excellent comparative analysis. I guess it emphasises the chronic underinvestment in Everton and the deleterious effects of such.

 

[SerenityNigh]

We are skint.

Please discuss this in the Board thread. This thread is for a technical discussion of the accounts and club finances. Thank you.

Everton don't show enough capital on the books and a quick glance at recent reports make me question whether Everton Football Club are a going concern

There you go @ijjysmith

 

[bobafro]

I'm imagining that the loaning (fees) of Barry, Lukaku and deulofeu contribute maybe 4 million

I would guess that the loan fee for Lukaku was probably close to 4m on its own (but i have nothing to base this on.. just a flat out guess)

 

[SerenityNigh]

They're all good questions some of which have partial answers in the thread.

There's an old saying in business turnover is vanity, profit is sanity, but cash is King.

Here's a business starved of capital that has tried desperately to grow out of increasing income despite costs growing at a similar rate, at least up to last year.

The biggest problem is that competitors are increasing their income at a faster rate and have the "luxury" of a positive balance sheet when they require additional investment in players.

In summary Everton's finances are improving as a result of the massive increase in broadcasting revenues. Unfortunately our competitiors are moving ahead faster for reasons already discussed.

This situation can only be resolved by a significant injection of capital.

Would be nice to hear someone make these points in an eloquent manner on a national radio show

 

[SerenityNigh]

I think key to understanding a company's performance is the ability to reconcile the P/L statement and balance sheet to the cash flow statement.
So, starting at the beginning :
1) we booked 88.46mio TV revenue in 2014. But how much of this was physically received in the May 2014 fin yr? Are TV monies received in instalments or in a bulk amount (I've heard Aug 1)

TV money is three pots: guaranteed split, TV appearances, final finish. I assume the even split is made in regular payments as mentioned previously. The TV appearances can only be paid after these appearances, but not sure how often these are paid out. The final finish money I assume is paid out at the end of the season. So it looks like these revenues are lumpy, even if you can reasonably project future revenues.

 

[deipnosophist]

I would guess that the loan fee for Lukaku was probably close to 4m on its own (but i have nothing to base this on.. just a flat out guess)

I'm thinking somewhere 3-4mio. And I reckon it might have been entered into 'other operating costs'. Barry was an odd loan...didn't we have to fork out 2mio when he signed on (despite him being out of contract)?

 

[SerenityNigh]

I'm not even going to pretend I understand where our money goes.

Really not bothered about WHO other teams have bough (Except one that I really wanted!) but every other team, and some Championship teams have spent more money than us.

This wouldn't irk me so much if we had a strong squad with no areas needed to be filled. But we clearly have. And the manager knows it.

It makes no sense to me in this time where we should have more money than ever that we are so far off the pace here.

A smart businessman pays no attention to how much businesses spend or what they purchase, but instead keeps his own plans and own valuations and buys what he wants when he wants. At least that's Warren Buffett's example. And it may not be entirely applicable to Everton's situation.

 

[ijjysmith]

A smart businessman pays no attention to how much businesses spend or what they purchase, but instead keeps his own plans and own valuations and buys what he wants when he wants. At least that's Warren Buffett's example. And it may not be entirely applicable to Everton's situation.

Sadly not mate.

Sport is a different world.

 

[SerenityNigh]

Would you consider selling a couple of the exagerated british premium players in the squad to arrest the slide into debt with the banks and so have Everton FC operating in the black? Might some short term pain equate to long term gain?
With a bumper tv revenues windfall on the near horizon should the club cut its costs and look to maintain premiership survival (and completely sack off cup interest) operate with a small squad and tread water for a couple of seasons and use the bumper financial surplus to pull the club out of the monetary crapper?

Are such financial gymnastics the last lingering thread of hope to turn the club as a going concern around. Pulling itself up by its bootstraps so to speak? (Not that I think theres a chance in hell the current ownership would dare try such a move)

Debt only matters if you can't afford the payments, the payments restrict your normal operating activities, or the size of your debt affects your ability to take on new debt. So, no.

 

[deipnosophist]

TV money is three pots: guaranteed split, TV appearances, final finish. I assume the even split is made in regular payments as mentioned previously. The TV appearances can only be paid after these appearances, but not sure how often these are paid out. The final finish money I assume is paid out at the end of the season. So it looks like these revenues are lumpy, even if you can reasonably project future revenues.

The 2014 accounts captured the transition to the new big money deal. We booked 86mio to income but I'm presuming about a quarter of this would not have been paid until Aug 2014 (or some date post 31 May balance date)...thus cash flow would deviate from accrual P/L. Of course, the final payment from 2012/2013 season would have been received in the May 2014 reporting period, but this would be a much lower amount. I'm guessing the 31 mio debtor item contains the TV monies booked but not received (along with the 20 mio still owed from the Fellaini, Jela, Vic sales). If so the increase in cash for 2014 (20.492mio) reconciles pretty well with the P/L statement.

 

[The Esk]

Would be nice to hear someone make these points in an eloquent manner on a national radio show

Well as the opportunity arises I will make further calls into radio stations to express my view at least.