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Player Valuation: £80m
It’s Deli Alli or Lingard isn’t it.
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Mutzo Nutzo
Player Valuation: £70m
is right. My top sauce reckons we had agreed terms with him and it was Norwich who wanted stupid money for him.
Celik it is then
Drico
Player Valuation: £60m
He does this great big pseudo analysis and only after that comes to the prescient point at the very end: if we sell a few players and Moshiri puts in a few more quid, we can spend €100m plus.Summer Spending?
With talk of £100m being available for summer transfers, a look at our projected cash position and how the close-season business might be achieved
PAUL THE ESK27/05/2021 0COMMENTS | Jump to last
With yet another “big summer” looming for Everton and claims that Moshiri will fund player acquisitions drawn up by Ancelotti and Brands by perhaps as much as £100 million, knowing what our cash position is, and knowing how we might fund player acquisitions this summer is of interest to all Evertonians.
Predicting cash flow from outside an organisation is a notoriously difficult task. However it is possible to give a range with reasonable accuracy. The accounts providing a starting point and provide information such as opening cash balances and amounts due to be paid and received in the following twelve months. It is also reasonable to predict operating revenues and costs, the main difficulty is in predicting cash flows from transfer activity and any changes to creditor and debtor positions throughout the year.
So what is Everton’s cash position?
The 20219/2020 accounts showed a cash position of £56.4 million as at the 30 June 2020. That sounds pretty healthy and with incoming transfer spend of £67.38 million in the transfer window one might assume that Everton’s finances were relatively healthy in the early days of the pandemic.
However various liabilities were due to be paid in 2020/21 including repayments of loans, £58.7 million and deferred payments to HMRC of £40.16 million. Trade creditors due were £65.4 million and trade debtors £55.6 million. Thus cash movements out of the club of £108.66 million. If we assume 50% of the transfer fees from last summer were paid at the time of the transfer, that adds another £34 million, making a total of £142.66 million.
I have projected cash outflows of £37.5 million from normal operating activities, and it is expected that continued costs relating to Bramley-Moore may be as high as £20 million.
As a result there is close to £200 million of negative cash flow out of the club before finance and investing activities are considered.
It is known from the details surrounding the share placement that Moshiri provided £50 million in November 2020 and an additional £50 million just after the share placement, therefore providing £100 million of new cash.
The remaining negative cash flow will therefore be funded by existing cash reserves (£56.4 million as at 30 June 2020) and new borrowings from Rights and Media Funding. It is believed we have credit facilities of £80 million with this funder. If we used all of this facility (and the new charges added at the beginning of May suggest we are close to that). In addition, 2021/22 season ticket receipts of at least £10 million will be received. This suggests we probably have cash balances of around £45 million. TV broadcasting money will also be received but given they are to meet operating costs and wages I am not including them in any calculations.
However the cash balance of around £45 million cannot just be spent on transfers, the club continues to lose money on day to day operations – my projections suggest around £3 million a month. Additionally, the club has future liabilities to meet including net £23 million on previous transfers, plus the outstanding £34 million (assuming last summer’s transfers were paid over two years).
Thus any war chest for incoming transfers must be met from one of three sources, (i) an increase in borrowings (ii) the sale of players or (iii) further capital injections by Farhad Moshiri.
Let’s look at the possibilities:
(i) an increase in borrowings. Highly unlikely in my opinion given the club will continue to lose money on its day to day operations for the foreseeable future, our wages and operating costs outstripping expected income. The level of external borrowings will also be of concern to potential lenders re Bramley-Moore.
(ii) A sale of players. As in recent years, Brands will continue to be charged with the task of moving expensive players on – a task made difficult by the performance levels of those on offer and their contract demands in a post pandemic environment. Walcott, Bolasie, Besic, Pennington, and King have left/will leave the club as free agents. Whilst the reduction in wages is welcome, the club receives no compensation from their next clubs. It is possible that we receive offers for Bernard, Kenny, Delph, Tosun (although still injured) and Gomes, however being realistic, the fees are not going to be high if indeed their contract terms could be matched elsewhere. In the context of bringing in new players, relying upon the sales of these players seems fraught with risk and minimal return. That leaves us the sale of sellable assets. Of the existing squad Moise Kean seems the most likely early sale (selling him before June 30 would assist Everton’s Profit & Loss account for this financial year). What sort of fee? Perhaps upwards of £40 million? Useful, but again not sufficient to meet Ancelotti’s acquisition plans. So who else? We are now looking at core players, the players ideally we would like to build a team around not dispose to potential opponents in future European competitions. I suppose Richarlison is the most likely candidate. Reluctantly from my perspective, but a fee of £70 million plus, if achievable, would probably represent good value if re-invested in productive players.
(iii) Further funding from Moshiri. There is speculation that Moshiri will provide funding of £100 million for the acquisition of players. I think this has to be treated with caution. Whilst it is true there are an outstanding 33,333 shares priced at £3,000 each which are at his disposal, it is my understanding that this was ear-marked for his contribution to Bramley-Moore, or in the event it is not required a further conversion of existing shareholder debt into equity. Either scenario would not provide additional funding for player purchases. In addition, spending £100 million on say four players would add something in the region of £45 million to our annual costs and therefore losses (assuming £5m a year wages for each player and four year contracts).
Summary
It is clear that Ancelotti expects support in the transfer market and to be fair to Moshiri, he has continued to fund transfer activity from his own pocket, especially when we have not been able to dispose of player assets. But each year it gets increasingly more difficult to keep adding costs to a business that currently has limited upside in terms of revenue (especially with not qualifying for Europe). We already are a heavily loss making business and in the absence of a massive increase of revenue we will continue to be so.
For me, the sale of Moise Kean and Richarlison (however reluctantly I type that) are the only viable solutions – gross receipts of over £100 million and a reduction in wages and amortisation costs for the two (I’d estimate at over £20 million a year savings) would give the space and the cash resources for Ancelotti’s acquisitions; Moshiri throwing £100 million into the club without player sales would just produce greater financial problems down the road.
Captain Spreadsheets has transmogrified into Captain Obvious.
If Carlo thinks Kean and Richarlison are dispensable, then it's pretty clear that he'll be spending some serious wedge in the summer and that Moshiri will top it up as needs be. There is no big insight needed to get to this point of view. Carlo isn't going to allow his reputation to go down the toilet because the Super League Six have imposed self-serving rules to pull up the drawbridge. Hence his attacks on FFP in recent months. Moshiri isn't going to risk losing Carlo. He didn't lure him here because Carlo took a shine to the charms of Formby Beach. All will become clear by August. We will know how high the Moshiri ceiling will be by then - and how competent Brands really is...
FTY
Player Valuation: £80m
Brands doesn’t seem keen on the Dutch market does he. Doesn’t actually seem keen on any market other now im thinking about it
Oasis1878
Player Valuation: £30m
“Tottenham Hotspur (@SpursOfficial) Tweeted: The Club can confirm the departures of Danny Rose and Paulo Gazzaniga following the conclusion of their contracts.
We thank Danny and Paulo for their service and wish them well for the future.
#THFC
️ #COYS”
Oasis1878
Player Valuation: £30m
Tottenham tweeted earlier today Gazzaniga was leaving along with Rose so he’s now a free agent
FTY
Player Valuation: £80m
Used to post here and yeah they did, if he was still sourced you’d think he’d have used that for views on toffee that which he doesn’t seem to have done
catcherintherye
Player Valuation: £80m
I think both know people at the club. If I was a betting man, I'd say Toffee TV will get some stuff passed into them.
I doubt that Leon Bailey and leaving emojis tweets would cover it though. Think he just likes Bailey.
CahillsCornerFlag
Player Valuation: £70m
Reckon we’ll sign that Zeki Celik as our right back, good age, good stats, just won the league. Problem being he’ll do what nearly all Turks do when they land in England which is forget how to play footy.
Ah, ok, didn't see that. Who would you prefer Romero or Gazzaniga?
CahillsCornerFlag
Player Valuation: £70m
Not sauced, but he’s a big Bailey fan based on ToffeeTv videos, and for good reason really as Bailey is boss. He does some very good videos looking at stats of potential signings alongside Andy, another good blue.
Oasis1878
Player Valuation: £30m
No probs, can’t remember the last time I saw either of them play tbh. Romero is 5 years older and has a dodgy knee I think so probably Gazzaniga. But Pickford will start whoever comes in won’t be
Everton are rumoured to be weighing up alternative targets to Max Aarons after talks to bring the highly-rated full-back to Goodison Park from Norwich ended without success.
According to Fabrizio Romano, football correspondent for The Guardian and Sky Sports Italia, there is no chance of the 21-year-old joining his former team-mate Ben Godfrey at Everton amid whispers the club balked at the £30m asking price.
In the meantime, there is renewed talk in interest from Marcel Brands in Lille right-back Zeki Çelik who has been linked with the Blues before.
Ridle Baku of Wolfsburg is another name that has been bandied about in connection with Everton but there is, as yet, no reliable speculation suggesting he is a solid target for the club.
According to Fabrizio Romano, football correspondent for The Guardian and Sky Sports Italia, there is no chance of the 21-year-old joining his former team-mate Ben Godfrey at Everton amid whispers the club balked at the £30m asking price.
In the meantime, there is renewed talk in interest from Marcel Brands in Lille right-back Zeki Çelik who has been linked with the Blues before.
Ridle Baku of Wolfsburg is another name that has been bandied about in connection with Everton but there is, as yet, no reliable speculation suggesting he is a solid target for the club.
We'll probably sign both and put them both on the bench
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