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2007 EFC Accounts

By Erik Dols :  15/11/2007 :  Comments (8) :
If I understand these figures correctly, losses and profits in last years more or less equal the net loss and profit on player trading in those years. Which would imply that Everton is running break-even, more or less, on 'normal business'. I do not know if I should be happy about that or not.

On one side, it's not as bad as the situation at Leeds was. They were throwing money out of the window and needed to play in the Champions League (and reach the last 16 at least!) to reach their break-even point before player trading. At least, that's what I always understood. The Champions League would give us the financial space to buy some extra big guns or to pay off loans, or both. Leeds just needed it to stay afloat.

On the other side, as long as we do not find some new source of money, there has to come a time when we need to sell more than we buy on the player market. Either we sell one of our biggest assets (Arteta, Cahill, Johnson, possibly Vaughan and Anichebe, and Yakubu of course but he only just arrived) or we sell four or five squad rotation players (Hibbert, McFadden, Osman etc). Both options don't look very attractive. Selling one of your best players is obviously not the right way towards silverware. And selling four or five squad players would mean you lose on squad depth, while I believe squad depth is for the first time in years at an acceptable level to compete on more fronts than just in the league. Again, not the right way towards silverware, or you should choose to sacrifice the league and gamble on (one of) the cups. Since the biggest money is made in the league, this would also mean you're taking a big risk financially.

One way or another, we need extra money if we want to remain a buying club. I agree that a new stadium (not necessarily Kirkby, could be the loop, a redeveloped Goodison or something completely different) will probably provide the extra money. But I can't see a new stadium being fully operational before 2011, and that's probably an optimistic timeline.

I'm afraid that as long as we don't qualify for the CL, next summer will see at least one of our highest rated players leave.

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Roger Trenwith
1   Posted 15/11/2007 at 13:10:18

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Don’t want to get into accountant-speak, but one could argue that the £9.4M loss is offset by the £10.4M Amortisation of Player Registrations. Why? Because in the current climate the influx of ever more TV money and the decreasing pool of good players available only serves to continually push up player values. An example is the Yak - even 2 seasons ago you’d be hard pushed to value him at more than £6m, yet we paid £11m!!
Surely the writing off (amortisation) of player registrations is simply a "paper" figure, particularly right now. Removing this would give us a profit of £1M, or am I missing something here?

On a more entertaining note, lets hope we get t’shite in UEFA Cup final and turn them over big stylee!! COYB
Glyn Withenshaw
2   Posted 15/11/2007 at 13:59:19

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In addition to the ever spiralling debts, the position in the accounts was as at the 31st May 2007.
I believe it also states in the accounts that since this date we have additional net transfer debts of a further £18.3 million.
Does this mean that our debt is now £84 million just as we are allso to get further into debt on a new stadium! Much as I’m pleased to see player improvements I do question how sensible it is to have such a level of debt?
Chris Briddon
3   Posted 15/11/2007 at 14:46:32

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I think you will also find that home grown players are given no value, So Vaughan, Anichebe, Hibbert & Osman have a current value of 0. Now if we sold them, they would make a signifcant increase on that number.
Stefan Tosev
4   Posted 15/11/2007 at 17:16:00

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Chris Briddon,

Thatis the point we will have to sell some of our players at some point in the future, Everton as business and club cant operate at loss every year
Paul Harrison
5   Posted 15/11/2007 at 17:31:55

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What i think has happened since Kenwright took the reins is that the club has been totally asset-stripped. Every piece of land, building, season ticket has been either remortgaged, sold or rearranged on a sale and lease back. Without huge external reinvestment the club could never fund a new stadium or even refurbish Goodison. Kenwright and Wyness are banking on Kirkby as the only option and their big pay-day... oh how cynical I am!!
Mick Mac
6   Posted 15/11/2007 at 18:46:40

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How much did FInch Farm Cost??
David Chait
7   Posted 15/11/2007 at 19:24:25

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Roger you are right... when I read Beardwoods last major report I didn’t see a bad picture... because I look at the results in trading terms, ie add back the amortisation of the players. Clearly the players are held at cost less amortisation and as such I bet the asset in the balance sheet is way understated and not really at fair value.

Saying that I think the results are not great this last year, but expect much better results with the new deal, which is clearly the basis for the new loan.

To sum up: I say add it back and look at the cash flow position. In his last report I was gagging for the cash flow, as all could do was hypothisise on where the cash went without it..but what I could tell is the debt is being used to buy players...

better stop now, I got carried away in the blueroom on this before...
Derek Thomas
8   Posted 17/11/2007 at 04:58:42

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It’s always nice to see the money side mentioned and in simple terms that even I can understand i.e. we more or less broke even,??? but sorry to take the wind out of your sails.

Sky provides money, the CL provides money, the spectators, me and you, provide money.

If stadiums provided money, BIG money, not conferences and concerts, especially new ones, then Bolton, Derby, Sunderland, etc etc would be awash with the stuff.

Success on the field provides money...Get the team winning on a regular basis and all this will follow.

Most of the Prem seems to be some sort of financial house of cards and if the football equiv of the Sub Prime market comes about then we’re all in deep shit and little good that it will do us, we won’t be the worst, we’ll just be one among many.

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