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The Mail Bag

To Spend or Not to Spend

Comments (27)

As we enter the silly season of football manager type speculation linking us to every player known to man, I am trying to see just why people say we have a lack of funding to bring in the quality players we so obviously need to challenge for the those coveted Champions League places.

If a club declares to the world that they have been taken over by a wealthy businessman, or have unlimited funds because of their financial backing by a wealthy American or Russian, then the price of the targeted player inevitably goes up. This could be a cunning plan by Moyes and the board to keep prices down ? plead poverty and then clubs wont hold us to ransom and demand over inflated prices.

For me, there are some real signs that we have got money to spend, and should invest this money in those players that will bring us the silverware we crave. Bill Kenwright has finally got to put his money where his mouth is and ensure that we can get to that next level. If he says he hasn?t got the money, then he lives up to his name of ?Billy Liar? or Billy Bullshit? or whatever else we can call him.

The evidence of funding being available is there for all to see:

? £42.1 million received from television (Sky) money. Source: Press Association

? £12 million from the failed Manny Fernandes bid at the end of last season. This money has never been spent and should still be sat in a bank account gaining interest.

? £5 million for McFadden?s sale.>

? £1.5 million as part of the deal that took Rooney to Manure (This will be less £500k if they fail to beat Chelsea in Moscow)

? £3 million in separate television money for various deals for our UEFA cup run.

? £11.52 million from the Premier League for our league position at the end of the season.

? £2.7 million as part of the new Chang sponsorship deal that was signed in January (£8 million over 3 years)

Despite all of the above figures I have not included gate receipts, merchandising, season ticket sales and other revenue streams. The grand total of the above figures comes to a staggering £77.82 million in income!

So, have we really not got a pot to piss in? Or is this just clever gamesmanship from our chairman and manager to keep our transfer target?s price down? As pointed out by other posters on this site, if Sunderland can be given £50 million to spend, they we certainly have money in there somewhere!!
Paul Cooke, Warrington     Posted 14/05/2008 at 16:03:40

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Michael Kenrick
Cool! £78M... sod the new players... for that, you can buy a nice new "mid-level" stadium in a nearby overspill town...
Jay Harris
1   Posted 14/05/2008 at 23:43:14

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Michael is it going to be "nice" too and you forgot to mention the benefit of being built on a landfill site so we can gas the opposition.
Paul Kish
2   Posted 15/05/2008 at 01:21:42

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Sorry, I know this is Football’s silly season but I must have missed something here.

We have by your figures taken 78 million in INCOME. Well, I’m no businessman by any stretch of the imagination, but from what I recall about basic accounting INCOME is used to pay the businesses’ COSTS.

So in Everton’s case stuff like..catering, security, travel, wages, police, electricity, medical expenses, bank loans, transfers, etc.

Take what’s left AFTER you pay bills and that’s PROFIT. That’s what we MAY have to spend IF we don’t have to put it aside for, as Michael puts it, that mid-level stadium.

Income is not how much money we have to spend. Over inflating people’s expectations of our spending power with unrealistic and inflated figures doesn’t do anyone or the debate over the issue any service. All it creates is angst, anger and distrust when people find out that Everton’s real level of transfer funds is no where near that level.

Can we please try and keep it real, over the next few months folks?
Erik Dols
3   Posted 15/05/2008 at 08:13:05

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LMAO you’re presenting money we didn’t pay for Manny as an income source.

I’m goign to buy a Bugatti Veyron. Oh wait, no I’m not. Hey, now I have £757,359 or so in my bank account!
Patty Beesley
4   Posted 15/05/2008 at 08:50:52

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You forgot to take off the wages we have to pay from thje money the Club takes in!! A large portion me thinks!
Shaun Brennan
5   Posted 15/05/2008 at 09:32:38

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Didn?t the Fernandes money to buy Yakubu borrowed on this or next season?

If only finance was so simple we would had £78mil with not outgoings!
Carl Warriner
6   Posted 15/05/2008 at 09:19:45

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Woh talk about shoot the messenger boys & girls, in Paul’s defence he is just trying to explain a few facts about where money could possibly be coming from this season and has he stated these do not include gate receipts, merchandising, season ticket sales and other revenue streams etc which fund fund player wages etc patty.

It is a fact that television revenue rose steeply from us earning 26.1 million last season to 42.1 million this season.

It just seems to be that anyone with a slightly optimistic view on here at the moment gets shot down quicker than Drogba!!!
Paul Cooke
7   Posted 15/05/2008 at 09:27:38

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Erik, if you were considering buying a Bugatti, then you would have to have the money in the 1st place, so yes, if you then decide against it, the money would still be in your bank!

The point I was trying to make was that I dont think we are as skint as everybody makes out.
Fred Rimner
8   Posted 15/05/2008 at 10:05:56

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Paul probably got shot down cos there is no point in estimating how many millions we can spend on player transfers. What’s the point of excitement - probably won’t be enough anyway.
Adam Carey
9   Posted 15/05/2008 at 11:19:03

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Paul, it would appear that the money for the Yak and Manny was based on loans authorised by Planet Hollywood. Given that Manny changed his mind, (or whatever really happened!), it is highly unlikely that that money was never borrowed. Would Earl still sanction it and would the bank still offer it?
Also, the McFadden money was not all upfront so you can knock a few million off there as well!
Down to £63M now...
Nick Coyne
10   Posted 15/05/2008 at 11:43:38

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Carl I’m with you pal. All Cookey has attempted to do is indicate some of the revenue streams that a club like ours could generate, but there appears to be an infatuation amongst some on this site that anything half way positive must be bullshit. The Board are corrupt or the manager is tactically naive and hopeless or Kirkby is shite!!

To all of the doubters, I am sure that Paul is aware that a budget of £78million was completely unrealistic, but was merely using, by his own admission, fairly limited maths to indicate that we should have money to spend in the summer.

However, the we-hate-speculation-and-all-things-slightly-optimistic-i-won’t-believe-it-until-they-are-on-the-back-of-the-echo-wearing-a-blue-shirt brigade will continue to view things as they do pal.
Erik Dols
11   Posted 15/05/2008 at 12:14:31

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I?m not a hater. In fact, I expect Moyes to have quite a large transfer kitty this summer (in the range of £20M, not £78M ;-) ) and I do see the point that we are not as cash-strapped as some people like to suggest.

I was just having a laugh about one particular part of the article which I found to be a bit silly. As others have suggested the money for Fernandes would have come from a loan and we probably didn?t loan that amount when the transfer collapsed.
Simple Simon
12   Posted 15/05/2008 at 12:58:21

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Yeah, good accounting. And what about paying our debt, players wages, tax, VAT, running costs, etc, etc? I wish you were my bank manager, Paul.
Paul Cooke
13   Posted 15/05/2008 at 13:02:11

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At no point during my comment have I said that we would have nearly £78m to spend on transfers, far from it.

I am not an accountant, nor am I a Club Chairman, I was simply trying to point out that due to the success of our team this year and increased income, we should be able to spend more money in the transfer market.
Tony Cunningham
14   Posted 15/05/2008 at 13:14:39

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Doesn’t the £42 million include our end of season prize money?
Dave Whitwell
15   Posted 15/05/2008 at 13:14:30

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I?m with Paul on this one and I am an accountant. Business thrives on 2 fundamentals financially, first and most important cash, secondly profit (in the case of a football club, this is more often and not the ability to pay future debts to the extent of not making a loss) assuming the shareholder is not in it to generate wealth (as Kenwright would have us know).

Therefore taking the revenue stream from Paul's sources, we should have substaintially improved our profitablity for this year, although we don?t know the impact of all the new contracts issued which are w/off over the period of the contract. The additional profit acts as 2 purposes it provides cash which can be used now, and secondly if such levels of profit can be deemed to be ongoing it gives security to a bank or owner to introduce more cash now by way of debt.

Therefore it is likely we should have a reasonable fund available, depending on how likely the Board sees our recent success continuing.

Tony Cunningham
16   Posted 15/05/2008 at 13:20:41

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Are we still entitled to any Rooney money? The constant rumours on here are that those clauses may have been cancelled as a result of Nev & Howard transfers.

Weren’t we loaned a large sum of cash for one year by a director last summer to finance our spending last year? Wont he want it back this year and this’ll be made easier since we didn’t spend it all on Manny.

Oh and since everyone else also got more money from Sky don’t forget to put all those transfer prices up a wee bit.

I’m sure we’ll still have a tenner to spend though
Paul Cooke
17   Posted 15/05/2008 at 13:31:31

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Try this link from the official website as confirmation that we will be receiving more money as part of the Rooney deal.

http://www.evertonfc.com/news/archive/boost-for-blues.html

Tony Cunningham
18   Posted 15/05/2008 at 13:50:51

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Excellent news... that’ll do nicely
Simple Simon
19   Posted 15/05/2008 at 13:47:15

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Dave: You might be an accountant, but as the owner of a business, I’m also aware that increasing turnover matters not a hoot if profits are still below what is needed to grow the business (i.e. buy more players). You’ve made a blanket observation about how things might work, but failed to mention associated risks. You’re a bad accountant!
jayharris
20   Posted 15/05/2008 at 13:43:05

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I may be wrong but was’nt the money for YAk and Fernades earmarked out of the 25 million SKY money last year.

I believe we all erroneously thought it was either a gift or a loan secured by Earl but turned out to be the SKY money which came late hence the late xfer activity.

If so then the point about the 12 million for Fernandes is still valid.
Simple Simon
21   Posted 15/05/2008 at 14:06:51

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Erik Dols: As well as the money we didn’t spend on Manny, We also didn’t buy Smith from Leeds. With interest, that would mean at least another £8m to add to the pot. I think next year we shouldn’t buy Ronaldo and Rooney. Hey, let’s not buy the entire Man Utd team. We’d be rolling in it!
Dave Whitwell
22   Posted 15/05/2008 at 15:36:48

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Simple Simon, I made a blanket observation based on the fact that we don’t know what the associated risks are, i.e. my mention of increased costs on the new contracts issued. Without having access to the management accounts it is impossible for us to summise what the real costs are. The simple point being that if Revenue is substantially above last year, given that the main trading costs, except for Player wages & finance costs (which I would guess are a substantial part of our overall costs), in theory should not be a lot different, therefore you would presume greater profits and hence more money available for players. Of course that ignores any money needing to be put aside for capital expenditure.

What I have done is try to give some insight based on what limited facts we do have, if that makes me bad then fine, I won’t bother applying for a job with your business!
Simple Simon
23   Posted 15/05/2008 at 16:05:16

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Paul Whitewell: you did indeed make the obvious link between higher turnover and, in consequence, higher profits. You then proceeded to suggest that, because of that, we were now in better position to take on more debt. In my book, you’ve not provided any insight whatsoever other than reiterate what anyone with half a brain, and without a degree in mathematics or accountancy, has already concluded.

Upshot: Bill can go to the bank and borrow more money based on last years accounts.

Great plan for the future!
Simple Simon
24   Posted 15/05/2008 at 16:20:29

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Sorry Dave, I meant Dave Whitewell. Your expertise in matter financial got me all of a fluster.
James Asquith
25   Posted 16/05/2008 at 11:40:47

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? £42.1 million received from television (Sky) money. Source: Press Association

- Fair enough.

? £12 million from the failed Manny Fernandes bid at the end of last season. This money has never been spent and should still be sat in a bank account gaining interest.

- This money was never in our bank account. It was a line of credit which was underwritten by Robert Earl. However before it could be drawn on for any particular purpose, Earl had to give the go-ahead. This was the reason for the delay between "Terms have been agreed for Gosling" and him actually signing on the dotted.

? £5 million for McFadden?s sale.

- Doubt this was all up front, knock off £2.5m

? £1.5 million as part of the deal that took Rooney to Manure (This will be less £500k if they fail to beat Chelsea in Moscow)

We have no way of knowing whether this has been written off as part of one or more of the transfers we?ve since been involved with from MU. Since we don?t know, have to assume it hasn?t.

? £3 million in separate television money for various deals for our UEFA cup run.

Where do you get £3m from? It?s been reported elsewhere that we?ve made a profit of between £0.5m and £1.5m on our UEFA cup run. I?ll take the higher figure of £1.5m for arguments sake.

? £11.52 million from the Premier League for our league position at the end of the season.

- As pointed out before, this is included in the first figure you gave of £42.1m. You can?t count the same money twice!

? £2.7 million as part of the new Chang sponsorship deal that was signed in January (£8 million over 3 years)

- You very rarely actually get the published headline figure from these sponsorship deals. There are all kinds of clauses based on performance, success, TV appearances, etc. Since we haven?t won anything yet, let?s call it £2m for now (I think that?s being generous to be honest).

So that gives a total of £49.6m (if my maths is right). As you say, we need to add in the Gate receipts, merchandising, etc, but even then I can?t see us having a turnover for the season much above £75-80m.

I think the operating costs in the last accounts were somewhere around the £58m mark, but since then various players have signed new deals which presumably upped their wages, plus the Yak, Baines and a couple of other players have signed in.

Of course McFadden and Stubbs have departed, but I still think it?s fair to say the wage bill will have risen significantly. Players (or at least their agents) know that the new TV deal means more income for clubs, and wage demands will be proportionately higher.

Remember that the money for Yak?s transfer was actually a loan, so the debt interest payments will have risen too.

Finally, I would suspect that there will be further installments to be paid on player transfers brought in over the last 2 seasons (e.g. AJ).

So all in all, and accepting that all the above is very rough, I can see us making anything between a £5m loss and a £15m-£20m profit on the year. Let?s plump for something in the middle - say £10m. That is a significant improvement over recent years. If it all goes into a transfer fund, we can probably spend headline fees of up to £25m (based on the fees being paid over a number of years and add-ons, etc).

Of course we actually need to pay these new players some wages, but we?ll be saving on Gravesen, Gardner, Wessels, etc. However you?d want any replacements to be better and therefore demand higher wages, so let?s say we actually only have £7m to spend, giving us a ?headline? figure of somewhere around £20m to go on fees - pretty much what?s being bandied about in the papers anyway.

Of course the normal doom-mongers will say we?ve probably made the £5m loss, and the eternal optimists will say we?re rolling in it. The truth is, none of us really know at all...

...makes me wonder why I bothered writing all this at all ;)
Andy Callan
26   Posted 16/05/2008 at 14:21:21

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What a complete load of shite.

What about wages and running costs of the club etc etc etc.......?!?!?!?!?

I don’t need to go any further do I....?!?!?!?!?
Dan Johnson
27   Posted 19/05/2008 at 11:38:07

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£12M for fernandes that was spent on Yakubu a few weeks later. I reckon Moyes will have £30M max.

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