ToffeeWeb - Season 2009-10

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Should we be debt free?

I'm not sure I totally support what I am about to write but it occurred to me as an "option" to attempt to improve the long-term future of our beloved club.

Estimates on our debt are around £30-40m as far as I hear from other people. In theory, having sold Lescott for £24m and if we were to sell other assets (Felli for a loss £8m, Anichebe £3m, Vaughan £3m, etc.), we wouldn't be far off being able to pay off the debt. That being said, I do realise that more often than not, one doesn't receive the full amount of a transfer fee in one go.

The point is this, if we did do this, I am quite confident that we have the basic groups of players (with a couple of cheap, more mature, additons) to survive in the Premier league. On the one hand it would be a backward staep, but on the other, wouldn't being debt free allow us to plan our progression a little better and retain our club as a profitable business?

I suppose the question is how much would clearing our debt save us each year? £2-4m. I know this is a thought that will be shot down in flames, but it just made me wonder if life without debt would give us a better foundation to progress, even if it meant sacrificing our current progress to do it.

Could we be a club turning a regular profit each year? Could we generate enough cash to start to climb back up the league again? Could we attract the buyer we always wanted?

I don't know really... But I do know that the fact our debt increases each year worries the hell out of me. And that thought is battling with my other thought that I am kinda enjoying the consistency Everton have been showing season on season.
Gareth Mercer, Sunbury Posted 24/08/2009 at 08:30:23

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Jimmy Saville
1 Posted 24/08/2009 at 14:44:46

We are mortgaged up to our eyeballs thanks to Kenwright and cronies. This wasn’t the case under Johnson, for all his faults. Time for a change at the top. And quick.

Jimmy Saville
2 Posted 24/08/2009 at 14:46:14

Great, 5th and cup finalist one year! Then survival the next year.

When does the gloom end?

Nick Parker
3 Posted 24/08/2009 at 14:47:35

Any money we have got is being kept for The Tesco Dome which will turn us into the next Southampton, Coventry etc etc.

We need to protest, get a petition going, mass boycott a match... in fact, whatever it takes, because we are a great club... but not for long the way we are going!

Ciarán McGlone
4 Posted 24/08/2009 at 14:54:11

£30-40 mill?

Aye, about 3 years ago!

Peter Griffin
5 Posted 24/08/2009 at 15:02:37

Gareth — I’m sure our board would be delighted if they were in as little debt as you state. Sadly, I think if you put a 1 in front of your £30-40M you would be a lot closer to the truth.

If you look at the sky 4 they are in huge amounts of debt eg. Utd £680 million approx. Yet they all have a far bigger turnover than ourselves so there debt is manageable.

We need a takeover and not fucking investment like BK keeps stating.

Jason Heng
6 Posted 24/08/2009 at 15:09:43

OS says "Chairman Bill Kenwright has worked tirelessly to get the best deal for Everton, achieving a substantial increase on Manchester City’s initial offer."

So BK’s not lying about working 24/7 to bring in "investments".

Jimmy Saville
7 Posted 24/08/2009 at 15:17:30

Bet that Kenwright is knackered!

Franny Porter
8 Posted 24/08/2009 at 15:39:28

I don't watch Everton because we are a well run club who could turn a profit. I go because I love the club, love football in general and I WANT TO BE ENTERTAINED!

Right now Gareth, neither of us are getting what we want :(

Paul Saleh
9 Posted 24/08/2009 at 15:42:09

Kenwright and the board Out! — 40,000 fans can't be wrong,

See if he works tirelessly on solving that one.

Ellen West
10 Posted 24/08/2009 at 16:15:20

"The basic groups of players (with a couple of cheap, more mature, additions) to survive in the Premier League"

Debt or no debt, we will still have trouble making signings no matter how cheap and mature they are... How the hell did we manage to sign Yak and Andy Johnson?

Dan Brierley
11 Posted 24/08/2009 at 16:04:13

It's incredible that people make up how much debt we are in. £130-140 million? What a load of shite. See below taken from 2008 EFC financial statement:

When we incorporate the annual interest charge of £3.9m (2007: £2.9m), principally arising from the servicing of the securitised debt and the bank overdraft, as well as interest receivable, the accounts show a pre tax breakeven position (2007: loss of £9.4m).

Borrowings for the year have increased to £39.5m (2007: £29.2m) reflecting the increased investment in the playing squad, however, £23.1m (2007: £24.0m) is not due for repayment for more than five years. The net debt position now stands at £36.8m (2007: £26.4m).

As a result of the above trading including transfer activity the balance sheet shows a net liability position of £19.8m, unchanged
from the prior year. However, it should be noted that the balance sheet contains £9.4m of deferred income in relation to advance season ticket and lounge membership sales which will be released to the profit and loss as games are played during the 2008-09 season hence will not require repayment. In addition, £23.1m of borrowings are not repayable for more than five years and the balance sheet attributes no value in respect of the increasing number of home grown players such as Tony Hibbert, Leon Osman, James Vaughan, Victor Anichebe, Jack Rodwell and Jose Baxter.

In terms of cash flows, the cash inflow from operating activities was £10.6m (2007: £2.7m). After net payments for interest of £3.8m, net capital expenditure (including expenditure on player transfers) of £16.9m and net loan repayments of £0.8m, the decrease in cash for the year was £10.9m (2007: decrease of £4.7m).

So you were accurate with your initial guess of £30-40 million Gareth. But the audited accounts are all lies according to some on this site. Apparently the board are taking all the money out of the club, and sitting on their piles of gold in the underground bunker....

Jay Harris
12 Posted 24/08/2009 at 16:21:26

Gareth it was stated at the AGM (I think) that our debt was now over £75 million having been over £60 million last year.

Most fans don't realise that, besides putting NO MONEY IN and selling/mortgaging any assets we had, Kenwright has also presided over operating losses for most of his tenure, the only highlight being when we made £26k last year with the Sky windfall money.

In fact, if we hadn't sold Rooney when we did, there was a suggestion that the banks may have called the loans in.

Anyone still in love with Luvvie?

Ciarán McGlone
13 Posted 24/08/2009 at 16:46:40

Dan,

That statement is not current... it expired as relevant in April 2008.

Dan Brierley
14 Posted 24/08/2009 at 16:51:40

The report was signed on December 5th 2008. Where is April coming from? But you're right, it is not current. Statements like ’£30-40 million? Aye about 3 years ago!’ is far more accurate.

Ciarán McGlone
15 Posted 24/08/2009 at 17:19:16

It wasn’t meant to be accurate - it was meant to be flippant.

April is the end of the reporting year.

Dan Brierley
16 Posted 24/08/2009 at 17:38:08

So can you please update us on the current financial status of EFC them Mr McGlone? Jay thinks over 75 million, Pete Griffin is thinking 130-140 million. Any advances?

I found this guide by the Guardian taken from each clubs financial statements. Make your own opinion about how much we are in debt in comparison to other clubs....

http://www.guardian.co.uk/football/2009/jun/03/english-premier-league-debt

Richard Dodd
17 Posted 24/08/2009 at 18:47:02

Blimey, Gareth, you'll be saying "Tenth is good" next! That used to get me into a lot of trouble!

The stuff I'm hearing from Goodison this week is even beginning to worry me!

Ray Robinson
18 Posted 24/08/2009 at 19:35:29

Whilst I like the idea of our being totally debt free in the current economic climate, I wonder if I’d ever have bought a house without a mortgage? Businesses need to take on manageable debt to expand. Football clubs need to do likewise. I don’t think its our debt necessarily that’s holding is back — it’s the lack of investment.

Kirk McArdle
19 Posted 25/08/2009 at 07:37:03

Whilst it would be great to be debt free the only chance of that happening is if another Abramovic came from under a stone and bought us, cleared the debts and provided transfer funds and a new stadium. That is not going to happen. Also if we used player sales to clear a debt how long would it be before we borrowed money again for transfer funds. It would take a few season to collate money together for team building. Another thing is if we were to pay off the loans / mortgages against Everton FC the banks / institutions would include penalty payments for early repayment against interest lost. Lets face it football clubs have to be run with debt.

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