If this article is a pre-emptive excuse for the board then I am disgusted. They supposedly had the money to sign Fer. They supposedly had the money to pay for Ofoe on loan. Has this money disappeared???

We have loaned out four players including Barkley who is now back since January. All of these loan outs saved money for the club. Surely there MUST be money for the summer.

Why does this skinflint board hide behind Dave Moyes and let him cop the flak? Put your hands in your pocket like the fans do and invest in the club.

What has he borrowed against? Surely the few recent purchases have all been made against recent sales.... Rodwell, Cahill, Bily etc...

If he was doing all this in the name of EFC with the intention of improving our lot, then he is making a piss poor attempt at getting the fans on his side.

He tells us nothing, pretends he doesn't know where all the money goes, and thinks it is all in our best interests. if you believe that then you are probably dafter than him...

The Fer deal was on the never-never — hence they didn't go for it. Negredo was a phantom bid.

The real issue is the reason for the debt:

Gross mismanagement by our board. Some might say "it's Goodison Park" but I ask again, who is responsible for the state of Goodison and for the lack of investment over the last 13 years?

Clearing the debt will give us a bit more breathing space but until the underlying problems are removed, we will continue to live hand to mouth.

Without tax planning he would have had more than a few million per year and almost £10 million over his contract after tax. However, with tax planning, he could have received tax relief on his investment in Everton, thereby helping Everton without damage to his net financial position.

We haven't sold anyone over the last two windows, transfers broadly break even. Therefore over this season and next we are still probably £5m down — don't expect big spending. Any transfer fees, as Peter Johnson once said, "are running around on the pitch".

I think the gate is inflated by cheap/ concession tickets which have been popular. Good to get junior blues through the door, but £100 vs £600 is a fair difference. So I wouldn't be surprised that gate receipts haven't moved much, if at all. Hope I am wrong as I say, but...

A) We are going to sign some (world class) players,

or b) we will have the best serviced lawn mowers in the northwest.

Vote now.

#All messages are charged at their normal providers rate#

According to the accounts, we have taken out a loan which is secured against next seasons TV revenues, this replaced a previous facility which had to be repaid in August 2012.

Took me one minute to find this information.

And they are also prepared to pay Manchester City Council £300m for the stadium. But we have to be careful what we wish for.

Even the Radio Merseyside Sports team are now pouting the Everton Spin. I give up.

Steve I would love to know what it is that the local media know that we as fans obviously don't, but surely they have some knowledge to keep towing the corporate line without question, mind you if it helps the Dark Side then it is little wonder that they don't question the Board or its motives.

Also (I may be wrong) but I am sure the high-ranking games like the Shite and Man Utd cost £40+ now. I'm not sure exact being a season ticket holder and I cannot be as speedy as you as I do a lot of posting on my iPhone, hence the spelling, so it's a ballache looking for facts as quick as I could on a computer.

Bloody marvellous, isn't it? Be careful what you wish for at Board level, but let's get rid of Moyes because he hasn't won a trophy despite having both hands tied behind his back.

We get the club we deserve.

Aren't the accounts you refer to up to the end of May last year and the loan in respect of this season's TV income? I think Wally was asking about next season's TV money?

Please clarify.

http://www.keioc.net/index.php?mact=News,cntnt01,detail,0&cntnt01articleid=405&cntnt01returnid=15

No wonder the economic system is in meltdown when 'old-fashioned' values are given short shrift and modern buy now and pay later values are the order of the day.
I'm sure the accountants will say that tax avoidance and low interest loans are prudent, but that is negated by a lack of moral responsibility and good-housekeeping.

Due to their own short-sightedness the club will have to continue in the same manner for the next 5-10 years. The David Moyes will he or won't he situation is yet another smoke and mirrors ploy to avert the focus from their unbelievable mismanagement of a football club.

Bill Kenwright can do nothing about the situation apart from buy time for himself and his cohorts although you would think even they would initiate a strategy that would help to alleviate our indebtedness, even if meant going through a couple of barren seasons. We may have to accept lower league positions and a lesser quality of players and teams, but if that results in a financially healthier club then it would get my vote.

Can you please particularise the policy of 'heavy investment in players' that you apparently think our board implemented prior to Kirkby?

I'm becoming more and more stunned by some if the patent garbage being posted on these pages over the last few weeks..

Just maybe......

If that is the case, and it's a very big if, then I wouldn't blame him for telling Kenwright and the Board to stick it.

"...they invested heavily (for us) on players..."

This Board have not put a single penny into the Club since they arrived in 1999. Nothing. Zilch. Zip. Nichts. Zero. Nada.

Stating the clear truth does not make me a pedant. Given that the Board has not invested a single penny in the club, what is the point of them? In what way have they – not David Moyes – improved the Club since 1999?

If you asked Bill Kenwright where he thought the club was going to be in five years' time, what do you think he'd say?

I was attempting to highlight that they are looking after their own interests rather than the club's.

That's the situation we're in now, the NET debt is £45 million meaning that after we've sold ALL the assets on our books (i.e. players) we still owe £45 million.

Extract from 2012 accounts: Net debt at year end, representing borrowings less cash on deposit, increased slightly to £46.0m (2011: £44.9m) however £18.7m (2011: £20.0m) is not due for repayment for more than five years.

Which club accounts have you got £70 million from? Also your statement about the debt stands after selling players is incorrect. The balance sheet showslittle value to homegrown players, and those that have amortised over a period of time, such as Baines, Jagielka and Fellaini.

The debt is large, and continues to increase. Running at a loss, increasing the overdraft to pay the season ticket loan. All grim stuff.

Everton brought to you by wonga.

This is simplified, before anyone tries to engage me in a debate about the difference between cost and value etc ! You can also only amortise what is in the balance sheet to start off with, but if we had put the Everton 'brand' on the balance sheet, Bill's antics would be busily amortising it as quickly as possible......

As per the latest published accounts, the debt which the club is carrying is approx £75 million, the net debt is £46 million.

So, in a football club, my understanding is the player would be the asset to the club on its balance sheet, the asset becomes worth less as his contract runs down over time. This reduction in value would be amortised / depreciated (written off) through a club's income statement over the course of a players contract.

I think Baines, Fellaini, Jagielka and most of the other players of that era are fully amortised now. Admittedly, those three aside, there is not much value there. So they don't show up on the balance sheets as assets, yet their high wages are in the expenditure column.

The thing that is frustrating, is the chorus of 'look how much the debt has increased!!!' Yes, it's true. But nobody mentions, it has grown proportionately with the turnover: more money coming in; more money to service the debt. This model is also representative of the entire Premier League. So every club is badly managed? Or are we merely playing by the rules set by the market we are playing in?

There is also this focus on the reduction in fixed assets. Which again, is also true. But so what? Where do you want the money? Tied up in investments, or out there on the pitch? I don't know if people have seen what has happened in the markets over the past 5 years. You may have heard of something called the financial crisis which has wiped hundreds of billions off people's 'assets'.

And we get the wonderful "We need some business acumen, and a long term plan" — How do you know there is not a plan? Because the club have not posted it through your letter box asking for your approval, you say there is no plan? If there wasn't a plan, how are we still going?

And, last but not least, the beautiful "We predicted this long ago, but nobody listened." Predicted what? we would still be in the shit financially? Who on earth was saying "Don't worry, lads, in a few years we are going to be making profits of £50 million a season"? Nobody, we all knew that financially nothing will improve. So these 'forecasts' just seem to be self-righteous nonsense with no foundations. I would argue that financially, we were far worse off the time we HAD to sell Dacourt, Matterazzi and Collins — arguably our three best players during that period.

There is no doubt that financially we are not well off, and there is nothing on the horizon that is going to change that. But that is the reality of the league we play in, and the reality for the other 99% of professional football clubs in the UK. I would love nothing more than to see Everton back at the top of the tree... but, until the rules of the game drastically change or we get taken over by a billionaire, nothing is going to change. Business acumen means fuck all, when you are up against people willing to pump in hundreds of millions without a penny in return.

However, and perhaps someone can help on this, Fellaini, for example only, was worth £15M, say, but in the last year of a, say, 5-year deal would be worth £3M. So, his real value is a lot more, let's agree on that, so what is the tax treatment please?

And additionally, how is this apparent loss in his value accounted for, please?

All-in-all, the players' values are not as transparent as they could be, but I assume Barclays hold a fixed and floating charge over the Company/club, and they will have professionally estimated values as part of their support of, for instance, the overdraft.

Someone, please add a few words of wisdom...

We have no plan to modernise Goodison and not enough money to build a new stadium. That from my point of view is where I believe the club has been mismanaged.

I suppose there are lemmings walking towards the edge of the cliff who question the reasons of why they leap off the edge, but then they say to themselves, "Well, that's what everybody else is doing... so we may as well follow suit."

Is it as Bill says — no-one is buying football clubs — or is greed preventing the sale and potential progress?

You could say that the grand masterplan all along has been to just let Moyes run with it...... buying and selling to craft a team out of nothing in the hope that he might break into the CL gravy train..... but then again, they could've just put our dog in the chairman's seat, and he would've delivered precisely the same outcomes.

http://bleacherreport.com/articles/1573294-everton-fc-4-biggest-reasons-the-club-hasnt-been-bought-yet?utm_source=newsletter&utm_medium=newsletter&utm_campaign=everton

And even if Moyes pulled off the miracle and got us onto the CL gravy train, is there any guarantee that he'd be given the money anyway?

See the heading above that, Fixed Assets, Intangible Assets, well that's our players value in the books as I said.

"But what about our homegrown players?" you cry. Sorry, I forgot Hibbert, Osman and Anichebe are worth £60 million........each

But Fellaini is worth £30 million you say? Well not to me, you're desperate for cash and having a fire sale and want to get your highest earner off your books? I'll do you a favour, £10 million paid over 5 years and my hand has just been snatched off by BK.

Truth is, the players are worth nothing to a buyer as they could get injured tomorrow and never play another game in their life. And if a buyer wanted to recover his money by selling the players, there'd be no club left, so it would be self defeating.

To start with they won't deal with anyone associated with KEIOC or Blue Union or they may just decide not to pay the rent as it's a fans trust who are hardly going to turf them out on their ear?

Looking at a single figure in a balance sheet does not give you the full picture. If you read only that figure, then according to the report we have paid £70 million in debt in 2011 also! It's obviously not possible.

I think the bit we are interested in, is borrowings. So, according to the report, we owe a total of £48 million borrowings (commonly called the debt by many people), of which £26 million is due this year.

What we don't know is: How much has already been paid? I would suggest that, by virtue of the fact we didn't have to sell in January, we had the funds available to cover that £26 million.

And then you start talking rubbish about homegrown and amortised players being worth a combined £10 million. If we are in a 'quick-fire' sale to pay off debt, why was nobody sold in January?

And you value Fellaini £5 million less than Jack Rodwell? Madness....

And who are the susidiaries of the Group? A subsidiary is a company that is owned by the parent company. So the Parent Company of Everton FC are borrowing money from a company that they themselves own? What is that company? What do they do? Where do they get their money from? Who are their directors and shareholders? Are they A BVI company?

And because they are owned by Everton you dismiss that we owe them money when the accounts clearly show a liability? br />
And according to your accounting definition we only owe money to people that we have borrowed from, not including creditors? Creditors are not people that are owed money in your world? In everyone elses world debt is what you owe, not just what you borrow. Creditors ARE people that you borrow from, only you don't receive money from them as a cash loan, you receive goods or services which you have to pay for at a later date.

Dan, if we don't do 'quick-fire' sales, where did the Arteta money go? Bellefield? Rodwell? (who is the reason why we didn't have to sell in January). I'll tell you, to partially pay the losses we make each year, they aren't really the net loss as reported in the accounts as you have to take into account the sales of assets without which the losses would have been greater and in reality continue to be greater.

I don't value Fellaini at anything Dan, the buyer will do that, I'm just saying that because YOU think he is worth £30 million doesn't mean that is what someone else will value him at or what he will be sold for (I wouldn't sell Rooney for less than £50 million ring a bell?). And if buyers know the financial dire straits that Everton are in they will drive a hard bargain. Not to mention current form, injury and the players desire to leave etc. that will devalue the sales price. Do you think City now think that Rodwell is worth what they paid for him? or even Lescott who they are selling for £4 million and taking a £20 million hit on?

I didn't say anything about our players being worth a combined £10 million. I don't know where you get that figure from as the accounts show £24 million?

That`s immoral for an Evertonian like BK, so we should storm every theatre in which his productions are playing if ever that were to happen!

[Why does an afternoon in the Freshy make me so militant? It must be the Abbot (5%)!]

Richard, I think your #211 scenario is the most likely.

Someone like Fellaini, in terms of being an 'asset', his £15M value is depreciated over the life of his contract, so in simple terms, £3M is amortized each year. (This is not so much a tax treatment per se, as the object of the clubs books is to make a loss — and pay no tax!!!) The 'apparent loss' is accounted for by debiting that particular pot of £3M... but the key word is 'apparent' — it's not a real loss of money, just an accounting trick (alright, convention).

I very much doubt that the Bank's overdraft facility would be tied directly to individual players' valuations... more another accounting pot (one carrying a big negative number) that is there to cover day-to-day operating costs throughout the year.

In terms of asset value, the players are massively undervalued. They are treated like machinery that is wearing out, and there is absolutely zero value recognized for homegrown players — until they are sold!

Big plus to the balance sheet! Same with Fellaini at or near the end of his contract, when, in accounting terms, he is considered to have little or no book value... but hey Chelsea are gonna shell out £25M for him. Income, straight to the bottom line.

Perhaps at least now someone who understands it better will now chime in that I'm full of shit!

Not sure on player values. A player could break a leg and be worthless, or he could just be a transfer flop.

Yes, tax is paid on transfer fees:-

HMRC EIM64115 - Tax treatment of Association footballers: share of transfer fee.

A transfer fee is a payment made by the old club on transfer of a player from one club to another. These payments can arise in both Association and Rugby football. They are chargeable to tax provided you can show that, in relation to the particular club concerned, the payments "though not obligatory, are expected, are generally asked for, and are usually accorded" (Corbett v Duff (23TC at page 778), see EIM00640). This will usually be the case as regards Association and Rugby League footballers. Such payments are taxable even if they are illegal under the Association or League rules.

The same principles apply in relation to payments to professional Rugby Union footballers. However, overt professionalism in that sport is relatively new. The existence of a custom, where one exists at all, will therefore be less easy to demonstrate.

In the rules of the Scottish and Irish Football Leagues the shares of transfer fees paid to players are described as payments by way of reward for loyal and meritorious service. Under the Southern Football League rules the payments are regarded as shares of presumed accrued benefits. In all cases, the amount is generally based on the number of years and fractions of years of a qualifying period of service with that club. Where a share of a transfer fee is paid to an Association player by the old club see EIM64135.

In the English Football League, transfers between clubs entail the new club paying the League a levy of five per cent of the transfer fee. Signing-on fees are payable to the player at the discretion of the new club and will normally have been agreed between the player and the new club during transfer negotiations. The signing-on fee payable to the player is stated in the contract and is normally payable by equal instalments over the period of the contract, which may sometimes include the period over which there is an option to extend the contract.

Where the player is subsequently transferred at the request of his club, any unpaid instalments of the earlier signing-on fee are payable immediately. But where the player requests a transfer he forfeits any such unpaid instalments unless the management committee is satisfied that his transfer request was made on reasonable grounds.

Instalments of signing-on fees are chargeable to tax on receipt.

I think it would follow tax treatment of other intangible assets. EFC get tax relief on the transfer fee amortisation, but would pay corporation tax on any gain made where proceeds exceeded book value. If you look at the post-Rooney accounts, EFC didn't pay any tax on the gain, as this was offset by rollover relief from the acquisition of other players (from the past I'd guess).

Further, with £72m overdrawn profit and loss reserve, I wouldn't expect any tax payable soon, regardless if Baines, Fellaini or whoever was sold.

If I owned 25% and did the same thing (and I have not randomly picked that number), is there a requirement that the beneficial owner is recorded anywhere?

ps: I mentioned my masterplan the other week. If I own a share, I get a Wembley ticket; if I have a season ticket, I get a Wembley ticket; if I have both, I still get just the one. Just before the Wigan game, I was happily telling everyone I could about how clever I am.

The loan is not really repaid or payable on demand, and as long as the lender is happy to renew. Terms may differ, for example the interest rate.

This is the exact issue facing Cyprus now. The rolling loan has to be either repaid or rolled over, but the World has moved on and in that case before Bankers will let them have a renewal they want assurances that the Country can service the debt and then that the Country is well run financially, bit like Everton FC's bankers at overdraft renewal time.

#642: The explanation is a little too banal for me: I was hoping for something far more salacious...

The name 'Virgin', according to Branson (in his autobiography), arose from Tessa Watts, a colleague of his, when they were brainstorming business ideas. She suggested Virgin – as they were all new to business – like "virgins". The original Virgin logo (known to fans as the "Gemini" or "Twins" logo) was designed by English artist and illustrator Roger Dean: a young naked woman in mirror image with a large long-tailed serpent and the word "Virgin" in Dean's familiar script. A variation on the logo was used for the spin-off Caroline Records label.

Strangely, them Yanks don't recognize the word "amongst'... a bit like 'whilst'...

Under GAAP players are treated as trading stock and brought to account at cost price. Fellaini comes in at £11mil whereas Big Vic is nil.

They sit on the balance sheet as current assets(stock on hand) as they can be sold at any time regardless that they may be under contract. Someone comes in with the right amount of cash and it's a sale. This is reflected in the P&L and this is the treatment that occurred when they sold Rooney, so they reported an operating profit based on player sales. Players are tangible assets as they can be sold for cash. It's football; it's a business and this is how they balance the books.

(2008, 09). Accounting for Football Club. StudyMode.com. Retrieved 09, 2008, from http://www.studymode.com/essays/Accounting-Football-Club-165074.html

A) Ultimately, who owns the biggest shareholdings?
B) Who controls them?
C) What is the connection with the Loan facilities Everton take?
D) Who is the friend of the club and where are their tax liabilities based?

And, lastly, is it? D is B, (who is also A) he owns part of C which is based, in the British Virgin Islands. The Company lends Everton money at high rates and pays no/little tax on the money they receive.

Or am I off my head?

Unfortunately, we now need to get a little technical in order to understand the concept of amortisation, which is how accountants reduce the value of assets over time. In this case, we mean footballers.

At the end of a player’s contract, accountants consider that a player has no value, as he is allowed to leave the club on a free transfer. It’s probably easier to comprehend with an example. Man City signed Yaya Toure for £30 million on a five-year deal, so the annual amortisation is £6 million.

In the club accounts it then has to report how much it views each player's worth has declined each year. So for example Coventry signing Freddie Eastwood for £1,200,000 on a four year contract costs the club £300,000 per year. This is what is reported as 'amortisation' in the club accounts. At the end of the contract the player can just leave on a 'free' so he is viewed as potentially no worth to the business after that.

This 'amortisation' only covers the costs for players bought in. So Kevin Thornton, for example, did not have any effect on the amortisation costs of the club, as he was never bought from another club. Also once a player has finished his initial contract he stops being counted. The other way to look at amortisation is that it is the average amount being spent per year on bringing new players in.

In 1997, the Accounting Standard Board (ASB) issuedFinancial Reporting Standard (FRS) 10, Goodwill and Intangible Assets, which came into force in the UK in December 1998. One important feature of FRS 10 is that it has removed considerable reporting discretion in requiring that all directly and indirectly purchased intangibles should be capitalized at cost. The International Accounting Standards Board (IASB) soon followed by issuing International Accounting Standard (IAS) 38, Intangible Assets

More recently, the Financial Accounting Standards Board (FASB) issued SFAS 142, superseding APB 17 that systematically addresses the definition, initial measurement and subsequent treatment of goodwill and other separable intangibles.

The treatment of investments in players’ contracts by UK football clubs has not been uniform until the issuance of FRS 10, which became effective in the UK in December 1998. This standard governs accounting treatment of goodwill and other intangible assets and equally applies to listed and private companies. It requires that all purchased intangibles should be capitalized separately from goodwill and that all intangibles shall be amortized over their useful economic lives, unless useful life is indefinite. Intangibles with indefinite useful life should be reviewed for impairment every year. The transitional arrangements of FRS 10 require the reinstatement of intangible assets previously purchased separately, which were expensed (eg, previously expensed player contracts).

Prior to FRS 10, UK football clubs could elect between capitalization and amortization of players’ transfers and immediate expensing of those transfers. Clubs that elected the capitalization method recognized player transfers as intangible fixed assets and amortized these intangibles over the term of the contract. Also, gains and losses from sale of player contracts were treated as capital gains similar to the gains that arise on the sale of fixed assets. The second method was based
on immediate expensing of players’ contracts. When a player contract was purchased (sold), expenses (revenues) were recognized and reported separately.

Furthermore, under Financial Fair Play, the capitalzation method is reinforced:

An important part of the [FFP] rules relates to the way that player transfers have to be accounted for. Although a club will often pay a transfer fee to another club immediately, from a Break Even perspective the financial cost of acquiring a player has to be written-off over the duration of the contract.

We need an example: let's assume Torres was signed for £50m on a 5 year contract and that Chelsea paid Liverpool £50m via an immediate bank transfer. As far as the Profit & Loss section of accounts is concerned (and the Break Even test), Torres's purchase price would be depreciated (or amortised) evenly over the 5 years of the contract. So, during the first 12 months, only £10m would be incurred as a cost in the accounts and Torres would end the year with a 'book value' of £40m. After 5 years, Torres's contract would have ended and he would be free to leave the club (he would also have a book value of zero).

If the club sells Torres part way-through the contract, the club the difference between the amount they receive for the player and the book value at the date of the sale is accounted for immediately in the accounts (and the Break Even test) as a 'loss/profit on player trading'. This is important as it explains how a club can sell a player for below the original purchase price and still record a profit in the accounts during the year of sale.

If Liverpool sell Andy Carroll for anything above £18m in the summer, they will record the difference as a profit on player sales during 2013-14. If we assume that Falcao comes to Chelsea for £50m on a 5-year deal in the summer, the club's P&L account for the year will only include £10m as an expense (under the heading 'amortisation').

The club will also, of course, have to include the player wages as an expense in the Profit & Loss account.

[Dick, I hope you read all the way through... there will be a test!]