Record losses for 2018-19 but future pathway clearer with USM naming rights option

First analysis of the 2018-19 accounts plus news from the General Meeting including the USM first right of refusal on naming rights

Paul The Esk 14/01/2020 74comments  |  Jump to last
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As widely forecast, Everton have published record losses for the extended financial year 2018-19.

However, the news of a £30 million right of first refusal for naming rights of the new stadium at Bramley-Moore Dock, provided by USM, will grab the headlines.

In addition Sasha Ryazantsev was able to provide more details of the primary stadium lenders, being JP Morgan Chase and a Japanese bank that I believe is Mitsubishi (to be confirmed).

The financial headlines are as follows:

  • Loss for the 13 months to 30 June 2019: £111.8 million (2018: loss of £13.1 million)
  • Operating loss for 13 months to 30 June 2019: £29.7 million (2018: loss of £22.9 million)
  • Despite extended period, revenues fall to £187.7 million (2018: £189.1 million)
  • Reduction in player sales sees player trading profits fall to £20.3 million (2018: £87.8 million)
  • Continued investment in playing squad plus a reduced number of players sold sees the amortisation cost rise to £95 million
  • Wages increase from £145.5 million to £160 million (85% of turnover)
  • Exceptional costs relating to Bramley-Moore Dock of £7.7 million
  • Commercial income falls from £43 million to £41 million
  • Farhad Moshiri contributed a further £50 million in 2018-19, plus an additional £50 million after the end of the financial year
  • As a result of Moshiri’s further financial support, debt falls £9.2 million
  • Farhad Moshiri continues to fund losses and cash requirements increasing his loans to the club by £100 million to £350 million in total.
  • USM increased their Finch Farm naming rights contribution from £6 million previously (2017-18) to £12 million.

Profit and sustainability

The losses for 2018-19 push Everton closer to the 3-year accumulated loss limit of £105 million, but not over it.

At last, the club have presented a plan to reduce future profit and sustainability concerns. Essentially, three elements will reduce pressure on the business and provide breathing room for Ancelotti in the summer.

Player trading profits will also improve the Profit & Loss account – current profits for this year standing at around £60 million.

Finally the capitalisation of the costs of developing Bramley-Moore Dock will occur either in this financial year (2019-20) if planning approval is granted before 30 June 2020, or in the next financial year if after. Current accumulated costs are running around £43 million.

Finally, and most importantly, the contribution from USM.

Naming rights for the new Bramley-Moore Dock stadium

USM are providing a £30 million injection for a right of first refusal to acquire naming rights for the new stadium at Bramley-Moore Dock. Without seeing details, this will be treated as income, thus significantly contributing to the club’s profits in 2019-20.

This is a significant and welcome development, perhaps other than Moshiri’s continued commitment, the most significant.

Other areas of note in the accounts:

As always, away from the headline figures, there’s always one or two interesting pieces to pick up in the accounts.

The cost of employing Directors has risen substantially in recent years, up from £770,000 in 2015-16 to £1.62 million in 2016-17, £2.48 million in 2017-18, and £3.61 million in 2018-19. The highest paid (but unnamed Director) received £916,000.

Staff numbers increased from 427 to 456 employees. The club also employs an average of 411 temporary staff on match days.

Trade debtors (amounts owed to Everton) within a year reduced from £64.3 million to £51.8 million. Meanwhile, trade creditors (amounts owed by Everton) increased from £56.2 million to £73.5 million (due within a year) and £34.4 million beyond a year.

Summary

Everton have clearly invested to become more competitive, to increase the chances of success on the pitch. The return on the investment made so far has been poor but, with Brands and Ancelotti, we have the right management experience to move us forwards.

Issues still remain with an expensive squad with many players surplus to requirement.

Moshiri remains the 4th largest benefactor in English football. USM’s contribution to the club increased significantly with the Finch Farm naming rights doubling and of course, the right of first refusal for naming rights on he new stadium at Bramley-Moore Dock.

Further analysis to come…

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Reader Comments (74)

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Steve Ferns
1 Posted 14/01/2020 at 21:24:15
Paul, if I remember correctly, you and your EBM colleagues were championing the ascension of Brands to the board before it was mooted. Therefore, do you see any validity to Tom Cannon’s assertion that the DoF should not be on the board?

From your figures we effectively owe Moshiri £350m quid. Presumably whilst he is committed this is of no concern, but if he was to lose interest in the club, then this would be a catastrophic debt to be called in.

Mike Galley
2 Posted 14/01/2020 at 21:32:02
We're effectively £350 million in debt!!!
Sheez, I've just broke into a cold sweat. I've no reason to doubt your reckoning Steve, but quite frankly, that terrifies me.
I just hope there's a bigger, longer game in play here with regards to our owner (and friend?), and there will be no loss of interest, on their part, in the short term.
Gary Gregson
3 Posted 14/01/2020 at 21:54:59
Yes, basically we are £350 million in debt and we owe it to Moshiri, at zero interest and with no payback date. But, if he sold up say for £400 million, he would have to pay off the debt of £350 million. So he would basically pay himself his money back. The club is probably valued at much more than that now so he has lost nothing.
Jamie Crowley
4 Posted 14/01/2020 at 22:21:29
Yes Mike Galley, that is a frightening number.

What's more heart-stopping scary, is that wages are 85% of turnover. I'm not an accountant, but that's just unsustainable! It's bankruptcy / administration bound.

I know there's a plan, and Usmanov is clearly behind all this funny money, but it's scary.

Anyone having an issue with our current owner needs to be gently reminded he's now dumped three hundred and fifty MILLION (haha) pounds into Everton Football Club.

It's Monopoly money - it's like this shit isn't even real. SO out of my league, pissin' in the deep end of the pool.

Don Alexander
5 Posted 14/01/2020 at 22:39:59
Few if any of us understand accountancy in the way Mr Moshiri, in effect, says he does but it's transparent to me that after all the mega-blunders the guy's made as our effectual owner he's now placed his last pile, ever, on the ability of CA.

If CA fails to get us regular European League qualification within the four years of his contract the new stadium and fans will be fucked whilst all the players, Moshiri, the board, Usmanov and whoever else on the "inside" breathe a sad but gentle sigh as they all reach for their brochures on their next prospective beach-side mansion.

21st century English football folks! Don't ya just love it as you queue up to buy the latest shirt/pint/pie/program at extortionate cost?!!

Mike Galley
6 Posted 14/01/2020 at 22:43:59
Are wages being 85% of a clubs turnover high?
I don't know (I'm no accountant), but how does it compare to other clubs? It does seem high to me, though.
Would I be right in thinking that we probably won't spend much money on the Old Lady in the next few years (assuming BMD comes off), so, therefore could we be ok with a high wage % against turnover for a year or two?
As I say, I've no idea about this sort of thing, but some of the stuff I've read tonight does worry me.
Jerome Shields
7 Posted 14/01/2020 at 22:52:57
In my opinion there is a bigger plan than actually running Everton properly as a Club. Moshiri and Usmanov are obviously one in the same and there is a coordinated investment of staggering proportions, being pumped into Everton by them.

The Board, but especially Kenwright and Barret Baxendale are not up to properly utilising such resources, and don't seem to have to care , the largesse just keeps coming.

The Bramley Dock development must be only part of the plan, a takeover of the whole Peel site may the overall objective. Everton has already increased in value, even with the lacklustre performances and will increase in the future.

Kenwright and Barret Baxendale are way out of their depth, but enjoying the ride with no performance targets or accountablity.

Jamie Crowley
8 Posted 14/01/2020 at 23:32:29
Mike Galley -

The way I understand it is 60% is very good, 65% acceptable, 70% too high and dangerous.

If you had a company running 85% payables to income, the company wouldn't even be able to cover its overhead the majority of the time.

85% is dismal. Any explanation to excuse it is slapping lipstick on a pig.

That's my take. I bow to much, much more knowledgable people than I in the end.

Paul [The Esk]
9 Posted 14/01/2020 at 23:40:45
Wage costs are way too high to be sustainable. Yes we can conjure up some wheeze to get more of USM's free cash but ultimately we need to address the balance between income and costs by growing the business outside of TV revenues and friendly faces contributing generous amounts relative to market value.

We've bought some time with the USM announcement and no doubt the naming rights deal will be generous also, but we have to face facts our costs are too high and these costs don't include Gomes, Kean, Iwobi and Delph bought in the summer.

Paul [The Esk]
10 Posted 14/01/2020 at 23:42:47
#1 Steve, yes I have always been a fan of the DoF model and I think it is essential the football side of the business is represented at board level. I totally disagree with Tom Cannon.
Andy Crooks
11 Posted 14/01/2020 at 23:47:19
Steve, there is no way on earth Mr Moshiri is going to lose interest in our club. He is, effectively, all in. He will win, in my view. New stadium, naming rights and Ancoletti. I believe we are at tipping point.We are right on the edge but I think it is all about to drop into place.
My God, we deserve some luck.
Andy Crooks
12 Posted 14/01/2020 at 23:55:40
Paul, meant to say that is a fine article. You know what, though, there is some unaccountable stuff that can happen.
Bernard becomes our Silva. DCL becomes our Kane. Holgate becomes the top, top, player I believe he will. We win four in a row. Suddenly, the light comes on.

Jamie Crowley
13 Posted 14/01/2020 at 00:08:02
Andy, I'm not sure that's exactly true. I don't disagree with you as I think Mosh is in for the long haul, but he's not "all in."

He's loaned $350 million against something he owns. The Club will pay the loan back to him, providing a revenue stream he and his family. Then all he has to do is? Wait.

Wait for a buyer.

The last NFL team to be sold was the Carolina Panthers. It went for $2.2 billion dollars. Yes, Billion.

The Premier League is larger than the NFL. Everton, once it has the new stadium, will be worth at least $1B.

Spot math tells me the purchase of Everton if Mosh sells, pays off $350 million in loans, and Mosh walks with $650 million in his pocket (simple math, ain't that, but you get the point).

All that is based upon a $1B sale of Everton sometime in the future. And I will bet my house, wife, and kids that Everton would be sold for at least that much after the stadium is built. People will argue that's way above valuation.

The thing with filthy rich people is, valuation is garbage. Valuation is only what someone will actually pay for a product. And the Premier League will continue it's Monopoly money ways.

Farhad has made an investment. The really cool thing about untapped, sickening wealth, is that he's just invested in himself. Probably from his perspective the safest investment he's ever made.

But the point is he can cut bait at any time and get his money back, and then some. Sell the thing.

Once that stadium is built, Farhad should be applauded every day he doesn't sell. Because in time, he'll be forgoing a HELL of a lot of money by holding and not selling. Unless you're a fanboy of future valuation, which is just bird in the hand is better than one in the bush countered.

Bob Parrington
14 Posted 14/01/2020 at 00:08:57
Agreed 85% is OTT but I'm confident that the board is looking hard at getting rid of the dead wood in the playing staff. Also, more efficiencies and reduction in general staff, can be expected?

It seems the whole reaction to the threads on the subject is negative. Unfortunately, we can't expect change of the kind that is being undertaken without at least a short term effect on the bottom line. Add the bad mistakes with player purchases, including silly wages for many and it becomes compounded.

I reckon we shouldn't be worried. If, as somebody on here has mentioned, Moshiri gives up, he's not going to get 350 mil in cash out from the business. If he foreclosed it would be interesting to see what happens. There's more to this club than some think and surely another buyer would come in.

Jay Harris
15 Posted 15/01/2020 at 00:11:03
As far as I am given to understand, £250M of the £350M was obliged as part of the sale so cannot be extracted easily. Apart from which it appears that Usmanov & Moshiri want to go all in and get us back in the big boys club again, which will make their investment sound and massage their egos quite a bit.
John Zapa
16 Posted 15/01/2020 at 05:05:15
The expected poor results are unsustainable. This year the club compiles with FFP, but next year it will not without significant player sales (among Richarlison, Calvert-Lewin, Bernard, Davies).

The simple fact is that, next year, income will be further reduced since it's a 12 month accounting period, while most revenue sources are stagnant. Expenses will rise, with a higher payroll and amortization costs. It's very dark times ahead, we are all watching the Titanic head into the iceberg in slow motion while the music is still playing...

Bob Parrington
17 Posted 15/01/2020 at 07:17:04
OMG... better pull the plug now then and we can all go down to the river by the Liver Building and have a communal dive into the Mersey fest!
Andy Walker
18 Posted 15/01/2020 at 07:23:32
Not a good financial position to be in when attempting to build a new stadium. Not impressed at all with Moshiri’s business acumen, it seems almost as poor as his football knowledge. Fair enough, he’s put his money in but he’s pissing it away and that has to stop at some point, FFP or his own brain kicking in.

Our club feels like it’s on a knife edge to me. It will go one way or the other. Let’s hope it works out, the alternative is a catastrophic collapse.

Martin Nicholls
19 Posted 15/01/2020 at 07:51:12
So many people on here who know more about the finances of EFC than it's billionaire, accountant owner and his multi-billionaire backer. I know no more than any other fan but am confident that these guys are serious players and that the success of EFC is integral to their wider plans. We can't influence or control it so I for one am happy to go with the flow - the alternative was to still have the (relative) pauper Kenwright running the show.
Tony Abrahams
20 Posted 15/01/2020 at 08:18:03
Jerome@7, surely that was the biggest part of the plan with regards to buying Everton, once they realised the scope of this massive regeneration scheme, that will still be putting money into people’s pockets 40 years from now?

Moshiri buying possibly the most iconic building in Liverpool, surely wasn’t just because he his building a stadium on Bramley Moore Dock?

Joe McMahon
21 Posted 15/01/2020 at 08:27:12
John @16, I think the only player you mentioned that anyone top 6 would be interested in is Richie. DCL way down pecking order. Plus look at Danny Ings (he may end up somewhere). I can't see any of he few players we have that are worth keeping being sold. I think Richie will stay.
Laurie Hartley
22 Posted 15/01/2020 at 09:30:13
Paul thanks again for a good article - I get the sense that you are feeling more comfortable about our future.

There are four board members as I understand it - Kenwright, Barret Baxendale, Ryazantsev, and Brands - Woods and Harris having “moved on” last year.

Like you, I think the football side of the operation has been placed in two safe pairs of hands in Brands and Ancelloti.

In one of your previous articles we discussed Ryazantsev’s ability and agreed that he is a good operator - another safe pair of hands.

The guy that interests me is Colin Chong the stadium development director. He is a very experienced operator in construction and seems to me to have been a major coup. I think we will see his profile increase this year.

What I am driving at is that all the pieces seem to be in place to push the club on.

As for Usmanov - I don’t think he backs losers. He made £300 Million when he sold his Arsenal shares to Kroenke.

Brent Stephens
23 Posted 15/01/2020 at 09:50:49
"Everton have clearly invested to become more competitive, to increase the chances of success on the pitch. The return on the investment made so far has been poor but, with Brands and Ancelotti, we have the right management experience to move us forwards".

So I'm optimistic.

"Issues still remain with an expensive squad with many players surplus to requirement".

But we've already shifted a big number of others. And there's further movement. So I'm optimistic.

"Moshiri remains the 4th largest benefactor in English football. USM’s contribution to the club increased significantly with the Finch Farm naming rights doubling and of course, the right of first refusal for naming rights on he new stadium at Bramley-Moore Dock".

So I'm optimistic.

This optimism is so hard! No, it feels good. No certainty of success. But no certainty of failure. Judgement reserved on Moshiri, Brands, Ancelotti, DBB. Turning around a tanker...

Bill Watson
24 Posted 15/01/2020 at 10:09:01
I was really surprised by Tom Cannon's objection to Brands being on the board and I don't really see where he's coming from when he says Brands is only answerable to himself.
Brands was/is employed to install some cohesion into the recruitment policy and to ship out some of the dead wood, thus reducing the unsustainable wage bill of 85% of turnover.
If he comes up short he will answer to Moshiri. Moshiri is the one who hires and fires and I'm sure he won't be shy in protecting his investment.
Jerome Shields
25 Posted 15/01/2020 at 10:41:49
Tony#20

God knows what their motives are, but running a competitive
organised and profitable football Club does not seem to worry them as much as you and I.

Kenwright and his side kick Barret Baxendale pissing about are a luxury they are prepared to tolerate and pay for. You and I would have had them long gone and making a better shape at running Everton.

As Don#5 says '21st Century Football Folks', with a Russian Oligarch connection.

Jimmy Hogan
26 Posted 15/01/2020 at 10:58:10
Does anyone have any evidence that Barrett-Baxendale is out of her depth? I seem to read quite a few posts stating this, but not backing it up with factual evidence. I'm neither for her, or against her, just curious as to why she gets a lot of stick.
Bill Watson
27 Posted 15/01/2020 at 11:08:48
Jimmy #26

I've made this point on another thread. We don't know what goes on in the boardroom or FF so how, on earth, can we pass judgement on them?

For years posters have been questioning Ferguson's ability as a coach and had him down as simply a cone carrier at FF. I think recent weeks have demonsrtated there's a little more to him than that.

The only one we can really judge is the manager who is judged by results on the pitch, every week.

Paul Smith
28 Posted 15/01/2020 at 11:09:02
Jimmy she even has her own nickname - little Miss Dynamite! Not sure what she has done to acquire it.
Brent Stephens
29 Posted 15/01/2020 at 11:10:19
Jimmy #26 I think that's a reasonable question, reasonably put. You might ask what is it specifically so far that she's done wrong in her role as CEO.
Jay Wood
[BRZ]

30 Posted 15/01/2020 at 12:54:14
Like others, I am queasy about the 85% of turnover taken up by wages.

I also raise an eyebrow at how directors' remuneration has soared nearly 5-fold in 3 years.

But then, I balance that against what has long been suspected that is now, increasingly, in the open: that Alisher Usmanov is clearly interwoven in the scheme of things.

He and his long-time accountant, Farhad Moshiri, are not mugs running an open-all-hours corner store. Throw Sasha Ryazantsev into the mix as a savvy operator.

They will know all the tricks to ensure the club doesn't run foul of any malpractice calls against them.

The £30 million Usmanov has pledged just for first option on the naming rights of the new stadium is further evidence to me of a much larger game being played out than merely the fortunes of Everton FC

As I've mentioned previously, it's my belief that some very big players - and Usmanov fits the bill - is using Everton as a vehicle to make a whole Everest of money on real estate and commerce in Liverpool (and beyond).

That they intend to front and back fill the neglected docklands between the Liver Building and BMD. They may even be anticipating a revival of Liverpool as a maritime trading route post-Brexit as the country trades west to the States, rather than east to Europe.

As the city riverfront continues to be transformed, there could also be an expansion in the number of visiting luxury passenger cruisers to Liverpool.

By investing as they are using Everton FC as their front, we and they are potentially extremely well-placed to benefit from all this.

And when the first spade goes in the ground at BMD, you just know who will provide the steel for the build, probably at very favourable rates.

Heady times. On balance, I think we could well be on the cusp of something very special happening in the next decade.

Dave Abrahams
31 Posted 15/01/2020 at 13:09:59
Jay (30), your second paragraph, I noticed that, it had the last three years remuneration of directors income and the last one (2019) was £11M a very big increase but that page didn’t stay on the screen, in the Philarmonic, for very long, not long enough for me to have a good look at it.
Jay Wood
[BRZ]

32 Posted 15/01/2020 at 13:19:02
You were there last night then Dave?

What was the mood like at all the proceedings and 'revelations'?

What was your reading of Tom Canon's motion at the start of the AGM?

It sounded a bit confused from what I read he said. Claiming on the one hand that Marcel Brands should not be on the board and that the two DoF we've have had have been disastrous, but in the next breath saying he was not advocating the abolition of the DoF role or the dismissal of Brands.

I recall, for some reason, he used to be the media's 'go to' man when they needed a quote on football finances for some reason, but I haven't heard from him in years until last night.

Does he still lecture at Liverpool Uni?

Brent Stephens
33 Posted 15/01/2020 at 13:31:07
Jay, Canon is Emeritus Prof at Liverpool last I knew.

I think you're right to look at Everton's business strategy and finances as possibly part of a much bigger and longer-term business strategy on the part of Usmanov and Moshiri. This why we should take the longer view on the success or otherwise of DBB, Moshiri, Brands... Much too early to judge.

Dave Abrahams
34 Posted 15/01/2020 at 13:50:17
Jay (32), I knew ofTom Canon by name, but the fella sitting next to me pointed him out, adding he will have something to say at some point, which turned to be correct. Why I knew the name was because he was constantly in the media, a few years ago, talking about football, mostly relating to Everton and Liverpool,I haven’t heard much of him in the last few years, but he was a person who the media would seek out when important news of the Merseyside clubs occurred, so maybe he is someone who likes to be seen, and earn a few pound at the same time.

His objection seemed to be the only one as nobody else voted with him, although to be fair he received a generous round of applause for his long objection speech. The whole evening went off without upsetting or getting anyone excited to be honest, although the announcement of Usmanov buying the new stadium naming rights surprised some people.

Steve Ferns
35 Posted 15/01/2020 at 14:50:11
Dave, I knew the name Prof Tom Cannon as well, but only just bothered looking it up. I knew he was a prominent academic expert on football.

ToffeeWeb have a nice Timeline on the Kirkby Debacle: Link

Here is an article on ToffeeWeb by Tom Cannon: Link

Lyndon wrote a great article called "blessing in disguise" about Kirkby but I cannot find a link to it.

Tom was a big opponent of KEIOC and said the following after the Government derailed the move that the fans who protested had cost the club a load of money and possibly their "talented" manager. Link

Tom Cannon was (or is) a friend of Kenwright and used to defend him on matters of finance regularly. Kenwright wouldn't have liked last night's stunt so maybe there has been a falling out, or maybe Prof Tom wanted some limelight again? Who knows, it was bizarre.

Ryan Holroyd
36 Posted 15/01/2020 at 15:22:02
Kenwright would have LOVED last nights 'stunt' 🤣
Thomas Lennon
37 Posted 15/01/2020 at 16:16:59
85% of turnover equates to around £15million to bring it back to 65%? Roughly.

Can anyone think of three players earning £5million a year (£100 000 a month) that we can get rid of without an impact on the first team? I can hazard a guess that all the loans out/sales last summer more than balanced out this deficit.

If we want to win something in this mad world, we have to invest hundreds of millions and ultimately yes there is a risk to the club. Begin to worry if Stan Kroenke sells up at Arsenal.

Bill Gall
38 Posted 15/01/2020 at 16:39:00
As a normal supporter and not a financial wizard most of what I read is what most companies supply during a AGM. My thoughts as a supporter is it makes no difference of all the figures given out, may they be good or bad it, doesn't matter what your company supplies, it relies on the finished product bringing in the revenue, and in Evertons case that is their Premier Team that is put out for display.

In saying that it seems that the Owner is gradually improving the quality required to improve the team by getting the correct investor backing, ensuring financial backing is there if required, and ensuring all the correct steps are followed for the new ground.

As a number of people have stated there should be some directors replaced om the board but I am sure Mr Moshiri with his financial background and experience on bigger company boards than Everton F.C. is satisfied with the people he has on the Board, if not he will not hesitate to replace them.

You don't become a Billionaire in business and let incompetent people waste your money and reputation.

Ryan Holroyd
39 Posted 15/01/2020 at 16:59:37
Thomas – Sigurdson, Tosun and Schneiderlin.
Derek Taylor
40 Posted 15/01/2020 at 17:19:07
I suspect Moshiri labours under a misconception that Kenwright and his henchpersons are much loved by the Evertonian hoi polloi!

If only he knew the truth!

Jerome Shields
41 Posted 15/01/2020 at 17:44:26
Jimmy #26,

Without going into Barrett-Baxendale's CV and suitability for the position of Chief Executive Officer, which has been adequately covered by previous posters, with knowledge, one should look at information presented at the AGM.

A substantial decrease in Commercial revenue contributing to Record losses. As Chief Executive, one of Barrett-Baxendale's first acts was to restructure the commercial operations of Everton, giving a range of employees titles and probably wage increases. This in practical terms would have resulted in an increase in commercial revenues if it worked; it obviously has not.

A Chief Executive of any organisation that has record losses does not normally last long afterwards. Barrett-Baxendale will be at the next AGM, as Chief Executive, still not having left EitC behind, because her being out of her depth suits.

Don Alexander
42 Posted 15/01/2020 at 18:02:02
DBB, or "Lil Miss Dynamite" (cringe) according to the ponce who appointed her, has certainly lived up to the nickname in terms of positive input to stem the losses hasn't she?
Paul Smith
43 Posted 15/01/2020 at 18:11:24
Thanks, Don. I take it that it was Bill Kenwright who gave her that nickname?
Ray Roche
44 Posted 15/01/2020 at 18:32:17
Little Miss Dynamite was the nickname of Brenda Lee, who has been Rockin’ around the Christmas Tree since 1958, which is about how long it seems since Boys Pen Bill rode into town.
Laurie Hartley
45 Posted 15/01/2020 at 00:35:43
Jay # 30 - I agree with your view that BMD is only a small part of a much bigger investment plan on Merseyside. It is however vital to kickstart the process.

It is the book end that will separate the working docks from the residential development about to take place and is why, in my opinion, Moshiri and Usmanov will see this through to completion.

Two other projects I will be keeping my eye on closely:-

Wirral Waters
Mersey Tidal Barrage

They are going to need a lot of electric if they build all those apartments and houses.

The other resource that Peel owns in the area is the
Manchester Ship Canal

If as you suggested they feel Liverpool will once more become a major trading route post Brexit, then the canal will once more become as important as when it was first built and for the same reasons.

Heady times indeed Jay.

John Zapa
46 Posted 16/01/2020 at 05:50:49
Jerome 41, the deceased commercial revenue has little to do with DDB and alot more to do with the teams onfield performance. In the previous set of accounts, Everton included income earned from the Europa run in commercial income (prize and TV money). In the current set of accounts, there is no European football, will leads to a drop of 14m or so to commercial income as a result.
John Zapa
47 Posted 16/01/2020 at 06:01:29
I'm not sure why Paul or anyone else seems optimistic after the release of these figures. What worries me is not the current disastrous results, but what the next years results will look like. We are currently half way into the financial year, already income is practically stagnant again, except for whatever dubious deals can be arranged which is basically Moshiri and co trying to bypass FFP. What really worries me, is the rising costs which seem uncontrollable at the moment.
Previous set of accounts, wages to turnover was an extremely high 77%
Currently its 85%
In the next set, it could rise to 90% taking into account that during this financial year, Ancelotti was hired at around triple the cost of his predecessor, I'm fully expecting bumper new contracts to the younger players like DCL, Davies and Holgate who are all on around 20/25k per week at the moment.

Even though a few players will be off the payroll at the end of the season, they will still be included all the way to the end of the financial year.

Without key player sales, I would predict the club to make similarly large scale losses again, which would be close to defaulting with FFP regulations. There is only so much financial voodoo Moshiri can play at before many years of constantly poor decisions of recruitment come back to bite.

Thomas Lennon
48 Posted 16/01/2020 at 08:58:58
Ryan #39 Stek (? loaned?), Niasse and Martina (remember him?) all at end of contract this summer. These are quoted at £100 000 a week (£5million a year). Then Tosun, Schneiderlin, Siggy, Walcott possibly Baines (£23 million wages) saleable this summer with for sure Bolasie, Ramirez, Besic already out on loan on £9 million.

£37 million on players we probably want to move on.

The plan is to recruit young potential and sell on if the price is right rather than buy the ready-made article for immediate impact. Whatever we think of them now most are improving steadily. Progress still needed before we can let more of the senior men go so I expect to see the like of Siggy & Baines hang around.

We are clearly not in clear blue water yet with some pain to come.

Anthony Dove
49 Posted 16/01/2020 at 10:08:40
One of Brenda Lee’s hits was Sweet Nothin’s. Quite
appropriate really.
Jerome Shields
50 Posted 16/01/2020 at 17:26:28
John#46

That maybe so, but there has been little progress in developing the commercial aspects of Brand Everton, which is also part of Commercial Revenues.

It's seem that the emphasis is more on developing Balance Sheet aspects of Everton Finances and as you say the results of less emphasis on Everton Profitability and trading performance which will kick in years to come.

It's not a bad position for Kenwright and Barret Baxendale to be in at the moment, in personel terms.

It will be interesting to see the outcome when all is boiled down.

Paul [The Esk]
51 Posted 16/01/2020 at 17:48:58
John (47) I am a little more optimistic than I have been for sometime. Despite my reservations about Usmanov the £30 million goes someway to resolving a problem I have been forecasting for a longtime. It doesn't solve the problem entirely of course.

From the summer's purchases there's another £22 million to add to the amortisation bill, although some will be offset by the sales out, similarly with wages but I think you are right, costs in 2019/20 will be greater than 2018/19 even before any summer signings which fall into next financial year.

The combination of the £30 million, the current estimated player trading profits for 19/20 of about £60 million and the possibility of capitalising the Bramley-Moore costs before the financial year end gives me hope we won't have to sell one/two of the players we would otherwise wish to retain, just to balance the books.

Additionally if BM hasn't received planning permission and we do go over the £105 million we would have a strong mitigating case assuming planning occurred soon after 30 June.

None of this gets away from the fact that the business continues to be run poorly.I said on the last EBM podcast last night the CEO and board are in denial blaming the losses on the early part of an investment cycle. No one needs reminding except the board that the current cycle is 4 years old and should be producing dividends on and off the pitch. If they genuinely think otherwise then the charge of delusion is warranted in my opinion

Carl Manning
52 Posted 16/01/2020 at 18:12:33
I have to agree with Jamie in regards to Moshiri’s potential long term thinking. The man city group is now valued at over £4 billion so there huge outlays have still shown massive financial returns should sheikh Mansour decide enough is enough. I know they own more than just man city, but maybe this is the model we’ll follow?
Brian Hennessy
53 Posted 16/01/2020 at 18:16:11
What we need is for Usmanov to fund another "accountant" like Moshiri to buy into another club in China or the like.

Said club then swoops in and offers money we couldn't dream of for Siggy (35M), Walcott (20M) Delph (15M) and Schneiderlin (20p), allowing us to get rid of some of the useless expensive clowns we have while also improving the balance sheet.

Kevin Prytherch
54 Posted 16/01/2020 at 18:32:33
Brian 53 - if you’re going to post then at least make it worthwhile and realistic please...

No ones going to give us 20p for Schneiderlin.

Brian Hennessy
55 Posted 16/01/2020 at 18:50:11
We can all dream Kevin.

Jerome Shields
56 Posted 16/01/2020 at 23:02:57
Paul the Esk#51

In any business I was involved in I always concerned myself with trading with a close eye on cash flow. I thought of profit as being the main measure of performance and my main interest in the balance sheet was better utilisation / increasing Assets and reducing liablities.

Everton reminds me of a community organisation I was involved in, that wanted to buy larger premises at £1, 5 million and the Board voted to do so, as I did as Treasurer inserting, 'subject to financial Assessment ' as I seconded the proposal, which was carried unnamously. My logic was it was no use being the sole objector, since I could do nothing and would be out of the picture. My actual thinking was, it could go bust, but not while I was Treasurer. The Chairman had got a letter, presented at the Board Meeting from the Bank of Scotland funding the proposal, without contacting me or being asked for any financial information. The proposed purchase was on the front page of the Local Newspaper within two days. I used the financial Assessment as a delaying tactic. The Bank of Scotland froze all future loans to all property customers a month later. The property crashed to being worth £250, 000 the folliwing month after that and my Financial Assessement caused the FSA to ban the Community organisation from borrowing money and buying the property, which would have busted the organisation. My philosophy of giving back ended. I was sent a Solicitors letter by the property owner threating to sue. I told the Board to paper the wall with it.

I like John#47 have a bad feeling about the whole Cavalier approach of those that own and run Everton at this AGM.

As you say the trading performance of Everton FC is poor and whilst they appear to be well aware of what not to highlight, as a transparent exercise this AGM has been a shambles. As you say there protestations that they are at the start of Investment cycle, which is no surprise to either of us, is covering up a very poor overall Management performance. The quick flash of the Directors renumeration slide, to the wheeling out of Ancelotti, who never attended a Club are no surprise. The Board members who spoke except Brands, seem like willing participants in imparting information, not caring about performance, coming out with some staggering phases.

The Financial Voodoo, aptly termed by John, is also a attempt to bring the accounts into keeping within the FIFA financial rules. It seems to directly points to Moshiri and Usmanov as being one of the same, without Usmanov having a beneficial interest.

It's of course natural to want to think it will all work out. But in my experience a organisation has to be performance driven and expanded on self generated profits. The advantage of this is that those that working in it are working to a disapline and the necessary governance exists.

Whilst I have been successful in running businesses, I have also had to step of some sinking ships or as I prefer to think of it, I made a Horlicks and then cleared off.

This AGM gives the impression of being too like a Sinking Ship for my liking.

Steve Hogan
57 Posted 16/01/2020 at 23:56:54
Jerome (56)

I think you have hit the nail on the head with your description of how the business at Everton is currently run and managed.

The AGM was full of bravado and pretty outlandish statements, without fully acknowledging the poor commercial performance of the club.

Simply promising the future appointment of an ex-player as a 'global ambassador' is just papering over the cracks.

I really do wonder as Chairman of the club, whether Kenwright actually does have a full financial grasp of the situation we find ourselves in?

Paul (The Esk) comes in for some criticism for being overly pessimistic on how the club is currently run, but like all of us, being an ex-local guy, he wants us to succeed, it's as simple as that.

The irony of all this, is that the massive influx of capital provided by the arrival of Moshiri three years ago, has been squandered in the most awful fashion, all under Kenwright's stewardship.

I have openly questioned the appointment of DBB as CEO of the club, not because of her previous background in the charity/education sector, but simply on the grounds of 'was she best candidate available from the sporting global /business environment' available to us?

The answer is most certainly no. She was appointed because she was highly unlikely to rock the 'cosy' Everton boat that Bill likes to surround himself with.

Until we have absolute change at the top, I am not totally convinced the club is finally on track, certainly off the field.

Bob Parrington
58 Posted 17/01/2020 at 03:56:55
Brian@53 I reckon you missed your best occupation (whatever you do now) because this is brilliant thinking! Ha! Ha! Like it.

Kevin - he's worth whatever another club is prepared to pay for him. I think your first bid is ambit. I'll up it to 10 quid.

Bob Parrington
59 Posted 17/01/2020 at 04:05:45
Jerome and Steve H, This makes me glad that we seem to have gone through the phase in which Accountants are promoted to 'decision making' positions as distinct from information and opinion providers.

Of course, the entrepreneurial people should take some guidance but, without the entrepreneurial types, life would be soooo boring. For instance, this thread might be, maybe, 10 posts rather than 58 by now!

Bob Parrington
60 Posted 17/01/2020 at 04:10:39
Jerome@56 I omitted to state that IMO cash flow is king. Many businesses have been caught with their pants down with massive assets but lousy cash flow.

Strangely, out of the ashes of their liquidations have grown excellent companies - regularly with the same owner (or proxy) at the helm. Nods as good as a wink, eh!

Jay Harris
61 Posted 17/01/2020 at 05:31:33
Dont you all know its one of Bill's machievelian plots to get Moshiri's money, undermine everything he does including managers and then sail in at the 11 th hour to "save" the club again just like he did last time when he DID NOT remortgage his house.
Jay Harris
62 Posted 17/01/2020 at 05:31:33
Dont you all know its one of Bill's machievelian plots to get Moshiri's money, undermine everything he does including managers and then sail in at the 11 th hour to "save" the club again just like he did last time when he DID NOT remortgage his house.
Paul [The Esk]
63 Posted 17/01/2020 at 11:31:02
Jerome, Steve, Bob thanks for your comments. Steve whom I have met will vouch for my disdain for the manner in which the club is run and my long held belief that the board lacks the expertise and experience to (i) run a football club (ii) grow a business & (iii) manage a fairly significant capital project.

I must stress my slight signs of optimism may be more equated to Lamont's "green shoots" comments in 1991 than any change in the above belief!

I am of the opinion (shared in this thread) that Moshiri sees this as a balance sheet game and is heavily gearing the business in the hope that the stadium (the fixed asset) will add to the value of the club and (ii) the players (the intangibles) will not only increase in value but drive an increase in income (allowing the purchase of more intangibles) through higher league placing and regular European football.

It is an incredibly risky strategy in my opinion especially when no attention is given to what should be the foundations of the business, operational excellence and a growing revenue base from a growing number of partners globally not just friendly faces.

The £30 million injection gives us some breathing space but unless the business model changes or we hit an extraordinary patch of form then we've just kicked the can down the road a little.

Jerome Shields
64 Posted 17/01/2020 at 17:23:14
Paul the Esk#63

In fairness to you, you did not attend the AGM to gauge the tone. It is likely that most of those that attended got their shares because they are in the know or have long term connections, few would have the knowledge to ask the forensic questions that you would be capable of asking or the desire to do so. The Professor latched onto a old chestnut, which would have been considered a mild distraction and completely manageable. . You of course know other posters on ToffeeWeb who could ask similar difficult questions. In my experience even if you or they where there you might not get your own way in asking questions anyway. I once had someone behind me at a, AGM about , 'Sit down and shut up' when I asked a question in a fund flow statement. You get all sorts at such meetings instructed and uninstructed.

The problem is that those presenting the AGM have a false sense of thinking they actually capable of the position they hold at the top table, while there is a few, not so obvious ones, pulling the strings.

I think there is a collective relief that Moshiri has still got aleast one golden egg left and knows someone that can get him another one if he needs it. But we all know that the performance on and off the pitch needs to get better and being fed the same old guff, rather than showing progress in the key performance indicators, or have someone on the Board come out with information showing they know what they are doing in relation to these Key indicators is long overdue.

Of course we do understand what Brands is trying to do and what Ancelotti is capable of, but the same old background music is getting tiresome as we all know it needs to show signs of change. Quite frankly we are al! sick of it being played again and again, and recognise it miles away.

Kieran Kinsella
65 Posted 18/01/2020 at 14:29:32
Derby County are mounting a legal case against FFP even being valid legally. I am wondering if the FFP will undergo a Bosman like moment? I understand you can't have businesses that are in solvent but in that respect we have the government authorized to step in an liquidate insolvent entities. But if you look at other industries etc tech giants, social media companies etc. Most of them run at massive losses, kept afloat by the owners. Tesla for example was losing money big time but the founder was rich enough to invest his own cash. As long as bills were paid no one cared. There wasn't a car association coming along saying "you can only run at a loss of 105 million over three years". He was able to happily spend his own money as he wanted in his battle with Ford GM etc. By the same token, Yes I get the logic that we don't want doomsday scenarios of "benefactors" calling in their "interest free loans" and bankrupting clubs. But at the same time, if we allow rich people to waste their money as and when they please then we wouldn't even have the issue of "loans" or weird sponsorship deals because anyone rich enough and stupid enough could spend all that they want. So I suspect that the FFP situation could run into trouble if presented as a commerce case and when compared with other industries.
Jerome Shields
66 Posted 18/01/2020 at 18:48:20
Kieran #65

I have just learn't that apparently other Premier League Clubs are pushing the Premier League to have Everton investigated over the £30million purchase of the Stadium naming rights in terms of the FFP rules. The staggering amateurish AGM looks too much like manipulation of the FFP rules, with a surprise announcement made at the AGM in a attempt to give a legal gloss.

Given the size and capitalisation of Everton and the money flowing through the Fund Flow statement, the huge wages /high wages percentage and increases in Directors remuneration, not only are ToffeeWebbers able to highlight concerns, but Premier League Club who are in the business can pin point concerns to the Premier League, who will have to act on Governance issues , especially in relation to FFP

In my opinion the Derby County challenge will fought hard, because it will be detrimental to Football.

Paul the Esk, Steve, Bob and myself are right that a Club has to be able to improve to the standard performance indicators, and to question the relevance of manipulation of the Balance Sheet in place of, a team playing good football and winning games.

John P McFarlane
67 Posted 18/01/2020 at 19:15:22
FFP or no FFP it is the club itself that is saddled with any debt that an owner incurs, even if that owner is a kindly soul who puts in his own money via interest free loans or happens to know a rich bloke who is happy to sponsor various elements of the club.

It's not like we haven't been here before is it? Remember the chaos that ensued when Sir John passed away? Depending on how things go in the next couple of years we could quite easily find ourselves back in familiar territory similar to the start of the 1990s.

As for FFP it is an artificial, unfair measure which stymies the growth of any club which wasn't in a position to grow during the boom years and it knowingly allows the richer clubs to keep their competitive advantage. Eventually, someone will challenge this rule and someone will win that challenge, much better if the football family arrived at a solution which would be fair to all.

Fans of a nearby club, thinking that their club is and always has behaved properly and without circumventing the rules should remind themselves where their club was in 2010 and how some behind closed doors meetings with bankers and the likes helped it to remain viable aided and abetted by the media of course.


Kieran Kinsella
68 Posted 19/01/2020 at 03:04:12
Jerome 66,

Just to be clear. Do I think Everton is well run and in a healthy financial position? No. Do I think the usm deals are farcical attempts to circumvent FFP? Yes absolutely. My point is simply that from a legal perspective, dealing with privately run businesses, I think UEFA etc are on thin ground with FFP and for better or worse I suspect it will eventually be overturned in court

Ryan Holroyd
69 Posted 19/01/2020 at 14:55:10
Hilarious how people on here know more about Evertons finances, ffp than two billionaires and their team of presumably very expensive accountants 😂
Stephen Brown
70 Posted 19/01/2020 at 15:16:32
Another point in FFP!

Got to laugh at everyone ( me included) before we had a billionaire saying FFP is only right !! Man City and Chelsea are bang out of order, it’s not fair!!

We have 1 possibly 2 billionaire owners and FFP is a joke!!

As I said, guilty as charged!!

Steve Ferns
71 Posted 19/01/2020 at 15:40:50
FFP is a joke. It’s not a fair system. It allows for the big club to have more spending power than the smaller clubs. It enshrines an Uneven playing field and is a case of the big clubs pulling up the trap door after them, so newly rich clubs cannot get to their level. All in the name of fair play.

As for the courts overturning it, don’t be so sure. The EU and it’s highest court, have said that they don’t want to get involved in football. There’s been a few top lawyers who sought to raise their profile and make a load of money on taking down the transfer system, and other things, but they’ve failed without even laying a glove on football.

FFP might be a different story, but the reality is the powers that be in Europe don’t want another Bosman style interference in football and only got involved to help the likes of Bosman who were being forced to remain at their clubs.

Jerome Shields
72 Posted 19/01/2020 at 18:16:48
Steve #71

You are probably right, the FFP exists and Club are use to working with and are happy to do so. They are also happy to use it to their advantage if they can. I agree the Courts will not overturn it.

Derek Taylor
73 Posted 19/01/2020 at 19:46:51
Jerome, no doubt you were amongst the Kenwright critics when the Club had nowt but skint shareholders.
Now you can't bare to see Everton able to compete moneywise with the Chelseas and ManCitys of the Premier world. Like so many faithful Blues there must always be something to moan about otherwise it wouldn't be the club you purport to love.

Strange world you inhabit !

Jerome Shields
74 Posted 19/01/2020 at 22:48:39
Dereck #73

It takes more than money to compete to become a top-four challenging Club in the Premier League, eg, Everton over recent years. There appears to be a belief at Everton that there is more than one way to do it. We will see how successful they are trying more than one way. Those that do achieve it, concentrate on the one way of improving performance on the pitch.

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