Have finances improved?

[Matt]

Like I was saying in the other thread, I feel that we are in a very different financial state now, though looking through the information Ive found, im confused. Im certainly no financial mastermind, if we have one on TT, feel free to break it down to idiot level

 

Changes :

Income/money saved

• Wages saved seems to be between 9-12m (depending on which source you review) from Moyes, Hitz, Mucha and Neville
• Depending on which source you read, the new TV deal is worth 20-25m additional revenue.

 

Expenditure

• 11m spent on Martinez (1.5m), Robles (3.5m), Kone (6m) - wages unknown. I guess, around 70% of the 9-12m is reinvested directly into our new boys but it is only a guess. If someone wants to correct me with a link, I'd welcome it

 

 

I know somewhere on here, Louis mentioned that a lot of mortgages (4?) are being paid of this year, and we took on another relatively small one. Theres been no new sponsorship deals that I can think of in the last 12 months.

 

 

Some of the source material I was looking at:

 

http://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Documents/Industries/Sports%20Business%20Group/deloitte-uk-sbg-arff-2013-highlights-download.pdf

 

http://uk.eurosport.yahoo.com/blogs/the-rundown/club-paying-wages-160415004.html

 

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10102605/Premier-League-revenues-to-top-3bn-despite-rise-in-footballers-wages.html

 

http://www.evertonfc.com/assets/_files/documents/jan_13/efc__1357208599_Everton_Financial_Accounts_201.pdf

 

http://swissramble.blogspot.ch/search/label/Everton

 

http://www.transfermarkt.co.uk/en/fc-everton/transfers/verein_29.html

Edited July 24, 2013 by Matt

[Cornish Steve]

If I were looking at Everton as a business, I'd be looking to see how to generate more revenue from supporters: bigger stadium, increased fan base, greater fan involvement, .... The TV deal is all well and good, but it's a change in the business environment and not in the 'company' per se.

 

Forgive my ignorance on this, but what hope is there to increase revenue by increasing seats - either by increasing stadium capacity or moving to a bigger stadium? What about increasing seats virtually? Can Everton reach out to international supporters without undermining the TV deal? For example, could they expand evertonTV to make it a real channel accessible via the Internet to many thousands of supporters overseas? (I'm thinking of how, in the US, the Boston Red Sox make significant sums of money in this way.)

 

Player salaries make up a big part of the costs, so cost-cutting is important. Companies thrive, though, by growing revenues rather than by cutting costs. How can Everton do this?

[codders78]

We also have a saving of 33% on Finch Farm for the duration of the lease - about £15 million saving I think.

 

However all of our debt has been leveraged against the additional TV revenue so we won't feel the benefit, we spent that years ago. My understanding and interpretation of our situation is that we don't make much, if any money at all, what we have is spent paying interest on loans taken out years ago - what is concerning/encouraging (not sure which the former I think) is that our debt levels have remained static, neither rising nor falling. This means we are merely maintaining them not paying it off, it also means we are relatively stable.

 

I don't know where the money has come from for our transfers thus far but past history would dictate we have to sell a player to balance the books as our transfer surplus has generally been used to this end.

 

The bottom line is debt I reckon. Those that have spent in the window thus far who I would consider lesser clubs to us haven't got any debt, they feel the benefit of increased revenue and can use it to fund team improvement not the balance sheet.

[Matt]

We also have a saving of 33% on Finch Farm for the duration of the lease - about £15 million saving I think.

 

However all of our debt has been leveraged against the additional TV revenue so we won't feel the benefit, we spent that years ago. My understanding and interpretation of our situation is that we don't make much, if any money at all, what we have is spent paying interest on loans taken out years ago - what is concerning/encouraging (not sure which the former I think) is that our debt levels have remained static, neither rising nor falling. This means we are merely maintaining them not paying it off, it also means we are relatively stable.

 

I don't know where the money has come from for our transfers thus far but past history would dictate we have to sell a player to balance the books as our transfer surplus has generally been used to this end.

 

The bottom line is debt I reckon. Those that have spent in the window thus far who I would consider lesser clubs to us haven't got any debt, they feel the benefit of increased revenue and can use it to fund team improvement not the balance sheet.

good point

 

also was looking at this, very interesting: http://www.financialfairplay.co.uk/

[codders78]

I'm not sure FFP will have that much impact with some clever accounting. Nobody on the continent seems to give a hoot about it

[SimonButtle]

This is a small article about how our wage bill is very high against the annual turnover.

 

http://espnfc.com/blog/_/name/espnfcunited/id/5101?cc=5739

 

a better one with PDF download of accounts

 

http://www.toffeeweb.com/season/12-13/news/23366.html

 

http://www.guardian.co.uk/news/datablog/2013/apr/18/premier-league-club-accounts-debt

Edited July 24, 2013 by Simon

[Louis]

UEFA Fair Play won't make any difference to us for the forseeable future.

 

Have finances improved ?

 

The TV money has gone up. A lot of other factors are the same, wages will no doubt increase.

[Romey 1878]

In other words, we're still treading a very fine line so not much (if anything) has changed at all.

[Steve_E]

Matt posted a SwissRamble article here somewhere and this is an earlier one from him: http://swissramble.blogspot.be/2011/09/everton-no-blue-skies.html

God damn, shit's bleak.

 

One outtake:

 

As operating losses have increased since then, the importance of player sales becomes even more evident. The key point is that if Everton do not repeat player sales at the same level as 2010, namely around £20 million, then it is extremely doubtful that they will break-even in future. This is unlikely to be music to the ears of Everton fans, but it’s a harsh reality.

 

20m! That's roughly the same as the new tv money probably. So that enormous amount of money we now get from that tv deal basically amounts to nothing more than that we can get loans to spend a little bit of money on players again without having to sell anyone?

[Romey 1878]

Matt posted a SwissRamble article here somewhere and this is an earlier one from him: http://swissramble.blogspot.be/2011/09/everton-no-blue-skies.html

God damn, shit's bleak.

 

One outtake:

 

20m! That's roughly the same as the new tv money probably. So that enormous amount of money we now get from that tv deal basically amounts to nothing more than that we can get loans to spend a little bit of money on players again without having to sell anyone?

We're a really well run club, hush your mouth!

[marcopaulo]

part of me wishes we'd just sell a couple of big names and clear the debt...crippling us every season it seems..i'd rather drop down to 15th or so for 3-4 years then see what someone(maybe martinez) could do with a debt free club with a good academy(or so i hear)

[Steve_E]

We're a really well run club, hush your mouth!

 

Another outtake:

Everton have enjoyed a long-term shirt sponsorship deal with Chang Beer, which has been extended no fewer than four times, the latest running until 2014. This increased the annual payment from £2.6 million to £4 million (partly performance-related), but this is still only half as much as Aston Villa’s new £8 million deal with Genting and a lot less than Tottenham’s £10 million deal with Auresma.

 

Villa get double what we do?

 

 

The debt has been rising because the club has been spending money that it does not have on strengthening the team. As Elstone put it, “our pursuit of success has stretched our finances.” The result of this risky strategy is clear to see, as the club is burdened with a 25-year loan from Bear Sterns (now at £25 million), which has the advantage of being long-term, but carries a high interest-rate of 7.79%, leading to annual payments of £2.8 million. The only way that Everton can manage to pay this is by increasing its bank debt, so the club has built up bank loans of £17 million and an overdraft of £5 million.

 

Although Everton’s debt is by no means excessive compared to other football clubs, the problem is that they appear to have no realistic way of paying it off. That is why the bank has capped the club’s overdraft at £25 million, which has meant that the £8 million received for the sale of Bellefield last December and the proceeds from this year’s player sales have gone directly to the bank.

 

Furthermore, the loans are covered by the securitisation of future revenue (TV money and ticket sales). The accounts also note a potential sting in the tail with up to £12 million of contingent liabilities for transfers, which are payable dependent on future appearances and loyalty bonuses.

 

Everton’s total liabilities are actually £95 million, leading to net liabilities of £30 million, so £50 million of value has been lost in just over a decade, as the balance sheet had net assets of £19 million in 1999. Most of the club’s assets have been sold off, which also increases costs for higher rents, while Goodison’s value is declining.

 

The only substantial assets left are the players themselves with a book value of £45 million, though Elstone points out that accounting conventions mean that players are recorded in the balance sheet way below market value.

 

 

 

 

That's depressing as well, we're getting more and more in debt in pursuit of short term "success", which really just means finishing 6th...

[marcopaulo]

think romey may have been a bit sarcy there

[Steve_E]

think romey may have been a bit sarcy there

 

I got that I was just adding more info.

[Matt]

UEFA Fair Play won't make any difference to us for the forseeable future.

 

Have finances improved ?

 

The TV money has gone up. A lot of other factors are the same, wages will no doubt increase.

So then yes I dont know if wages will increase anymore than they usually do. FFP will mean that we have to live within our means. Part of the TV money will go towards covering the operational losses (I assume) which last time were reported at 9m so I dont see how we can be hiking up the wage bill at the same time. This is why I was pointing out the big savings of the 4 that left.

 

Like Romey said, we are walking a thin line. We dont have to sell this year, which is something different but it wont last long.

 

part of me wishes we'd just sell a couple of big names and clear the debt...crippling us every season it seems..i'd rather drop down to 15th or so for 3-4 years then see what someone(maybe martinez) could do with a debt free club with a good academy(or so i hear)

wouldnt make a difference if we dont stop operating at a loss though. Plus, Im pretty sure we would have to pay fees to pay off the loans / mortgages early.

 

Im going to relax this transfer window. We dont have to sell (doesnt mean we wont if someone wants to go) so Im enjoying the less stress whilst I can. The TV money is going to help over the next few years, but its only a stop gap which will fail if the board dont sort things out.

 

There is the additional worry of 3 years time when the TV deal is renewed. If its less than now, and we havent found a sugar daddy, there will be a clear out.

[marcopaulo]

aren't we only operating at a loss because of the interest we pay on all the loans? that's what i thought although i admit finances and that are not my strong point so i could be talking absolute shite

[Matt]

aren't we only operating at a loss because of the interest we pay on all the loans? that's what i thought although i admit finances and that are not my strong point so i could be talking absolute shite

its a definite part of it, but I dont think its all of it. then again, im not financial whizz either

[StevO]

I've said in the past we don't need a sugar daddy. Just someone to come in and wipe the debt clean, try to improve our commercial deals and build the club back up with a blank slate.

[Cornish Steve]

I have a question about the TV money. It's usually presented as something that's a nice windfall with no consequences - but nothing in this life comes for free. What are the negatives about this deal? Does it in any way prevent Everton from generating new revenue streams of its own?

[Steve_E]

I have a question about the TV money. It's usually presented as something that's a nice windfall with no consequences - but nothing in this life comes for free. What are the negatives about this deal? Does it in any way prevent Everton from generating new revenue streams of its own?

 

I don't if you're on about selling their own TV rights individually? But I doubt very much that would get us as much money as this collective TV deal does. In Spain clubs sell their broadcast rights invididually and Real and Barça alone get 34% of the total amount.

[c1982]

http://www.royalbluemersey.com/2013/8/20/4640916/latest-epl-shirt-sponsor-deals-details-show-everton-in-the-middle-of

[Cornish Steve]

It's questionable to me that so many sponsors are gambling companies. Personally, I'd impose a ban on certain companies being allowed to sponsor just so there's no hint of inappropriate influence.

[Brett Angel]

BK's a bellend. He runs the club like it's a local grocery store... The man had no business accumine, just a truuuuuueeeeeeer blue.... Oh bill, you do make me emotional.

[MikeO]

BK's a bellend. He runs the club like it's a local grocery store... The man had no business accumine, just a truuuuuueeeeeeer blue.... Oh bill, you do make me emotional.

 

Accumine!?

 

And you criticised Peter (opening yourself up to the :Grammar Police:) because he misspelt "conference" .

 

At least he just got the one letter wrong .

[Dalziel Kane]

I admittedly made a spelling error in the last post, but that can be attributed to fatigue after a long day and nothing more.

 

Kenwright may be many things, but I can't quite bring myself to condemn the man. True he may not be flavor of the month with some of our supporters but most again will realize he has his heart in the right place and dearly loves the club. We could be in worse hands some need to understand.

[marcopaulo]

I admittedly made a spelling error in the last post, but that can be attributed to fatigue after a long day and nothing more.

 

Kenwright may be many things, but I can't quite bring myself to condemn the man. True he may not be flavor of the month with some of our supporters but most again will realize he has his heart in the right place and dearly loves the club. We could be in worse hands some need to understand.

 

no one said you made a spelling error? did they?

 

are you angell in disguise?!

[Brett Angel]

This spelling error maybe down to the fact that I took to the forum through my phone, which may throw up predictive text every so often, not sit at my computer 24 hours a day, like a sad arse..... Kenwrights a wanker and anyone who backs him ate disillusioned sheep.

[Hafnia]

This spelling error maybe down to the fact that I took to the forum through my phone, which may throw up predictive text every so often, not sit at my computer 24 hours a day, like a sad arse..... Kenwrights a wanker and anyone who backs him ate disillusioned sheep.

 

I hope I never ate disillusioned sheep, i've spent that past 20 year worrying about mad cows disease! Now I can't enjoy lamb?

 

(yep, the phones do that!)

[Peter H]

Is DK and Angel the same person? That would be soooooo odd, one of them slating my spelling and one stepping up to my defence. (Btw, thanks DK)

[Brett Angel]

Is DK and Angel the same person? That would be soooooo odd, one of them slating my spelling and one stepping up to my defence. (Btw, thanks DK)

 

You have misunderstood what i was saying...I was never slating your spelling, i was merely pointing out an obvious flaw to enable you to refrain from making a complete idiot of yourself in future conferences.

 

Cheers Pal