Everton post a profit for 2016-17

Moshiri has pumped £150M of money – in the form of non interest bearing loans with no fixed repayment date – into the club so far.

These loans have been equitised in the balance sheet, resulting in a net asset position of £90M.

To equitise a loan in your accounts, the auditor has to be satisfied that the conditions of repayment are such that the money is effectively equity.

Moshiri has not been replacing debt with debt, nor funding the expansion of the club with debt.

He has been funding it with equity. The reason he has used non interest bearing loans with no fixed repayment date is that outright equity raised through the purchase of shares would result in a dilution of other shareholders.

In terms of the Profit & loss, turnover rocketed by £50M to £171M enabling the club to post a healthy profit. The Echo opines that broadcast revenues contributed to the biggest part of the increase.

Whilst I remain deeply concerned at the dependency on broadcast revenues and hence Sky, the recent Sky-BT tie up suggests the broadcast rights gravy train will continue for a little while.

The goliaths that are Amazon, Google and Facebook are sniffing around. Netflix is not quite in the same bracket now but they will be in a few years. The Chinese and Qataris too are pumping serious quantities of cash into international broadcasting rights.

We are seeing new media companies challenging older more mature broadcasters. The latter are responding by tying up in (Sky/BT) or indeed merging (Disney-Fox).

Farhad, who is no fool (except when talking to Jim White) spotted this and indeed its bountiful implications for the Premier League.

Funding the club with £150M of equity is probably a drop in the ocean compared to what future broadcasting rights will be worth.

This might also explain why so managers were sacked this season, and why Conte, despite guiding Chelsea to the title last season, finds himself under pressure.

Its a shame that the financial stability off the pitch was not matched by stability on the pitch. The dreadful months of end August (close of window with no centre-forward or left-back) through to November, encompassing the poor run of results knocked the stuffing out of our ambitions for this season.

Reading those accounts, however, tells us we have the financial means to improve dramatically in the areas of recruitment, coaching and planning.

Pumped all that money into the club. Got us in the steadiest position we have been in since Kenwright took over.

Still a phoney though... 😀

AGM is early next month. I'd suggest that we park the thread until after that. My experience of these is that there will be detailed accounts, a thorough presentation on those and chances to ask questions of Chair and CEO.

Mind you, that never kept some happy in the past.

Have you ever been to an EFC AGM?

Things are moving in the right direction at the moment on and off the pitch. Let's hope it continues for a long time to come.

Or until half-past two....

With the amount of money coming in from TV and advertising, all the Premier League clubs could be letting supporters in for a fiver and still afford to pay players a fortune and make a profit. I know EFC are among the cheapest but – at a time when real wages are falling for ordinary people – it's sad.

Early ones were stage managed, later ones got out of control with axes being ground, latest ones as I described above.

I remember one question that put Bill on the spot. "Thats not my department. Next question"

Do they actually answer questions nowadays?

He may even have taken out a second mortgage on his house to fund his interest free loan??

Mind you I am there as a proxy voter so don't say anything, out of respect for the man who lets me go in his place; he is a Liverpool supporter, by the way.

I have been to a few and watching Kenwright perform never fails to make me squirm and want to vomit, besides standing up and booing him.

The operating costs is raised repeatedly by those that don't want to hear. These include all those items not covered elsewhere in the accounts.

The major item is payments to players for image rights. This had been stated clearly, as has the answer to questions about drawings by directors. When the CEO has stated very clearly that there were no payments to directors, the questioner and others there could have shouted "liar". Nobody does but loads of brave souls do it on line.

Big Sam needs to move the project on now. Onwards and upwards.

So 𧵎m buys you 㿙m plus 'goodwill', or rather his half share of that.

My, there is a lot of goodwill in football! I can only assume that Moshiri has negotiated, as part of his interest free loans, a very attractive buy price for the other shares.

As you say, valuations currently tend to revolve around models like discounted future cashflow which as you also say, is increasingly reliant on TV money. Personally I think the domestic part is near its peak. I think the Sky/BT partnership is very defensive. Live football rights have pretty much gone as far as they can in driving subscriber revenue growth and I think are maybe turning a corner and beginning to limit that growth by removing the cash to pay for other rights – that is where I feel Sky is heading towards.

On the other hand, international rights are a fertile area with still much upside. But for how long will the big clubs accept divvying this up so 'fairly' with the smaller clubs with very little international awareness? To be blunt, in an Everton v Man Utd game, what would actually be a fair commercial split for the income? Would we even see 10%?

We've seen a lot of asset price inflation over recent years because of the rather unusual (understatement) monetary policy that has prevailed and I wonder if and when that returns to normality, we might see a rather more prosaic approach to valuations, not least to football clubs.

So 𧵎m buys you 㿙m plus 'goodwill', or rather his half share of that. My, there is a lot of goodwill in football! I can only assume that Moshiri has negotiated, as part of his interest free loans, a very attractive buy price for the other shares."

Mark -

1. I have no clue what has been negotiated by Moshiri to purchase other shares.

2. The Net Asset Value reflected on the club's balance sheet is a highly conservative estimate of the value of the club. A big part of the club's value sits in its playing squad. These are recorded at historic value and are amortised over the life of a player's contract. Players such as Tom Davies would not have a value in our accounts whereas in reality are worth more in the open market. Ditto Seamus Coleman, Mason Holgate, DCL. The value of Everton's brand will also not be shown on the balance sheet. Being a Premier League club has significant investment attractions in its own right these days.

3. So yes, what you call "goodwill" (or what I'd call Fair Value/Market Value) contributes a significant portion to the valuation of EFC as a going concern.

4. Valuations can be derived in various ways. Discounted cash flows is one method. Adding up the various assets of the club using Fair/Market value (playing squad, brand, licenses) is another (known as Sum of the Parts). The IFRS-based balance sheet is the most conservative of the methods and best used for traditional businesses with assets which are recorded at Fair Value.

5. In terms of Moshiri's outlay, it is more than £150m. He bought the shares for £90m odd so in fact he has splurged £240m so far. Only £150m is reflected on the balance sheet as that is what has gone into the club. If Moshiri sells his stake in the club in the future, he will look to recover the full outlay.

Caveat: All figures I have quoted are from the Echo. Once I obtain some time I will check out the accounts of the club.

This is the one I want to see in more detail. I bet we've spent two or three times the 2015 amount in the last 12 months. money being drained from the game.

Colin (25) Any reasons for the build to take "hopefully" 5 years?? It seems to be a protracted timeframe..

Link

He talks some plums, Elstone.

Great reading your posts about Socrates. A man of principle who had some great men as people he held as heroes.

https://youtu.be/eKgPY1adc0A

Socrates is a cult hero of mine, not least of all because he comes from my wife's home city, Belem.

He was called Socrates because his father was a keen reader of philosophy and had a small library of books.

Socrates tells the story how such an innocent interest could be questioned under the military government that ruled Brazil through the 60s and 70s.

Out of fear of being discovered with such a library, his father destroyed the books he so loved.

In a biog I've read, Socrates said: "In 1964, I saw my father tear up many books, because of the revolution. I thought that was absurd, because the library was the thing he liked best. That was when I felt that something was not right. But I only understood well much later, in college." (He was just 10 years old then, but the seeds of resistance had been sown).

Sadly, later in life, Socrates had a drinking problem which didn't help him to survive a bout of food poisoning. Tragically, he died in 2011 after going into septic shock, aged just 57.

Don't get me started on another Brazilian football cult hero of mine, Garrincha - 'the little wren'. Some snippets:

* an alcoholic by the age of 8, supping cachaca with his alcoholic father
* lost his virginity to...a goat!!!
* driving a car when drunk, he ran over his own father...and knew nowt about it until the police turned up at his door
* killed his mother-in-law when again involved in a car crash when driving drunk
* when Brazil won the WC in 1958, be had to be told and convinced he had just played in and won a WC final
* that the home dressing room at the world famous Maracana in Rio is named after Garrincha, rather than any of the other greats who have played for Brazil
* that in all the internationals they played together for Brazil - 70-odd - if Pele and Garrincha were both selected, Brazil NEVER LOST!!! Not once...
* that for many - possibly even a majority of Brazilians - Garrincha is much more loved than Pele and is considered the better player
* sadly again, the alcoholism finally took its toll and he died aged just 50. They reckon 2 MILLION people took to the street for his funeral procession
* his other moniker was 'alegria do povo' - 'joy of the people', and on the cemetery wall where he was buried was daubed the simple message:

'Obrigado, Garrincha, por voce ter vivido' - Thank you, Garrincha, for having lived.

Two very special people, Socrates and Garrincha, flaws n' all.

I always thought Garrincha's career - consisting of adversity, comedy and ultimately ending in tragedy either side of the period where he showed his genius - had the right ingredients for a cult/folk hero amongst ordinary Brazilians.

Pele's career - genius, followed by a retirement funded by corporate sponsorships and banal sound bites, just doesn't quite lend itself to being a folk hero.

Maradona and Best fit in the same category, whilst Pele and Charlton, who achieved more on paper, will never have the same cult following.