Premier League Profitability & Sustainability Rules: What They Mean to Everton

Four questions:

1) Having seen this coming, might Usmanov & Moshiri bung more cash our way to help or is it retrospectively impossible?

2) who will make the key decisions on sanctions: The Premier League or Uefa?

3) If we are non-compliant, what is your best guess about sanctions?

4) Do you think this might be why Ancelotti walked?

1. It's nothing to do with the amount investors put into the company, it is purely the difference between costs and revenue.

2. This is a Premier League issue, nothing to do with Uefa.

3. Inbound transfer embargo, budget limitations, agreement to break even, possible fine.

4. I doubt it, he would have known of this as a possibility for some time (assuming he has good advisors).

I'll trust your number crunching as it makes perfect sense. I've felt the last few years we had a Monte Carlo or bust approach hoping we'd win silverware or get Europe and to Hell with the consequences. We did neither so it's time to pay the piper unfortunately. The positive is that some of our better seasons in the last 30 years have come when we are broke. Going back to Colin Harvey, big spending has never worked out. Over to you Rafa

If stadium costs escalate beyond the £500 million that Alexander Ryazantsev, Everton's Director of Finance and Commercial Officer, gave as an answer to a shareholder at the AGM, what effect will this have on your forecasts and how would such an extra cost be financed, in your opinion?

Rodriguez will be kept because of his commercial value and may even get a 1-year contract extension (something I don't agree with, but I can see the commercial reasons in this case). Richarlison may be kept for commercial reasons but, if the right money is offered, he will go.

I am beginning to wonder if the right-back position will change and expect more of a Townsend or Gray type signing. Moise Kean will be sold but will be given more playing time if not.

For some unfathomable reason, I actually think he might do it. Furthermore, I suspect he may surpass the Moyes era by actually sneaking a piece of silverware. Perhaps I'm guilty of unwarranted pre-season optimism!

I think it is more Kendall PRE 1, probably over a extended period, with a continuation and stricter adopting of the Ancelotti plan. Silverware is possible, but not because of adopting a Moyes model.

My understanding is that the stadium costs are in excess of £550 million. This will be funded by Moshiri, lending, and a naming rights partner (assumed to be USM). It's always been thought lending would be in the range of £300 to £350 million with Moshiri, USM and perhaps some (relatively minor) public finding from grants.

Mike, a player sale now won't help the position up to 30 June, the year end. But it might act as a mitigating factor, demonstrating the willingness to reduce costs and book some profits if possible.

It certainly looks like we will have to forget the "Koeman" purchase style, and have a canny transfer position over the next year or two.

If so, Rafa Benitez may well be the man, along with Brands, to get us through this iffy patch.

This must take a long time to put together, so thanks for all the time and effort you have put into this post As you correctly say the Premier league will make a decision based on our figures as of the 30th June this year, so any sales will only help in being a mitigating factor as to what punishment they may hand out. I think the 6 who wanted to join the ESL may have really helped us when it comes to what judgement the Premier league will make, as in normal circumstances I think they may have looked at a points deduction, but because of the very light punishment they handed to the 6 I cant see anything more than a fine this time.

I said a few weeks back when Ancelotti left suddenly and out of nowhere Benitez name cam to the fore, that they had made Ancelotti aware that there would be very little to spend and he would have to consider losing at least one of the better players. That was the green light for Ancelotti to look for pastures new, and why Benitez became the number 1 choice of Usmanov/ Moshiri. They knew he was so desperate to get back managing in the Premier league he would gratefully accept a much reduced budget. I think Pauls figures highlight why we didnt go for the best candidates out there in Conte and Galtier as Conte would have wanted the sort of budget Koeman had and Galtier would also want a lot more than is apperently on offer.

You can also be well aware that other clubs are aware of Evertons current situation, hence why PSG would only take Kean on a loan. Also Juventus who were also interested in taking Kean back have so far not shown any interest. Maybe they know how desperate we are to turn our financial situation round that they will offer something really low nearer the deadline. Also we may have to sell Richarlison just to demonstrate to the Premier league that we intend to get our spending back under control.

A.1.185. “Secure Funding” means funds which have been or will be made available to the Club in an amount equal to or in excess of any Cash Losses which the Club has made in respect of the period from T-2 and is forecast to make up to the end of T+2. Secure

Funding may not be a loan and shall consist of:

(a) contributions that an equity participant has made by way of payments for shares through the Club's share capital account or share premium reserve account;

(b) an irrevocable commitment by an equity participant to make future payments for shares through the Club's share capital account or share premium reserve account.

This irrevocable commitment shall be evidenced by a legally binding agreement between the Club and the equity participant and may if the Board so requires be secured by one of the following:

(i) a personal guarantee from the ultimate beneficial owner of the Club, provided that the Board is satisfied that (a) he/she is of sufficient standing and (b) the terms of the guarantee are satisfactory;

(ii) a guarantee from the Club's Parent Undertaking or another company in the Club's Group, provided that the Board is satisfied that (a) the guaranteeing company is of sufficient standing and (b) the terms of the guarantee are satisfactory;

(iii) a letter of credit from a Financial Institution of sufficient standing and an undertaking from the Club's directors to the Premier League to call on the letter of credit in default of the payments from the equity participant being made;

(iv) payments into an escrow account, to be paid to the Club on terms satisfactory to the Board;

(v) such other form of security as the Board considers satisfactory; or (c) such other form of Secure Funding as the Board considers satisfactory;

I would imagine that Everton FC are fully aware of the consequences of breaking the rules, but it might be some considerable time before the punishment for any misdemeanours are seen. Manchester City have muddied the waters by their actions and their resolve to fight the governing bodies, but Everton FC cannot afford to become embroiled in long and costly trials, and will probably have to cut its spending and raise income significantly, probably by selling key assets to avoid any punishments.

It is quite clear that the driving force for FFP and its sanctions are the established richest clubs and nobody dare challenge the sanctity of that cartel.

Premier League FFP Man City

Income questions

Sorry to ask all this, but it seems that Moshiri has the money but, for some reason, can't put it into the club. Is that about the situation?

Clearly Moshiri has that funding at his disposal although, equally clearly, regardless of any Premier League requirements he wants to fund the stadium to keep it on schedule for a 2024-25 opening.

Kendall was in a worse position in some ways as the expectation he was contending with was not to be the "best of the rest", but to be the best, albeit that others were much more catchable in those days. Nonetheless, the Board did discuss the prospect of selling Bellefield in order to generate transfer funds for Kendall [Mk I].

Not too sure what you mean by a "Moyes model" or, indeed, by "the Ancelotti plan". The managers each have to manage within the set of circumstances as they stand at the time of their appointment. Each will do so in their own inimitable way.

It seems the reckless squandering of money over the last few years may now be over, making Benitez's situation somewhat less like that of the other post Moyes mangers & probably a little more comparable to that which Moyes had to deal with for the most part. Maybe we'll have Moyes at West Ham United describing Benitez's Everton as being set up to play "like a small team", tongue in cheek no doubt!

Make it that any new owner has to put a guaranteed bond with the Premier league that any money spent would not be leveraged against the club. That way when these owners leave the club isn't left with massive debts that they cant afford. But FFP was set up to keep the established cartel in place, like all the rules UEFA impose its all done to benefit the cartel. I say well done City and PSG for taking on UEFA and the cartel. I cant think of another business were its competitors limit how much they can plough into their businesses just complete madness.

"to submit by March 1st in each season a set of accounts for the current season and the accounts for the previous two seasons."

and you also say

"Given projections had to be provided before March 1 2021"

What is the cut off date that these accounts, or projected accounts, are to cover?

Is it the 30 June date you later mention?

That's according to Eindhovens Dagblad journalist Rik Elfrink, who has provided an update on the defender's future today amid the continued links to Everton.

FFP Stalling Move?

Does this report, if accurate, suggest that Everton FC is already in breach of the FFP rules, and are therefore subject to adhering to a budget set by the league for this current window?

"Surely we can kid some Portuguese club to take Gomes on a free and the same with Davies and the anonymous number ten. "

Gomes is on 80k a week, no one is going to pay close to that even if he's on a free. Davies is on low wages and has experience at least, so why get rid of him when we can't afford anyone better. Lastly, good luck getting anyone to take the "anonymous number 10" No one will touch him until the legal situation is resolved, if it's resolved that is in his favor.

You are right that buying Dumfries wouldnt make any difference to the figures we submitted on June 30th which according to Paul will show we have transgressed the FFP rules. But if we carry on buying players knowing we have already transgressed the rules it will look like we are sticking 2 fingers up to the Premier league regarding their FFP rules.

Now while I absolutely detest FFP rules I would think that we wouldn't be doing anything to mitigate our cause by signing more players given our position. I assume if we do buy players without selling first it may well be that the Premier league impose a points deduction rather than just a fine. I don't believe the club would want a points deduction and will do whatever it takes so that doesn't happen.

Thanks, I just wish mine was a more positive post to brighten your day.

His wages will be reflected in the accounts until we stop paying them. If his contract is ripped up, we save the wages - but lose any potential transfer fee we could recover.

As it's unlikely that we will be able to sell those players who are on massive wages, other clubs are not going to pay top whack even if they're interested in any of them...PSG and Kean loan. Richarlison?

Si (41) Only a guess but the PL would look at that and deem it a bad business model, and screw the club with a fine or deduction of points if the loss account looked anything like dangerous. What we seem to have done, is be very cavalier in our transfer dealings which as brought us to this situation.

I think Brian has it right about the motives of the PL and, in our case, they may not bend over backwards to get us off the hook. It might be totally different of course, if any of the Slimy Six come a cropper!

Thank you for the explaination. It makes it alot clearer.

Looking back at Benitez 's initial interview , he did mention finances as a consideration on future plans. The finance situation of the Club and how to improve it must have played a big part in employing Benitez. It is obvious that other candidates would not have had the experience and know how of Benitez.

The Ancelotti plan is play set up to defend and try to nick a goal. In Florida this seemed to be have been continued, with addition of pace via Gray and Townsend. Moyes model was to set up a team that was difficult to beat with a emphasis on workrate but failed to take the team to the next level in offensive play. Therefore his team was not consistently unbeatable.

I agree that Benitez is facing a similar scenario to Moyes spending wise for the waste you highlighted. I just think that Benitez will be hopefully better at taking Everton to the next level and may challenge for some silverware and more like Kendal in dealing with this scenario.

I assume that the club has to put forward the figures to the league as estimates and therefore there is a bit of scope for creative accounting so Bill can count every lawnmower at Finch farm twice and find the Arteta money.

Joking aside now that we have permission for BMD can we not capitalize every bit of expenditure that could loosely be described as "In the interest of BMD development"?

Personally, I am glad that there will be a limit on our spending. I think the money that has been wasted in the transfer market over the last 3 or 4 seasons borders on the obscene.

Having thought it through, I find our exploits in the transfer market this season somewhat refreshing.

Does this "equity participant" have to be someone who currently owns shares in the Club? Or could it be a new shareholder?

And does the "Beneficial Owner" have to actually be someone who is registered as an owner of shares? Or would that put us into more problems with the league as was the case of our former purported "shadow director"?

The point on Manchester City's ongoing debate with the Premier League and UEFA is, in my opinion, welcomed. I get the need for some sort of regulation, but City's stance is to be encouraged for those trying to break into the elite. They are standing up to "the club" and not being beaten down. If it comes to it, I hope we have the same balls to do likewise.

Whilst FFP initially seemed a sound concept in principle, in reality it is there to close "the club" and prevent upstarts breaking into the inner circle. Within reason, name me another business vertical that constrains investment in order to allow growth? I'm no expert business person or investor, but to grow, you have to invest right? I understand the need for a fair playing ground and controlling recklessness, but we have to allow for investment to promote growth.

One thing that did surprise me is the wide goalposts between losses in excess of 15M and the threshold excess of 105M. That itself presents a relatively free ride for reckless spending. So it would appear clubs have a 95M buffer before being punished? And even then it seems there is scope for negotiation? Again, probably a drop in the ocean in today's football market, but still a big comfort zone of what is effectively a £95M overdraft.

The final point is an old one. Our scattergun approach to transfer activity in recent years has been nothing short of dreadful. No plan, no strategy and different individuals pulling in different directions. I actually thought last summer's was a good window for us. Not just in terms of the players we brought in, but the business we done. This summer we are clearly paying (excuse the reverse pun) for the damage done prior to that.

Thanks again Paul; your articles clearly take a lot of time and research.

The way I read Paul's reply to my query, to the chances of a "beneficial Owner" making a "legally binding" donation (for want of a better word) to cover the gap between £105 million and £140 million, was that (not verbatim but rough memory!) Mr Moshiri could make such a donation but he has also the priority of getting the stadium built for 24/25.

So they must have sat down and had many long discussions about the next move, after Carlo doin a bunk. So far, it looks like the move is to bring someone in who can make the best with who we've got on the books, selling who we can and keeping who we can.

EG is Iwobi worth keeping, could/should, we sell him; and going through that discussion on each of our players. Also seeing who we could bring in to improve the squad without costing a mint.

I suppose,as the transfer window progresses to August, we'll see, what comings and goings lead to' hopefully, a better squad at the end of the window than we have now.

Up to now, I think a good start has been made with the 3 squad players that have been brought in. They've all played well in the 2 American games, with very little time to get to know the other players and Townsend and Gray looking very decent players who can cover a number of positions and both Fast! The Goalie looked really cool, calm and collected and impressed me, more to the point, he's impressed our manager and coaching staff.
Can we keep Richarlison? How much would we get for him if he's sold? Who could we bring in for less that we sell him for? Is Gomes good enough to keep in the first team squad? Can we improve the team to enable him to do what he's good at and can he do that often enough? How much, if anything would he sell for and how much for us us to get a replacement in? It looks like PSG are playing poker with us and offering a loan. We are in a position that, it's reckoned, the lad wants to leave and we might have to replace him with with very little funds to do so. Can we get a good player in to become our regular right back, within what looks like, a tight budget?

All that and probably much more, also with working with what we've got to improve every aspect possible, of our game. Especially in attacking. Our goals for was poor and our ghoal diiference was the worst in the top half of the division.

Dead easy!

A period of financial retrenchment could prove a blessing. Forcing the playing side of the club to manage with its existing, expensively assembled squad might just enable those responsible to look for solutions from the players already available rather than chasing quick fixes in the transfer market. The hope we might generate funds through a sale of our best players looks forlorn given that most potential purchasers are themselves wary of over-stretching themselves.

It seems that the trio of European clubs, Juventus, Barcelona and Real Madrid remain steadfast in their quest to re-shape the European game forever and of course the other nine plus a few others will be waiting in the wings to join them should the circumstances allow.

“The Court backs the request made by the promoters of the European Super League, dismisses UEFA's appeal, and confirms its warning to UEFA that failure to comply with its ruling shall result in fines and potential criminal liability. The case will be assessed by the European Court of Justice in Luxembourg, which shall review UEFA's monopolistic position over European football.

Super League Court Victory

Whoever was advising him did him no favours and his latest mistake (Benitez) has reduced the club to a football strategy focussed on maintaining Premier League status whilst his fortune disappears down a dockland plug hole.

I suggest the appointment of Benitez is a more sensible decision than some of his earlier ones; for example, the sacking of Allardyce in order to make way for Silva, a manager with no proven track record of success.

At least there is a rationale for Benitez, an experienced operator, taking over at a stage when the club is being compelled to manage within limited resources and an unbalanced squad.

Like you, I want us to do well but, seeing as how 'half a £Bill' has gone down the sinkhole, I think it is asking too much to expect both a brand new ground and a top-notch team. I'm training myself to see 'halfway' as an acceptable mark for the next few years!

So there!

Higher up the thread (#18), I give a description of "secured funding".

The law is there to be used in whatever way the lawmakers see fit, so the law is not necessarily applied equally and Man City are fighting back, so they will look for an easier target. With Moshiri being focused on the stadium, that could be us.

Although this seasons signings are underwhelming, Benitez has already added 3 necessary signings for peanuts. These are the sorts of calibre of players we might previously have spent north of £30m on in the aggregate along with ludicrous wages.

In some ways I feel a bit sorry for Benitez. He could end up saving the club financially but be despised for failing to get us into a top 6 that probably isn't in reach of this squad anyway.

Wage levels are very high, well past the warning level but again we are far from alone and I think one or two new income sources came online since the new year? How many times have we heard of a substantial amount put in by Moshiri only when we read the annual accounts?

Covid is a very convenient write-off excuse – no one is going to be punished severely in the current environment.

Where this leaves us with spending money here and now is a different issue – we certainly need to reduce wages but that is sensible housekeeping after some of last season's failures.

Like Paul Richardson @ 68 says were the perfect target, not a sky darling, but big enough to matter.

I do think there are more than us teetering on a financial tightrope and they will be happy to sit quiet and for us to be on the naughty step acting as the lightening rod for all FFP ire.

No points deduction, or transfer ban, anything more and you would expect Moshiri to hire the very best lawyers to fight our case of why we receive a bigger punishment than those who signed up to a breakaway league, before putting it into writing to the Premier League.

Alternatively if it was shown to be that Moshiri's friend was in fact the "beneficial owner" and Moshiri was just looking after his interests ('in trust'), would that put us in trouble with the regulators?