Moshiri funding, general financing & "going concern"

For a more general view on the Everton 2021-22 accounts, please refer to Part I, here

“We need to be competitive and we need to win. We have a window to establish ourselves and we will do everything we can. Now we need to look at sustainability to be amongst the elite. It takes time, but we are committed.”

Farhad Moshiri, January 2017, annual general meeting of shareholders*

Farhad Moshiri’s financial commitment to Everton has been staggering, driven by circumstances he could never have realistically foreseen in 2016. The scale of his funding arises from three main contributory factors, one very much within his control and two (apart from the timing of the stadium development) beyond his control. The three factors are the exceptionally poor performance on and off the pitch, Covid-19, and the macro-economic and specific impact of the illegal invasion of Ukraine by Russia.

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Each have contributed in their own way to the position Everton finds itself in, and the resultant financial shoring provided by Moshiri.

Moshiri’s investment year by year

£750 million and counting. £750 million spent on funding manager recruitment and subsequent firing, player recruitment, funding losses in six of the seven years and yes, financing the design, preparation and partial construction of the new stadium.

However, even at £750 million, the task or project, as it was referred to in the early years, is far from complete. We have a squad in which the most marketable (and most talented) players have been sold, a squad that needs considerable re-investment in the coming summer – if circumstances would permit such – they won’t. We are reliant on third-party debt and the continued support of a non prime lender, and finally the completion of stadium financing – possibly another £300 million?

Our current financial condition

Before selling assets (players), before considering the stadium costs, we continue to lose cash from operations. Whilst the gap between revenues and operational costs (mainly wages) is narrowing, it is still likely this financial year (2022-23) will be cashflow negative.

To stem the negative cashflow, we either have to increase revenues or reduce costs further. Better commercial performance would obviously help but, more realistically, an improvement in our final position in the Premier League would benefit the finances. Dropping from 10th to 16th in 2021-22 reduced payments from the Premier League by £13.5 million. I’ll cover the potential impact of relegation later.

There have been cost savings in our total wage bill, a reduction of £20.7 million (11.3%) predominantly through the release of high earners such as Rodriguez and Bernard. Somewhat bafflingly in a period when costs must be controlled, management and administration staffing numbers increased from 101 to 116, and marketing and media staffing numbers increased from 53 to 78. With much of our operations outsourced, we do appear to have large staffing numbers.

The Everton business model, as with most clubs, relies on a significant contribution from player trading. Understandably, Covid had an impact and that is reflected in the submissions to the accounts and no doubt, the Premier League. However, in the absence of suitable replacements or the promotion of developing talent from the Academy, the loss of players such as Richarlison and others in previous years puts increasing pressure on what most would recognise as a diminishing squad.

Player sales contributed £67 million in profits to offset against losses elsewhere in the business and that pattern will be repeated in 2022-23 with the sales of Anthony Gordon and Moise Kean. It’s a fine strategy if the talent within the squad is not impacted; however, poor recruitment decisions or, more significantly, a lack of replacing players, like a goalscorer for example, remains a highly risky strategy if, for example, it concludes with relegation.

As mentioned earlier, lower league positions impact current revenues but also reduce the commercial and sponsorship opportunities. Everton have enjoyed “the best of the rest” premium on most commercial contracts for many years. As our competitive position on the pitch declines, it follows that any premium attained previously must erode also.

External Debt

Everton currently have two sources of external debt.

Firstly, a Covid-related facility from Metro Bank, initially £30 million but now being paid down. In 2021-22, the loan balance fell by £3.75 million to £26.25 million. One assumes that this trend will continue.

Secondly, is the facility provided by Rights and Media Funding, a private lender, ultimately owned and financed through offshore companies. Everton have a £150 million, 5-year facility with this company and, from the accounts, it looks as if it was heavily utilised. I estimate at the time of the accounts in excess of £135 million was outstanding.

Everton pay market rates of interest on this loan and it is not inconceivable with base rates having risen (and looking at competing providers like Michael Dell’s company), Everton will be paying an interest rate of around 10% on this facility. I will cover the possible impact of relegation on this facility later in the piece.

The Notes to the Accounts mention the possibility of further lending facilities being agreed after the year-end, but as yet there is no information to suggest further facilities have been secured.

The new stadium

When the new stadium project was first discussed, Moshiri’s plan appeared to be to find a significant debt partner in the early building phase, use the resources of the (to be) naming rights partner, USM, and finally, to underwrite any remaining costs from his own resources. Obviously, those plans failed to materialise.

Finding a traditional bank or indeed investors through a private placement (as per Tottenham Hotspur) has proved to be elusive. Three factors have been at play, in my opinion: the underlying performance of the business and the quality of the board/management; Covid and the deteriorating economic conditions globally, including the invasion of Ukraine; and a more difficult and costly lending environment as globally interest rates rose to counter inflationary forces. Indeed, global inflation will have played a significant part in the overall cost of the project, even with fixed price elements (as mentioned in the Accounts).

As a result, Farhad Moshiri has shouldered the costs of the new stadium to date. The accounts show £207 million of costs as at 30 June 2022, but potential investors believe his contribution to stadium costs currently stands in excess of £400 million.

Given Moshiri’s admission that total costs will be in the order of £760 million, that suggests £300 to £350 million is still sought. Media reports in recent months and an acknowledgement of a heads of terms being signed suggest a funding partner is getting closer. Talk of a direct equity investment though is wide of the mark.

It is likely that the investor(s) will provide what is known as junior debt (junior in that it ranks below other creditors) and, in addition to an agreed rate of interest, will have warrants attached. The warrants would allow the investor to acquire shares at an agreed time in the future and under agreed conditions. The investor would also be provided board seats (two have been suggested) and would have control over various reserved matters (ie, effective financial control).

It is unlikely this investor will provide all of the remaining funding; additional borrowings or further investors would be required. It would however allow the continued funding of the stadium. Notwithstanding going concern issues (below), the investment is not dependent upon Premier League survival.

The “going concern” issue

In Annual Reports and Accounts, directors and auditors have a duty to confirm (or not) that, in their opinion, the company will meet its financial obligations when they become due. and that the company has the resources (and future resources) to function without the threat of liquidation for the foreseeable future. This is usually regarded as at least the next 12 months from the signing of accounts.

In the 2021-22 accounts both the directors and auditors draw attention to the detailed notes (Note 1(C), page 22) within the accounts:

Directors Report:

Auditors Report:

Notes 1. (C) contain the following:

The directors were satisfied to confirm the club could meet its financial obligations for the following 12 months on the basis of existing banking facilities (described above) and a further injection from Farhad Moshiri of £70 million to fund the new stadium development and operational cashflow.

The directors have produced detailed cashflow forecasts based on two scenarios: (i) maintaining our Premier League status at the end of 2022-23 season; and (ii) “a severe but plausible downside” of relegation to the EFL Championship.

In the event of (ii), the club would review its cost base, trading strategy and defer discretionary spending to offset reductions in revenue.

From the notes, relegation has two significant impacts: (i) reduction in revenues; and (ii) the requirement for a “material repayment” of debt (one assumes to Rights & Media Funding).

Dropping into the Championship would have a huge impact on Everton’s revenues. In 2021-22, Everton received £115.1 million in broadcasting revenues. In the first year of relegation, a club receives 50% of the equal shared revenues – based on 2021-22 figures that would be a parachute payment of £40.75 million – a reduction in income of £74.35 million. In addition, it must be assumed that commercial income and perhaps gate receipts might fall also.

Secondly, the requirement to repay existing debt facilities – the accounts do not specify the exact amount but the covenant requires a material repayment.

The notes confirm the club is in advanced negotiations for further long-term funding and for stadium financing. However, neither are currently legally binding.

In addition, Farhad Moshiri has provided “a letter of support” confirming his intention to continue funding the club for the following 12 months from the date of the accounts (27 February 2023). However, it must be stressed that this does not represent a legally binding commitment and thus is not guaranteed.

The notes conclude as follows:

So what does all this mean?

Simply, if relegated, there is a significant doubt that we could continue as a going concern. In practice, that means the club if not supported by the major shareholder could enter administration. There are, however, alternatives – it is not a given.

The club has assets – it has players. Inevitably there would be a fire sale of players, both to generate cash but also to reduce costs. It is unlikely we could enter the Championship with most of the existing squad being retained.

Moshiri could sell the club at a discounted price to new owners who would re-capitalise the business, pay off debt and continue financing the stadium construction.

Alternatively, the club could sell the stadium to an investor or property developer. The stadium has an asset value, it might be worth at least as much as it has cost to date – perhaps more than £400 million. It might be worth even more on the basis of what it would cost to construct the stadium at today’s prices. The new stadium owner would complete the construction and have Everton as its tenant.

I stress each of the above are options in the event of relegation, the calling in of debt, and Moshiri’s inability or unwillingness to provide further funding. Administration – whilst highlighted in the Annual Report and Accounts, is not a given – there would be options, albeit deeply unpalatable options. One hopes we never get to this position as the prospects for the club would be bleak, on and off the pitch.

As I concluded in Part I, the stark reality is that the club does face an existential threat. Absurdly as an ever-present in the Premier League, as a club in receipt of £750 million of shareholder funding since 2016, as a club that has to sell its best players to have a hope of remaining compliant, we find ourselves in this position.

I cannot consider in any other business that the board and executive could survive having brought such peril to a business. Moshiri’s greatest failing to date has been his inability or unwillingness to bring in or retain professional business people to run his club, oversee and invest his largess wisely. He must act immediately or sell the business to those that can do so. If he doesn’t, the decision could be taken away from him in administration.

That would be at even greater cost to not only himself but to everyone associated with this venerable organisation. He has a duty (as do the directors) to protect our beloved club from the peril it faces. Changing nothing – directors, executives or ownership – will see the warnings within the accounts materialise. The threat can be no clearer, nor can the solution.

Reader Comments (58)

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Charles Brewer
1 Posted 02/04/2023 at 18:23:29
All rather makes Monday's match against Spurs rather important.

My reading of Paul's interpretation is that this club is essentially beyond saving if relegated, and may well be even if they do survive. Moshiri has done all and more than could be expected with the single exception of failing to get a decent CEO, Chairman and Board but the atrocious commercial and football management has managed effectively to burn almost a billion pounds worth of funding with just a building site and a far worse team the only things to show.

My deeply considered and measured conclusion is:

Fuck off, Kenwright, and take your garbage directors and can't-be-arsed players with you.

Tony Everan
2 Posted 02/04/2023 at 19:37:45
Paul, thanks for this.

Do you know if we have relegation clauses built into player contracts as standard to protect the club?

Maybe this is something that the Premier League should look at and insist on for all clubs? In the interests of the clubs' stability, for their fans instead of players and their insatiable agents.

Chris Leyland
3 Posted 02/04/2023 at 19:59:52
Paul, one thing I don't see a reduction in is matchday income if we go down. I actually think it will go up as we will still sell out at home and we would have 4 more home league games.

I think that the club could get away with not reducing ticket prices too. That's assuming we are still in existence if we do get relegated.

Jack Convery
4 Posted 02/04/2023 at 20:11:52
Peter Mills
5 Posted 02/04/2023 at 20:29:06

I have watched the development of the new stadium with great interest, anticipation, but also concern.

I appreciate there will be naming rights, and opportunities to raise extra income, but it hasn't been paid for by Everton FC. So, presumably for Everton FC to play football there, they will have to pay a rate of return or rent of several tens of millions of pounds per year.

Do you agree?

Lee Courtliff
6 Posted 02/04/2023 at 20:29:39
Heartbreaking stuff. No wonder we are a laughing stock to fans of other clubs.

Thank you, Paul, for the information.

Don Alexander
7 Posted 02/04/2023 at 20:43:22
The following clip from The Esk's piece is the reason our balloon of hope is only going to be doomed (as ever) by total pricks:

Notes 1.(C) contain the following

The directors [and note the plurality! – my brackets] were satisfied to confirm the club could meet its financial obligations for the following 12 months on the basis of existing banking facilities (described above) and a further injection from Farhad Moshiri of £70 million to fund the new stadium development and operational cashflow.

The directors [plurality again] have produced detailed cash flow forecasts based on two scenarios: (i) maintaining our Premier League status at the end of 2022-23 season; and (ii) “a severe but plausible downside” of relegation to the EFL Championship.

So, folks, just who do we think of in our boardroom as having sufficient business savvy to make any sane person hopeful?

Paul Hewitt
8 Posted 02/04/2023 at 20:46:01
Never been a more depressing time to be an Evertonian.

Thanks, Moshiri.

Tony Abrahams
9 Posted 02/04/2023 at 20:54:36
Do you think Moshiri could have bought Everton if he wouldn't have been prepared to keep Bill Kenwright on, Paul?
Paul Tran
10 Posted 02/04/2023 at 20:58:04
Thanks, Paul, your usual exhaustive, informative analysis.

I'm starting to wonder what Moshiri's motivation is here. I've often wondered whether he's an oligarch's mate who got lucky. What he's showing us is plenty of things; skillful business acumen isn't one of them.

Paul Tran
11 Posted 02/04/2023 at 21:04:52
Tony, I think Kennwright convinced Moshiri that we were a brillianty-run club that just needed 'money'. The fact that he fell for that baloney tells us plenty. The fact that he's shelved out all that money and not removed him, tells us even more.
Ed Prytherch
12 Posted 02/04/2023 at 21:08:06
To emphasize the incompetence of the board, DBB's response to the strategic review was to hire more staff at a time when we needed to cut costs. That is called pouring petrol on the fire.
Tony Abrahams
13 Posted 02/04/2023 at 21:08:55
Exactly Paul T. It’s no good having loads of money, if you haven’t got a club how to run a football club, and this is exactly why the man who kept on giving, was led down the garden path.

Of course he should have known better, but that statement alone shows how easy it was for Kenwright, to stay in such a prominent position, by simply massaging the ego of a man who might have had loads of money on tap, but never had a clue.

It’s why I asked Paul H, that question before, but not that it matters because it’s impossible to simply erase the past.

I obviously hadn’t seen post11 when I wrote this Paul.

Dave Williams
14 Posted 02/04/2023 at 21:16:57
This is all terribly sad. I remember the hope that we all had when Moshiri came in and what has happened since is a scandal.

How can millionaire/ billionaire businessmen fritter away so much money and then endanger the very existence of our club in such an irresponsible manner? Isn’t this what FFP etc was supposed to stop?

Where will it end? We have to be positive and drive the team on to get as many points as we can and hope that we avoid a points deduction. If we stay up we will survive as someone will buy in. If we go down it becomes a different ball game

Brendan McLaughlin
15 Posted 02/04/2023 at 21:17:37
Paul #10

Don't think Blue Bill needed to do much convincing.

Moshiri was of the opinion that all that was needed to bring success was a good manager backed financially.

The worry is despite back to back relegation battles, Moshiri's opinion hasn't changed and the Board/Blue Bill remain.

Paul Tran
16 Posted 02/04/2023 at 21:19:53
Yes Tony, take a badly run business, change nothing, give it more money and it'll waste even more money...
Tony Abrahams
17 Posted 02/04/2023 at 21:31:11
This just takes me back to the question I asked Paul H,@9, Brendan.

Take me or leave it Farhad, you know it makes sense, because me and my nepotistic friends are the best thing to happen to Everton, since the European ban in 1985.

Paul Hewitt
18 Posted 02/04/2023 at 21:34:38
Tony@9. I don't think Bill would have sold if Moshiri wanted him out. But that's all on moshiri, he should have just walked away.
Barry Rathbone
19 Posted 02/04/2023 at 21:47:15
Dave 14

You're right about expectations but some did question the Moshiri involvement he was a low end billionaire more Randy Lerner than Roman Abramovich and we all saw what happened at Villa.

I'm with the notion he was a Usmanov puppet with all the shiftiness that involves and if correct the Benitez appointment was Usmanov's idea then both organ grinder and monkey are as dull as dishwater.

The mess they've got this club into defies belief (it isn't the board) but with BMD already impinging pitch side due to finances relegation escape looks like a delay of the inevitable.

I'm almost beyond caring these days

Barry Hesketh
20 Posted 02/04/2023 at 21:56:09
They're both in it together, so they're both to blame, a pair of egotistical chancers, who wouldn't know how to run a market stall never mind a multi-million pound football club.

They decided to gamble and hope for the dividends to arrive, both men are the worst types to run any business - blindly optimistic fools - and practically every decision they've made has been a bad one.

Circumstances beyond their control have undoubtedly, interfered and made things more difficult, however, they never had a proper strategic plan in place and as has been the case for nearly three decades, the club has reacted to each and every event, with the foresight of a goldfish.

It'll perhaps, take another half a decade to recover from our current position that is, if we somehow manage to escape the worst of what might happen in the next few months.

It wasn't the black cat running around Goodison that bought us bad luck, it was having a person at the helm, that has acted more like a starstruck fan, when what we really needed was a level-headed, practical person who could recognise the perils of throwing money at a problem, when other solutions could be found.

To get one owner like that is bad enough, but to get another to work in tandem with the first, albeit a wealthier one, is unbelievable.

For the sake of the club and its fans, we have to hope that better days are ahead, it's always darkest before the dawn don't they say?

David West
21 Posted 02/04/2023 at 22:28:14
Another excellent peek behind the blue curtain from Paul.

I believe moshiri's exit was always planned once the stadium is built.
As Paul says, he could sell the half finished stadium right now for equal or more than he's invested in it due to inflation. So what will it be worth once completed? £900m - £1b ?
The club is worth roughly £400m by some estimates.
The club is just an add-on to the eventual sale in Moshiris' eyes.

The playing side has detireated rapidly due to poor manager selection, poor recruitment, poor long-term strategic planning of the squad & poor commercial performance off the pitch, which has all just made the stadium build more risky now.

I love to know what Paul's estimate for the value of BMD once completed?

If you build a house costing £100,000 and put it on the market, you would expect a 15-20% profit. I know its not the same market but there must be figures or estimates for this ?

Paul [The Esk]
22 Posted 02/04/2023 at 23:19:13
Will answer other points later today when I have time.
Cast your mind back to late 2015, the American investors Moores & Noell were in prime position offering £225m for 100% of the club. However they had no intention of retaining the then existing board.
On hearing this Kenwright was desperate to find an alternative buyer. He returned to Moshiri who had lost interest in Everton in the late summer of 2015. A cut price deal (valuing the club at £175m) and retained board positions for Kenwright and Wood and the deal was done. Earl objected on the basis he was being forced to accept a lower offer but to no avail.
Jerome Shields
23 Posted 02/04/2023 at 23:38:39
I think Moshiri became a billionaire putting Investment packages together.In Everton he has shown skill in doing this.But in those businesses were it proved to be successful he was working with people who could run the business, whether it be by hook or by crook.They did not enrich themselves by the business, but by how the business was run.

In Everton's case he got bluffed by Kenwright that, as Paul#11 says , that Everton was well run, but only needed a injection of cash.Many of us got similarly bluffed, but thankfully didn't have the money Moshiri had.

Kenwright basically asset stripped Everton to get control and then sold his Shares at a Profit.His sole aim in running the Club was to achieve that objective.So Moshiri got the shares at the right price and put the Investment package together, with a Docklands Development, but the actual incompetence of the Management came to the fore, something Moshiri tried to control by appointing Brands to the Board,( with football knowledge ) with a remit to cut the players wages% and go involved in Management appoints.But crucially did not tackle the actual problem source.

Further the Club Management continued there self serving style with the Second highest Directors Remuneration in the Premiership with one of the smallest Boards, one of the highest Internal support staff wages % in Premiership. Which continues unabated with increased staff as Paul notes in Marketing&Media and Management & Admibistration.Paul did omitted the 26 new positions the Director of Football created, tut tut, according to the Everton Chief Executive.Denise seems to think this has something to do with a permanent strategic plan( Something that does not exist in any Business textbook), which obviously does not consider budgets, never mind the Financial state of the business.

So Moshiri's Carefully formulated Investment package, has went askew as a result of the Club Management he let continue, as losses mounted.

The greatest disappointment I have is that Everton are relegation fodder referred to a Independent Commission, instead of challenging for a Premiership title referred to a Independent Commission, considering the Shed loads of money that Moshiri put into Club.

Kieran Kinsella
24 Posted 03/04/2023 at 00:46:51

The thing about Moshiri and his billions is that he isn’t some kind of Richard Branson genius. He was just the accountant for an Uzbekistani gangster who got rich as criminals used corruption and brute force to carve out empires as the USSR dissolved. He’s basically like that weasely accountant guy in the Kevin Costner movie The Untouchables. Easy to make money and be successful when you’re operating in a lawless vacuum created by corrupt Boris Yeltsin. Any one of us could have done what he did and some of us, Esk, probably Colin Glassar as he seems pretty smart, Dave Abraham’s as he is apparently someone who watches his pennies, possibly Don Alexander the cynic, and obviously me could have done better. 😉

Don Alexander
25 Posted 03/04/2023 at 01:08:12
Keiran, to be included in your post above is a privilege. To also be cited with The Esk, Dave A and CG is a fabulous privilege.

I don't think I'm a cynic though. I've never rated Kenwright and when Moshiri made the shit wealthy beyond even his self-serving dreams I pointed out that Moshiri was, at best, a mid-table billionaire owner in comparison with other Premier League owners at the time (as well as a few in the Championship). Since then his wealth status has markedly dwindled further.

That's why I don't see any kind of beneficial outcome for the football club with the longest history of all in the top flight of English football.

A bloke with tumours in his brain, lungs, liver and bowels has more chance of recovery than we do under these spoofs.

Tony Abrahams
26 Posted 03/04/2023 at 07:47:08
That last paragraph is very cynical Don, but when you have been banging your head against the wall for years, highlighting what a self serving, inept, nepotistic fraud that Bill Kenwright, obviously is, some people will always put you in the cynical bracket.

The most cynical phrase I’ve read on this thread is that (it isn’t the board) but that’s because I agree with Paul H, when he said that Moshiri should have walked away rather than get in bed with Bill Kenwright.

If the man who was simply just treading water, wasn’t prepared to sell unless he was kept on in a very prominent position, sells to a man who didn’t want the football club to take up to much of his time, then you would have to be very naive to believe our current position has got nothing to do with William Kenwright and his nepotistic board, imo Barry R?

John Chambers
27 Posted 03/04/2023 at 08:24:47
Thanks for all this analysis Paul but one thing I don’t recall seeing anywhere is the breakdown of how the club thinks we can argue our losses, when you take all the allowances out, fall within the £105m limit. In particular I wonder how that breaks down year by year as, on the face of it, the last 2 years alone are £160+m. That makes it look like we need to make a £60m profit by the end of June this year. The sale of Gordon and Kean just about equate to last years transfer profit but even with reducing wage bill, perhaps reduced player amortisation (although we did spend £60m in the summer) it feels like we need to generate another £80m from somewhere. Can only see that through more player sales
Paul [The Esk]
28 Posted 03/04/2023 at 11:31:54
John #27. I have a stab at it here. I know they're based on assumptions but it gives an indication of the scale of the problem from my perspective. The club vehemently deny this of course
Paul [The Esk]
29 Posted 03/04/2023 at 12:09:38
Jimmy I'Anson
30 Posted 03/04/2023 at 12:31:54
Paul, how does the reduction in the expected value of players affect the figures? For instance, if Everton had a solid offer for Richarlison of £100m, refused it, then the pandemic hits and we eventually sell him for £60m. Surely, if this happened, it would be very easily provable.

Is it possible that this is why the club figures for the pandemic effect are so high?

Jerome Shields
31 Posted 03/04/2023 at 12:47:07

I think you and the poster's would aleast principled and honest in your dealings. I was trying to simplify the Moshiri the Fixer from Moshiri who can't run a business.Whatever is the case on his past dealing, he really got exposed at Everton and it has cost him a fortune, though it is questionable his attachment to it.

But looking and Financial Accounts and Reports around it there are two concerns.Firstly is what lead the Premier League to give Compliance Assurances going on the real time unaudited accounts and secondly the Statement by the replacement Auditor that there are concerns regarding Everton as a going concern should they be relegated without qualification.Then we have a Statement by the Board that everything is ok, when clearly it is not.

For Moshiri a accountant to allow this has to raise question on whether he was complict in such conduct, knowing what has been going on all the time,every though there is no benefit to him or the Club.

On ToffeeWeb the problem on finances on relegation has been highlighted for aleast two year,the main problem with this is the attitude by the Owner and Board to the truth being told, by the Auditor and the Premier League.

Paul [The Esk]
32 Posted 03/04/2023 at 12:56:40
Jimmy #30 this is the so called un-crystalised losses which frankly is no different from reporting what might have happened if Collina had allowed the goal at Viilareal to stand
John Chambers
33 Posted 03/04/2023 at 13:20:20
Paul thanks for that. I appreciate it is an estimate you have had to put together but IF we can argue the PL had sanctioned our position, or at least any variance is minimal (I appreciate your figures show a significant liability!) for last season it means that for the current season we basically must break even as we would already have losses of £106m for 20/21 and 21/22.
I guess the spending last summer, when amortised, will largely offset the reduction on the books from previous seasons with Sigurdsson and Tosun contracts ending. Spending on wages may be slightly down with these guys plus Allan and Delph being off the books, perhaps £10m net benefit. Given the sale of Gordon and Kean offsets last seasons transfer surplus it looks to me like we have to make circa another £40m before the end of June in transfers.
Given the limited saleable assets we have I can see at least 2 of Pickford, DCL (if he can prove his fitness), Branthwaite (possibly our best prospect) will have to be sold
Jimmy I'Anson
34 Posted 03/04/2023 at 14:15:24
Paul #32 I see.
Your analogy isn't quite correct though, as with Collina we will never know. However, if we had offers for players in writing which were then reduced as a result of the pandemic, especially from the same club, then it's a bit more clear what has happened. Although, in the absence of pre-pandemic offers in writing this argument would fall down.
David West
35 Posted 03/04/2023 at 14:16:59
Paul. Do you have an estimate for the value of a completed BMD ?
Do you belive that is moshiri's exit strategy? Selling the club with a completed BMD ? Or even separately and we become tenants? Is there anything that ties the new stadium to the club or is it completely separated and owed by moshiri?
Stephen Colby
36 Posted 03/04/2023 at 15:02:23
As ever Paul a superb analysis of our current predicament. And truly frightening. I managed a company with a turnover of approx $250 million USD and we employed 7 people in our Marketing and Media dept. Outsourcing this discipline worked reasonably well, but we were laser focused on all oncosts and measured results on a very regular basis. From an above the line perspective the +16% increase in admin staffing costs during a period of COVID and the marketing and media stafing number growth from 53 to 75 is utterly inexplicable. I would hope to see a breakdown of these FTEs, with their job titles, salaries, and bonus potentials fully explained. But I will hope in vain.
Mark Taylor
37 Posted 03/04/2023 at 15:57:03
I'm with Kieran on this. Moshiri was not a billionaire through his own initiative. He was a jobbing accountant at Deloitte. You may make millions that way but not billions.

The change happened when he became close advisor to Usmanov and salary became secondary to the chunky minority stakes he was gifted by Usmanov. Of course we might think that the latter is a genial, happiness spreading person whose generosity is giving away billions is admirable, or we might think there is something more substantial in the transaction, not least allegiance and obedience to the Uzbeki. I see no reason why that would change just because of Ukraine in fact I see several billions reasons why it won't and can't.

A man with a couple of billion, even if it truly was his own money, earned under his own steam, simply cannot afford to spend £750m in hard cash with a substantial further liability on top of that, with random sporting chance yielding a realistic chance of losing all of that bar a few tens of billions in a fire sale. Sorry, but no-one would be mad enough to risk such a huge % of their supposed wealth without someone underwriting things behind them, with bigger pockets.

And this, I believe is why Moshiri does not sack the board when in any other business, they would be long gone. Kenwright and his side kicks know where the skeletons are hidden, they lead to Usmanov and it's is game over for Moshiri if that becomes regarded as fact. It's quite an impasse

Jerome Shields
38 Posted 03/04/2023 at 16:44:54

I always been of the opinion that £100 is worth more than £1000 you can't spend. If you have to give it away to get £100 value it was never worth £1000 in the first place.

So in the case of Moshiri the money he can put in maybe millions but if there are limited legitimate ways he can spend it he will take less value in what he gets for it.

So the millions he had spent, depending on the source may not be worth their face value to him.

You are right there is something very strange about being prepared to bankroll Everton's losses and fund a Foot ball Stadium and not try to hold the Club Management to account.

Considering the Sanctions and restrictions on the purveyors of such wealth, the world must be awash with such money, making a accountant like Moshiri, a valuable person to know for such people.

Given a Independent Commission is now involved it will be interesting what arises over the next two years.It is the destiny of Evertonians to suffer, so Everton will survive relegation , then a points sanction will be on the agenda.The Premier League will have to sort something' out with the Football League ,since writs will flying.God nows what will happen this Summer, but it won't be what anyone expects.

Mark Taylor
39 Posted 03/04/2023 at 16:53:03
Jermone, I think it's called money laundering.

An EPL club, even ours, does throw off a lot of cash. As you put it, £1000 in, £500 out is not a bad deal in that context...

Tony Abrahams
40 Posted 03/04/2023 at 17:03:39
But surely the money that they have spent on Everton, has already got to have been accounted for?

Didn’t Moshiri sell his Arsenal shares to Usmanov, to buy Everton? If this is the case, then he could have spent this money anywhere, and because it had already been passed through into the system, then every single pound, was already worth exactly one pound, until he carried on like a kid in a sweet shop, and began wasting it?

Mark Taylor
41 Posted 03/04/2023 at 17:35:38

I take your point but did Moshiri really have any shares other than that nominally in his name through the Uzbeki's largesse? Those sums quite possibly still to be used at the latter's bid and call?

Clean money might well be used to start a nominally clean business through which further sums can be laundered.

I imagine it has always been appealing to Russians to have a fair amount of their wealth outside Russia. Even more so now. Consider those banks in Cyprus, who the big depositors were, and why the government did what it did with deposits. That money has moved substantially to the Gulf, the UAE especially. There is some sense in what Jerome said. Even a devalued asset might potentially be worth a few hundred million which in turn is worth potentially far more than a few billion in Russia where it can never truly be thought of as your own. Plus it has the possibility at some point of throwing out its own pile of cash but this time into a real official bank account.

Neil Copeland
42 Posted 03/04/2023 at 18:06:18
Kieran #24, whereas, Rob H, Danny O, me and a few others would have blown it all and more on travelling to watch the toffees!

Joking apart, I think you make a very good point.

Tony Abrahams
43 Posted 03/04/2023 at 18:51:02
Interesting Steve, and although we can assume that Big Al is bent, my own view is that more money was possibly laundered through Everton, when Bill Kenwright was in bed with the Mozart of money.

It might not even have been money that was getting laundered, but maybe money that was getting stolen, when you consider the interest rates, and the way Everton were always using offshore banking, plus operating costs that became extremely extortionate.

The masters make the rules for the wisemen and the fools, is how I always view these types of discussions, especially when it comes to the horrible gangsters and the rest of the extremely straight world, who get governed perfectly by governments and politicians!

Jerome Shields
44 Posted 03/04/2023 at 20:38:31

You may say that, but none of the authorities will.But Moshiri is a Offshore investor with connections with plenty of money and is well versed in Finance and seemily has no problem continuing to Finance Everton.

The amount of money involved in this investment will be problematic for the authorities and though the Premier League is under pressure it did not take direct action, but referred Everton to a Independent Commission which will meet in private. The Football League won't want such a large problem pushed onto them.

I know the Final accounts throw up alot of question's, as they have done in the past as Paul the Esk has reported for years.But things keep going.Moshiri is still bankrolling Everton and the Board is still in place.There is not going to be wholesale changes, a few scapegoats at best.How it all plays out is not a fore gone conclusion..With a £750 million Stadium continuing to be built and Everton battling for promotion with the right Manager and possibility of another outside investors, no threat of foreclosure on loans and the real problem for the Premiership of putting a Big Club in financial jeopardy there still could be alot of twists in this tale.

The Government won't want to do much either with a election coming up.The Real Time reporting they mention is similar to what many business have to do for tax purposes already.

Jerome Shields
45 Posted 04/04/2023 at 05:30:16

The Chief Executive has a Permanent Strategic plan.I know you have never heard of such a thing.You will not find it in any Business text book.There are no budgets or accountability.Part of it was reviewed on the football operations side, which resulted in 26 new position a year ago.Any analysis I have attempted throws up impressive structure of titles in the football side.

I have not done a detailed analysis on the Admin side, other than who is involved in transfers , but anytime I look at it there is a impressive structure of titles with no budgets or accountability as well On the Commercial side Paul the Esk regularly talks of underperformance but anyone who has dealt with them is impressed on sponsorship and any dealings they have with Everton.I had dealing with them once years ago, which I would describe as parochial and incomptent.But this appears to have changed.

Everton have th second highest total remuneration for Directors in the Premiership and regularly have a higher wages % than is recommended.The Chief Executive regularly seems to equate titles and new appointments with good Management progress.

In dealing with losses, which have resulted in breaching the Premier League Profit and Sustainability rules wages exoenditure appears to be ring fences.The exception is on the playing side which the Director of Football, under direct instructions by the Owner, to cut back on Wages, Though this is after a prolific period of expenditure on overvalued players, who where given pop star contracts.Deadwood still exists and a policy of loaning out young players to reduce wages is on going.

This is all happening against the background of a Stadium Development which seems well managed and projected to cost £750 million.The owner has in writing has yearly introduced monies for equity to support losses and in the absence of promised Finance has continued to support the Stadium Development and it is reported that he will in future.The Owner has attempted unsuccessfully attract investors who would have expertise in running Sport Clubs, but is continuing to try.

There appears to be no threat of foreclosure on loans, and the Owner as a source of finance seems to have no limits.Losses this year have been reduced in comparison to other years even taking into account Covid.

In the Final Accounts we have received assurances that everything is OK, Though the new Auditor has expressed concerns of Everton as a going concerns should they get rekegated, but the Club with a new Manager appeared to be heading in the right direction to avoid it.The Board appears to suggest that it will be able to robustly defend the Club, having been revered to a Independent Commission for breaches of the Premier League Profit and Sustainability Rules.I have a sneaking impression they will get away with it.

I would add that in my own business life I have always managed and conducted my business in a totally different way than the above.

Michael Lynch
46 Posted 04/04/2023 at 18:52:24
Article in the Mail praising the fans, name-checking the author of this article, and dissing our board:
Jerome Shields
47 Posted 05/04/2023 at 10:34:36
Thanks Michael for the link.I think that Evertonians by their conduct could have a greater influence on the outcome than they realise.I don't think the Premier League will punish the Fan's with a points deduction, especially with a £750 million Stadium in the pipeline. The sanctions if any will be directed more at the Club and Owner.
Jerome Shields
48 Posted 05/04/2023 at 10:57:15
Club being the Club Management.
Brian Harrison
49 Posted 05/04/2023 at 11:52:24
Seems that unless Moshiri can sell the club then we will be going into next season with the same owner and board. Moshiri knows that if we stay up and with the shell of the stadium finished, he will have a better chance of selling the club.

But football clubs don't stand still and financial decisions will have to be taken now or very soon as some players are out of contract ie Mina which will free up money, but I am sure that Dyche would want Doucoure to be given an extension.
Budgets have to be detailed so the manager and DOF know what they have to spend next season. Also the club has to reduce a wage bill that is taking 96% of our income.

So if no buyer is found soon then Moshiri and Kenwright will be sorting out contracts and negotiating with possible transfer targets, so despite all the brilliant peaceful protests nothing will have changed. And sadly thats the way football is that if owners are happy to carry on because there are no alternatives and he has appointed the chairman and directors then nothing changes.

Tony Abrahams
50 Posted 05/04/2023 at 11:59:25
There are no alternatives? Wow.
Jerome Shields
51 Posted 06/04/2023 at 04:22:43

The Premier League will try and force Moshiri's hand.They obviously have no confidence in the Board.That means that they will give alternatives to Moshiri.They will not allow him to keep the Club in the Premier League without changes. This will all happen in private of course.We will know the result when sanctions are applied. Really the referral to the Independent Comission is the second stage in trying to sort out the Club..

Christine Foster
52 Posted 06/04/2023 at 05:46:17
Every home game this season has been a full house. Over 39k at every one, considering our best placing has been 11th, thats pretty damn good. With our away support top notch as well, will be at pains not to penalise the fans but it all comes down to the severity of the breach. The club will now know what it is and be preparing its defence and probably have an idea of the timelines involved.
Outcome? No sodding idea.. at least not until we know if its a felony (we never told them about a transaction...) or a capital offence (you deliberately lied about the accounts)
I have to push this away until the seasons end unless something comes out of the wash by then.. in the meantime each game as it comes.
Eric Myles
53 Posted 06/04/2023 at 06:13:24
Christine #52, it strikes me that the board knew of the problems with the accounts before the Southampton game on 14 January.

That's why they manufactured Headlockgate and the 'real and credible threat' to their safety for an excuse not to have to face the music.

Danny O’Neill
54 Posted 06/04/2023 at 06:23:24
That's all we can do as supporters Christine.

It's not head in sand time, we, sadly, have no control over the off-the-pitch outcome. We are there with the team and the manager. What little support for the board that remains is quickly evaporating, if it hasn't disappeared already.

I might be a fool when it comes to Everton and I'm not naive enough to believe they will go before the end of the season, but how they can stay in place them moment the last ball is kicked this season beggars belief. If they did or do stay, that would be self serving smugness and ignorance of the highest order.

There is usually a chargeable offence for incompetence. It's called being relieved of your duties. In other words, the sack.

Sold out every week. Loyal supporters who desperately love and follow our team struggling for tickets, relying on the goodwill of fellow Evertonians, whilst 4 seats sit vacant every week.

Why they haven't done the honourable thing is beyond me. They've already bailed out and chastised us as the villains, whilst their pantomime continues.

They have made their bed. No going back. It is impossible and untenable.

If they show up at Old Trafford, forget rubbing salt. It will be like having your finger nails ripped off and having vinegar poured on the the open wound.

I just referred to honour and our board in the same sentence. My apologies and for my emotive outburst.


Jerome Shields
55 Posted 06/04/2023 at 06:30:05
Christine it was something the initial auditor could not sign off on.The compromise with the second auditor was to include it and be allowed to put in the threatt to a going concern on relegation.ibit, which is a foregone conclusion anyway.The Premier League acted on the Final accounts breach of the Rules..IMO it will be straight forward on that, considering the effects of the outcomes.Diffetences in the unaudited accounts and the auditor d accounts are covered by voluntary cooperation not being legally bounding, as was reported in January..It kicks both ways

But as you say it is on to the end of the season and avoiding relegation, which Everton will.

Pete Neilson
56 Posted 06/04/2023 at 08:02:57
Danny the board won’t do the honourable thing as besides their narcissism they have over (£)3.1 million reasons to cling on. They’ll never pick up another paid gig in football after this shambles. Moshiri is ultimately responsible for not throwing them in the Mersey years ago.
Jerome Shields
57 Posted 06/04/2023 at 16:16:45
Pete. We will.Get a scapegoat, unless Moshiri is forced to do something.
Tony Abrahams
58 Posted 06/04/2023 at 16:25:15
I always look for hope, so that’s why I’m clinging to what I think Jerome is saying @51.

Liverpool were in a sorry state until Martin Broughton intervened (I can’t remember the whole episode) so hopefully something similar will happen to Everton🤞

Maybe this is different, but I live in hope.

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