The cynicism and lack of respect for shareholders, fans and all other interested parties in Everton, including commercial partners, it must be said, shows no limits. Issuing critically sought after reports and accounts late on an Easter Sunday afternoon with no prior briefing demonstrates the utter contempt in which Farhad Moshiri holds all concerned.

The provision of accounts for Everton Football Club Company Limited alone provide an incomplete picture of Everton’s position. The failure to provide accounts for Everton Stadium Development Company Limited at the same time is a complete dereliction of duty. It makes the task of providing a complete picture much more difficult, and is obstructive and unnecessary. One might consider it deliberate.

When one adds that shareholders no longer have the opportunity to question the board of directors at general meetings, the picture becomes complete. For many, the bonds which hold us to our beloved club are being stretched to the absolute limit.

Perhaps the new regulator can seek the necessary powers to force football clubs that have minority investors, to hold shareholder meetings?

Article continues below video content

Profit and Loss Account
Following an ongoing trend under the Moshiri years, the profit and loss account shows a final loss for the financial year 2022-23 of £89.1 million. The loss for 2021-22 was restated to £38.3 million.

Since 2016, Everton’s losses are

2016-17 – £30.7 million profit
2017-18 – £13.1 million loss
2018-19 – £111.8 million loss
2019-20 – £139.8 million loss
2020-21 – £121.0 million loss
2021-22 – £38.3 million loss
2022-23 – £89.1 million loss

The deterioration in the profit and loss account is largely due to the decrease in turnover, the significant deterioration in player and management trading and an increase in operating costs. At the operating level, losses widened from £24.5 million to £40.9 million.

Turnover fell from £181 million to £172.2 million largely influenced by the loss of USM related sponsorship revenues. 

Broadcast income increased marginally by £0.9 million to £116.0 million as a result of an increase in international rights payments offset by a reduction in domestic TV revenues – caused by a lower league position and reduced live TV appearances.

Everton’s decision to maintain price increases in season tickets – Everton sell the maximum number of season tickets permitted by the Premier League – saw an increase in gate receipts from £15.6 million to £17.3 million. Everton’s yield per seat remains significantly lower than most of its Premier League rivals, highlighting the need to move from Goodison Park, even if the cost of doing so is placing enormous strain on Everton’s finances.

Sponsorship income fell for the third successive year from £35.0 million to £19.2 million. The removal of the various USM-related sponsorship arrangements was netted against marginal improvements across the sponsorship portfolio, including, BOXT and Socios. The failure to replace any of the USM-related sponsorships reflects the poor condition of the club generally, and the ineffectiveness of the club’s commercial strategies and performance.

Other commercial activities showed a significant improvement of £4.4 million to £19.7 million – driven by increases in the Premier League central sponsorship revenues, increased income from overseas tours to the USA and Australia, plus payments from UEFA relating to player appearances in the 2022 World Cup.

On the expense side of the profit and loss account, non-exceptional operating costs managed to climb by £5.0 million. Add in exceptional costs of £3.2 million relating to payments to former employees and costs in total rose from ££205.5 million to £213.1 million.

Overall staff costs reduced by £3 million from £162 million to £159 million. Incredibly, given the cost pressures on the club, staff numbers overall increased from 491 to 532. Both marketing and media plus management and administration departments saw increases in staff numbers.

An important measure, particularly in the context of future regulation, is the total wage-to-turnover ratio. This increased from 90% in 2021-22 to 92% in 2022-23, considerably outside of projected future wage cost limits. Even prior to the change in financial regulations, the wage-turnover ratio remains much higher than the levels (70%) considered sustainable in the Premier League.

Directors’ Costs increased significantly from £3.1 million to £5.7 million. Included within this figure is a £2.5 million compensation cost for loss of office. The highest-paid director received £3.246 million compared to the previous year’s £868,000.

Costs relating to the new stadium no longer feature in the profit and loss account as they are now considered a capital cost given the increased certainty of the project being completed. Total construction costs for the year to 30 June 2023 stood at £210.9 million, a small increase on the previous year’s £207 million.

Amortisation, much loved by accounting and non-accounting fans alike, bucked recent trends and increased significantly from £68.3 million to £77.6 million, reflecting player acquisitions in the summer of 2022 and the winter of 2023. McNeil, Onana, Maupay, Gana Gueye and James Garner being the significant additions. Total player acquisition costs were £91.5 million (2021-22 – £55 million). The total value of players (intangible assets) decreased from £148.9 million to £144.5 million.

Yet again, compensation payments to leaving members of the coaching and management staff (Lampard et al) were significant – £7.1 million. The 2021-22 figure relating to Benitez et al’s departure was £10.5 million.

In addition, this year, there was a return of impairment charges to player valuations of £4.8 million (2021-22 – Nil).

Interest costs
Interest costs for the 2021-22 accounts were restated.

Previously stated as £10.4 million in 2021-22, the newly issued accounts show a revised figure of £4.15 million. The reduction of interest costs of £6.25 million arises from the capitalisation of interest costs relating to the new stadium. This has the impact of restating losses for 2021-22.

Following the restatement and capitalisation of interest costs, interest costs on external debt rose from £4.15 million to £7.86 million. I will cover the funding requirements separately.

Player Trading
The sale of Anthony Gordon, Nathan Broadhead and Ellis Simms saw player trading profits of £47.5 million – a significant reduction in the previous year’s profits of £67.7 million.

Cashflow – the life blood of every business
Any observer of a company’s financial performance and health will always point to the company’s cash flow statement. Whilst the P&L grabs the headlines, the most telling information is in the cash flow statements. A business lives or dies by its ability to generate cash.

Cash can be generated from day-to-day operating activities, from investing activities (player trading, shareholder equity injections) and from financing activities (borrowings).

In 2022-23, normal operating activities before movements in working capital saw negative cash flow of £42.3 million – a large increase on the previous 2020-21 figure of £22 million. After the change in balances of creditors and debtors, the negative cash flow from operations deteriorated further from the previous year to £56.5 million (2021-22 £34.3 million)

Cash from investing activities saw a greatly improved inflow of £72.3 million (2021-22 – £25.2 million) from player disposals – this is selling players to raise cash. A reduction in player acquisitions saw a cash outflow of £58.7 million in 2022-23 (£86 million in 2021-22).

The new stadium and other fixed assets saw cash outflows of £194.35 million, slightly less than the 2021-22 figure of £210.5 million. As a result, investing activities saw a total cash outflow of £199.7 million – a reduction from £271.4 million in 2021-22.

Financing contributed a net £234.6 million (2021-22 – £277.75 million).

Included in these figures are repayment of existing borrowings of £22.5 million; new external loans of £191.2 million; and shareholder loans (from Moshiri) of £69.7 million.

As a result of the above, cash in the bank fell by a further £21.6 million to £10.8 million as at 30 June 2023.

Shareholder loans totalled £450.75 million. The loan is to be repaid at a date mutually agreeable to Bluesky Capital and Everton Football Club. The loan is interest-free.

Aside from shareholder loans, as at 30 June 2023, Everton have a £150 million 5-year facility with Rights & Media Funding, a further £52.66 million 3-year facility, and an additional 34-month €28 million loan with the same lender. The above loans are secured by a fixed and floating charge on the assets of the club. These loans attract interest at 5% above the current base rate.

In addition, there is the remaining CLBILS facility with the club’s bankers Metro Bank which stood at £11.25 million (£26.25 million on 30 June 2022). In total, external debt stood at £341.4 million (2021-22 – £174.1 million) an increase in borrowings of £167.3 million.

Share capital and reserves
At the time of the accounts, 135,000 of ordinary shares, a share premium account of £324.9 million, a negative profit and loss reserve (accumulated losses) of £550.5 million, and £447.25 million shareholder loan from Bluesky Capital, a company controlled by Farhad Moshiri. As a result, shareholder funds stood at £227.73 million (2021-22 – £241.2 million).

Post balance sheet events
Since 30 June 2023, Everton entered agreements to acquire Beto and Chermiti on permanent transfers, Harrison on loan from Leeds United, Danjuma from Villarreal, and Ashley Young as a free agent. Iwobi, Gray and Cannon have been sold with temporary loans for Holgate and Maupay. The net impact of these plus other transactions (including contingent transactions) is £9.15 million.

In addition to the £450.25 million interest-free loan, Bluesky Capital provided a further £22.5 million interest bearing loan.

On 15 September 2023, Farhad Moshiri announced an agreement with 777 Partners to sell his entire 94.1% shareholding. This agreement was and remains subject to regulatory approval. Approval from the Premier League has not yet been granted although the conditions required for such approval are now known – details here.

The club continues to be caught in a perfect storm of underperformance on and off the pitch, combined with the complete indifference of the current owner. His misjudgements over the years have resulted in successive breaches of the Premier League’s Profitability and Sustainability Rules (PSR), a huge reduction in our ability to remain competitive, and enormous concerns over our ability to stay in business.

I will cover in detail in Part II, our funding requirements, including the stadium development company, MSP’s funding, and in particular the auditor's concerns regarding the future of the business ('going concern') in the event of relegation this season. In addition, further comments on the stadium, MSP’s position and future funding requirements. I will also cover its relevance to PSR.

The great Moshiri experiment, of throwing money at managers and players in the most irresponsible manner; of not having systems nor personnel in place to monitor, correctly advise and act, has reached the stage where the risk profile of the business has reached untenable levels.

His misjudgements are colossal. His total reliance on external short-term funding, his choice of potential new owner – both highly damaging and existentially threatening.

It should be stressed that the above report and accounts do not take into account the borrowings from 777 Partners, received during their approval seeking process this season, nor the MSP loans to Everton Stadium Development Company Limited.

Part II to follow...

Reader Comments (15)

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Ian Wilkins
1 Posted 01/04/2024 at 17:57:57
Paul, in a previous post you suggested that Everton would not breach PSR for last financial year. What has changed since (clearly we were in breach)?

How do you see the extent of the breach and potential mitigation? Apologies if you intend to cover this in Part II.

Ed Prytherch
2 Posted 01/04/2024 at 17:59:34
Incredibly, given the cost pressures on the club, staff numbers overall increased from 491 to 532.

It seems as if nobody at the club is taking things seriously. What on earth are 532 employees doing?

Rob Halligan
3 Posted 01/04/2024 at 18:10:38
Ed, I'm guessing that not all of those 532 employees are full-time, with the vast majority of them working only on matchday.

All the stewards we see around the stadium, all the catering staff, chefs, waiters/waitresses, refreshment kiosks staff, turnstile operators etc, won't be doing those jobs just for the love of it.

Larry O'Hara
4 Posted 01/04/2024 at 18:17:08
Paul, very sobering, many thanks.

As you say, Moshiri's contempt for us mugs is endless.

Look forward to Part 2, but while no disrespect to your excellent work, what an indictment of the club that we have to rely on your analysis based on limited information as it is.

Brent Stephens
5 Posted 01/04/2024 at 18:21:49
Rob #3,

I also suspect much of the increase in “staffing” is down to the unsurprising increase in match-day security staff after those end-of-season pitch invasions and fines imposed on the club.

Rob Halligan
6 Posted 01/04/2024 at 18:34:33
Brent, I'm hearing the club are now advertising new positions for the new stadium, one in particular which is right up your street, that of Pedalo Operator.

Job description is pretty simple.... To transport fans to and from stadium from Garston Docks. Must be fit and own your own pedalo. Salary negotiable!

Brent Stephens
7 Posted 01/04/2024 at 18:52:54
Rob, I've now fitted the second pedal so it doesn't just go round in circles any more – unlike some of the debates on here!

"Salary negotiable" – I hope I'm negotiating with Moshiri, then. And a 5-year contract.

Peter Mills
8 Posted 01/04/2024 at 19:09:42
Paul, I am an accounting idiot…

Are we ruined or not, please?

Barry Rathbone
9 Posted 01/04/2024 at 19:10:08
"The great Moshiri experiment, of throwing money at managers and players in the most irresponsible manner. His misjudgements are colossal. His total reliance on external short-term funding, his choice of potential new owner – both highly damaging and existentially threatening."

Should be on banners hanging across the Mersey Tunnels, John Lennon Airport, Runcorn Bridge and the East Lancs Road through Knowsley.

Charles Ward
10 Posted 01/04/2024 at 20:42:10
Paul, thanks for your Sterling efforts in trying to get to the bottom of this quagmire.

This stood out: “Directors' Costs increased significantly from £3.1 million to £5.7 million. Included within this figure is a £2.5 million compensation cost for loss of office. The highest-paid director received £3.246 million compared to the previous year's £868,000.”

Another example of directors getting an undeserved increase for poor performance.

Hate to mention it but our neighbours published their accounts a month ago and sadly mentioned the drop in their match day revenues to £80m. And that was before the ground extension.

It shows how badly we have been let down with things like the Kitbag deal etc.

Jerome Shields
11 Posted 01/04/2024 at 23:12:24
Moshiri is a red herring. It's who is working him in the background who is important.

The thread through Everton for over 30 years is persons enriching themselves at the expense of the club, starting with Kenwright, though Johnson did quite well, and continuing with Green, advisor to both Kenwright and the next person to enrich himself, Usmanov, and now the exclusive 777 Partners.

It is obvious that they don't care how the club is run or how it does. They will make money anyway, as Kenwright's remaining shares will.

More than ever, the fight is on to save Everton, support the authorities that are trying to hold Everton to account on our behalf.

John Raftery
12 Posted 01/04/2024 at 23:23:27
Brent (5) and Rob (3),

I have looked at the staffing figures in the accounts. The 532 figure does not include the average of 305 temporary staff employed on match days. That 305 figure was actually 310 in the 2022 accounts.

The 532 figure includes increases of 11 in players, training and management, 8 in the youth academy, 5 in marketing and media and 17 in management and administration. The only area not showing an increase was that of maintenance, security, pitch and ground safety with 62 staff, the same number as in the 2022 accounts.

Ed Prytherch
13 Posted 02/04/2024 at 03:09:47
John #12 - Thanks for checking it out.
Jimmy Salt
14 Posted 02/04/2024 at 08:59:30
Not sure of the detail but I do think we would've been better off if Usmanov owned us and the club was seized and sold like Chelsea.
Brent Stephens
15 Posted 02/04/2024 at 09:40:49
John #12 thanks for digging further.

So 17 more in admin / administration!

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