Everton Doo Doo

by   |   13/07/2023  8 Comments  [Jump to last]

Some figures that might help us all realise just what a mess Moshiri has got us into:

In the accounts dated year ending 30 June 2022, we state Assets Under Construction are £168m. 'Assets under construction' are the stadium. Moshiri has recently stated the stadium will cost £760m so there is a further £592m to still be booked. £130m of this is rumoured to be coming from MSP, although this has still not been confirmed. No one has a clue where the remaining £462m will be found. Where is the funding?

Once the stadium is completed, we will have to start depreciating the £760m cost. In the accounting statements, we say Properties are depreciated over 10 to 40 years but Plant and Equipment over 5 years. If we take 20 years as a rough average depreciation period, then we will be booking approx. £40m a year to depreciation and reducing our profit. As our gate receipts at Goodison last year were under £16m, we will be struggling to cover this additional £40m cost from increased attendance, corporate hospitality and naming rights.

On top of this, we will have to service the massive debts we will have incurred and are going to incur. Currently, we have the following debts:

In Other Loans, we show a debt to Rights & Media of £150m

We also show that we took out a loan from the Government CIBILS for Covid impact of £26m

We also have loans out from Moshiri’s foreign company ‘Blue Sky Capital’ of £380m

A total of £556m that all have to be repaid at some point. They are incurring interest charges that also need paying.

On top of that, there will be the £592m we have remaining on the new stadium – that’s well over £1.1 billion in debt and nothing to repay it back with.

To make matters even worse, once we move into our new stadium, we are committed to demolishing Goodison Park and renovating the area around it. Plans have been made but I’ve seen nothing on just how much all of this will cost, nor the funding.

With another £592m still to be paid on the stadium, servicing the debt, and the additional costs of running two sites, is it any wonder that we have nothing for players? Any sales we do are going to pay the builders, and that the board and the auditors started mentioning concerns on whether we would remain a Going Concern if relegated.

We are deep in the shit and it won’t be fixed in 1 year's time – maybe not even 10 years' time.

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Reader Comments (8)

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Barry Hesketh
2 Posted 13/07/2023 at 13:24:05
Bob, I always believed that the actual stadium build would cost circa £500M and that the other costs, demolishing Goodison and building or renovating the surrounding area would make up the rest of the circa £750M.

I don't know for sure, and you're correct that the debt burden will be significant for many years to come, but don't fret the owner is a successful accountant!

Stephen Vincent
3 Posted 13/07/2023 at 14:16:50
Bob, The £592m was at 30th June 2022, since the stadium build has continued roughly to plan, (I was on Regent Road on Tuesday and it looks amazing) I assume that Laing have been paid on time so currently the balance to completion is considerably less than £592m. How it has been funded is a different question!

The Rights and Media is secured with an open-ended charge on The Old Lady and you would assume that the redevelopment of the site for social housing will cover this, but again who knows.

The £380m due to Blue Sky is interest free with no set contractual repayment date and under the provision of FRS102.22 is treated as equity. The rumoured £130m from MSP will almost certainly be equity rather than debt.

We also had £32m cash at the bank at 30 June 2022.

So whilst there is considerable cause for concern, not quite as bleak a picture as you paint. Still won't be signing a decent striker any time soon though.

Clive Rogers
4 Posted 13/07/2023 at 15:11:29
With Usmanov's input now blocked, it is all now down to Moshiri. As he hasn't attended a game for 20 months, he seems to have lost interest in the football side of things.

I think now his main concern is getting out with most of his fortune intact. He has the funds to pay for the new stadium but I doubt that he will or he wouldn't be taking out the loans he has or getting MSP involved.

I don't trust him and can see the club having a massive debt crippling operations for decades. Hope I am wrong but don't expect to see him waving his little blue flag anytime soon.

Mark Murphy
5 Posted 13/07/2023 at 19:36:31
Will the club receive any income once the redevelopment of Goodison is complete?

Does the club own that land and will they be able to sell the redevelopment?

Dennis Stevens
6 Posted 13/07/2023 at 20:09:32
Aye, & it's raining here too!
Tony Everan
7 Posted 14/07/2023 at 07:42:51
Bob , A grim read to start the day.

Mark, I wouldn’t be surprised if it was sold as a package with planning per and clauses stating what Everton is happy to be built there. Then raise a few million up front.

Stephen, thanks for your take, it makes me feel a bit more optimistic, or should I say less pessimistic? With regards the decent striker, if we don’t sign him our financial position will become many times worse next May. It has to be top of the list of footballing and accounting priorities.

Bob Wilkinson
8 Posted 14/07/2023 at 13:55:51
Stephen (3)
You are right, the figures I have used are from a point in time. the 30th June 2022 and things have moved on from then. I'm sure we have booked a lot more to Assets Under Construction but I'm not sure where the money to pay it has come from.
We had the Richarlison money, then the money from Gordon and Kean etc. etc. My view is that a lot of this money went into paying Laing and Rourke and this is why we haven't seen any transfer activity except for free transfers and I expect it to continue
I also believe that the loan from Rights and Media and from Blue Sky Capital were increased after the year end if I am reading the posts from the Esk correctly. My point is these loans do have to be repaid at some point and that market rate, sometimes high market rate interest is being charged (not sure the Blue Sky loan although I did read there were loan arrangement fees)

We are still not making money as a club and frankly I'm not sure if we will make a profit once we move into the new stadium if we are saddled with high loans, depreciation and interest charges. When we have to start repaying these loans we will face enormous pressure on our cashflows

I, personally, don't see us having a great deal to spend on the team for the foreseeable future

Goodison demolition and renovation I can't find any figures on it which is a worry

Tom Hughes
9 Posted 15/07/2023 at 12:05:50
The original funding model never got off the ground. It appears that no financial institutions have been prepared to back it, even after a significant investment was committed by the owner and construction was well underway.

So, it's been a Bank of Daddy project from the start. Displaying some of the same financial scattergun economics we've seen with our on-pitch investment. As far as I know, other than very broadbrush descriptors, at no point were there projected figures showing how this all stacks up, not only to pay for itself, but help provide significant new funds for team investment etc.

Most fans weren't too worried at first and kept saying "We've got a billionaire owner and a multi-billionaire backer to get it over the line". To be fair, that probably wasn't unreasonable given Usmanov's previous largesse. His sponsorship deal could've been almost anything, and guaranteed the stadium's viability in the medium term. However, without that, (plus with the inflated cost, if true) the financial gaps aren't just glaring they are cavernous.

As far as I can see, the only real hope now is that it can provide a massive step-change in everything and/or at least package the club for a quick sale to someone who can absorb the debts going forward. Otherwise, it could easily end up more millstone than milestone!

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