A poor financial record, but new hope at Everton

Have Everton's recent financial woes been caused mainly by incompetent management of football resources required to run a team in today's Premier League?

Or has the real reason been the massive drain on these resources that was required in order to finance construction of the new Everton Stadium at Bramley-Moore Dock?

I think the answer has to be 'a bit of both' as it seems certain that the vast loss Moshiri made personally in his 'investment' in Everton is actually visible to all in the wonderful edifice he constructed on the banks of the Royal Blue Mersey.

And perhaps it's all water under the bridge now as we do indeed look forward to a new era with much higher expectations and we can perhaps confine such deliberations to the anals of time past?

But the answer to your question is an unequivocal yes from me. It's important to note that Everton hasn't lost all that money -- Everton's owners have lost all that money.

And none of 'em -- not Moshiri or Kenwright or any of those who preceded them -- are relevant today, except as historical objects of frustration and perhaps gratitude (I know I'll offer Farhad a thought of thanks when I sit down in the new stadium). The Friedkins haven't lost a dime on this club. Yet, anyway.

So Grant's figures are the financial equivalent of cave paintings -- ancient and fascinating, but unconnected to the present day.

But the larger and more obvious issue of the refinanced debt, reported recently at £567 million -- including the £350 million stadium debt -- is what Friedkin purchased deliberately as an investment. It's a big-looking number, but it only qualifies as a problem if it creates some sort of financial strain for a man who's worth $7.5 billion per Forbes today.

I await correction by the corporate financial experts here, but that's how my simple mind understands things.

The £450 million in shareholder loans owed to Moshiri were converted to equity. Otherwise, the overall debt would be £1 billion.

TFG’s refinancing package, which has replaced existing debt on more favourable rates, and the conversion of Moshiri’s interest-free loans to equity has stabilised us.

As reported elsewhere on TW, the stadium could boost the club’s revenue by at least £60m a year thanks to its bigger capacity and corporate hospitality facilities.

As a point of comparison, our matchday revenue in 2023/24 accounts was £19.1 million and commercial revenue from sponsorship, advertising, and merchandising revenue was £21.6m.

So revenue will increase dramatically and cost of servicing debt will reduce.

Mine if that some of those losses would have been related to the new stadium (it might have made overall sense for Moshiri to maximise paper losses?) certainly the (high) interest on those loans would have been a big cost impact, the Friedkins own financing may already have been converted to equity and I think we can all agree that the precious loans will mostly or entirely have been re-structured on which I hope are much more favourable terms.

The question is therefore how much wiggle room our new situation allows, specifically what is our current 'status quo' position. The fly in the ointment is that last FY we still have a wage to turnover ratio of over 80% (according to club accounts) What is strange about this is that it gives a figure of around £150m which is pretty much double the first team player wage costs I've seen quoted. It seems incredible half the clubs wage bill is non first team player related.

While we have a very large number of expensive players out of contract and I think a big opportunity to do a large scale wage re-structure (and maybe some further pruning of group and company non playing staff), we are clearly still some way off break even. In terms of increasing turnover (while holding wage ration constant) Deloitte apparently claimed the new stadium could give match day revenues of £55m versus current revenues of £19m. That is a big and worthwhile boost but a) it seems ambitious and b) it will surely also incur addition on the day costs given the size increase (we currently employ c 380 matchday temporary staff).

My hunch is we would still be lucky to break even, even with a new stadium. Of course that might still allow us some wiggle on PSR although that is apparently being replaced with a new wage ratio cap (currently discussed as 85% for non European clubs) in 26/7. This would certainly give us scope to add good quality players subject to the appetite of the new owners to incur ongoing losses.

So as best as I can determine, don't expect fireworks this summer (unless we sell e.g Branthwaite) but looking ahead, the new 26/7 regime looks reasonably favourable to us provided Friedkin is willing to 'invest' in the squad, given all the attendant risks involved in that.

In terms of on the pitch fortunes I guess it now largely comes down to how much TFG are prepared to invest in the first team squad and academy and over what period.

But they are now constrained more by willingness rather than anything else - albeit there’s talk that PSR still represents a problem this summer at least?

If I'm right (and I may not be) then for sure PSR this next year is more of a constraint than the 2026-27 arrangements (if they are actually implemented) the latter I think would give us more scope, assuming the investment appetite is there (because it would need additional funding, doubt it's even near possible out of cashflow).

I think you said it, the right path but a bit of walking first before running.

We are still a great club though with incredible fans and who knows we may in time be playing beautiful football in a beautiful stadium and financially stable. Whoever writes the book "Everton -How not to run a football club" or perhaps how corruption in football manifests itself then they could make a few bob.

Mark #7, thanks for that clarity. Also, as I read it the stadium revenue projection covers match days only, not the potentially significant revenue stream that would be generated by other events. Is that how you read that number as well?