Some of the interesting points to emerge from the latest set of Everton accounts after they were released on Monday
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Everton executive chairman, and key Friedkin Group figure, Marc Watts (R) looks on next to interim chief executive officer Colin Chong during the Premier League match between Everton FC and Chelsea FC at Goodison Park. Photo by Chris Brunskill/Fantasista/Getty Images
Everton executive chairman, and key Friedkin Group figure, Marc Watts (R) looks on next to interim chief executive officer Colin Chong during the Premier League match between Everton FC and Chelsea FC at Goodison Park. Photo by Chris Brunskill/Fantasista/Getty Images
Everton’s latest accounts are an intriguing read. They cover a fascinating year in which the club was engulfed by crisis - on the pitch and off it.
The Blues set a new record for going winless in the Premier League and flirted with another relegation battle - largely due to the controversial points deductions that were a punishment for previous financial excess.
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Former owner Farhad Moshiri, meanwhile, explored a takeover deal with 777 Partners only for that to collapse due to the weight of the legal and regulatory challenges the group became embroiled in.
READ MORE: Everton's £53m loss does not tell whole story - there has been a major changeREAD MORE: Everton announce huge loss but Friedkin Group make future vision clear
And then - after the financial year in question - came new owners The Friedkin Group. And in a matter of months, a lot has changed.
How much money the club lost as a result of points deductions
Everton earned a total of £16.9m in Premier League merit payments for the club’s 15th place finish last season. The figure is made up of separate UK and international allocations of the broadcast and central commercial revenues received by the league and distributed to the clubs.
The figures allow us to explore how much money the club lost because of the controversial points deductions it was handed as a result of PSR breaches in the previous two financial years. Had Everton not lost those eight points, they would have finished 12th and earned a combined £25.4m in merit payments. It means those punishments cost Everton £8.5m in total.
The value of a trip away
The club brought in £21.6m in sponsorship, advertising and merchandising revenue during this period, a £2.4m increase supported by renewed sponsorship deals and new agreements, such as with Ticketmaster, Etoro, FIGS and Kick.
That uplift was countered by a £2.7m drop in ‘other commercial revenue’, taking that total down to £17m. The most significant factor in that fall? The previous year, Everton travelled to Australia during the World Cup break on what is described in the accounts as a “lucrative” trip. This set of accounts cover the low-key trip to Lake Geneva and the next set of accounts will cover the training camp in Ireland, with Sean Dyche not a big fan of long-haul summer trips due to the impact they can have on his schedule.
With David Moyes set to lead Everton out to the US this summer for the Premier League series with West Ham, Bournemouth and Manchester United, Everton should see a positive impact to the books.
The next set of accounts will also show the commercial work already completed ahead of the move to the new stadium, including deals with the likes of Castore - who have gone beyond kit manufacturing to take a headline position in the new ground.
A big reduction in an area under a lot of scrutiny
This period saw a lot of work to ensure the club complied with PSR for the first time in three years - a goal that was successfully achieved. One significant barometer for the effort to make the club more sustainable is the wage to turnover ratio - particularly with that being a potential new marker through which spending could be judged in the future.
This figure was a whopping 89% in 2022/23, once the outsourcing of retail and catering services is taken into account.
The latest accounts saw that drop to 81% - an improvement that showcases work behind the scenes to improve the financial outlook. Andros Townsend, Yerry Mina and Tom Davies were among the players whose wages dropped off the books after their release in the summer of 2023.
The transfers this period did - and didn’t - include
Though Dyche is no longer at Everton, these accounts are the first in several years that did not include the pay-off for a manager and his backroom staff being relieved of their duties. The exit of Frank Lampard and his team had cost Everton £7.1m the previous year.
In terms of transfer dealings, Everton mirrored the profit on sales of the previous year. In 2022/23 the sales of Anthony Gordon, Nathan Broadhead and Ellis Simms raised £47.5m. In this year the sales of Alex Iwobi, Lewis Dobbin, Tom Cannon, Demarai Gray and Ben Godfrey raised £48.5m.
This period did, however, include the signings of Youssef Chermiti, Beto, Tim Iroegbunam and the loan signings of Arnaut Danjuma and Jack Harrison.
The big change in confidence
One of the big differences in the latest accounts is the confidence in the club’s financial outlook. Last year it was reported there was a “material uncertainty” the club could operate as a going concern - meaning it could meet its expected obligations - should Everton suffer relegation.
This year, those doubts are gone. This is because of what has happened since the end of the financial year, with the December takeover by TFG taken into account in this new assessment,
Auditors Crowe gave the club an official seal of approval, stating: “In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
“Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going concern for a period of at least twelve months.”
What TFG have done to inspire such confidence
The accounts offer an overview of the steps taken by TFG to improve Everton’s outlook. They are significant.
One huge move was to resolve the interest-free loan provided by Farhad Moshiri. This £450m deal was converted into equity - removing it from the balance sheet weeks before new PSR rules would have meant the club would be charged a market rate of interest on the borrowings. This does not mean, however, that Moshiri was given that full sum to secure his sale, simply that the issue has been resolved on terms that remain between them.
The club’s net debt has risen by more than £200m to £567m. While that looks like a worrying sign, much of the increase has fallen to spending on the completion of the new stadium as well as TFG paying off a host of expensive loans that Moshiri was using to keep the club going. The club was paying huge interest rates on some of those loans but they have now been consolidated and refinanced with the help of JP Morgan Chase. The international reputation of TFG has allowed them to repackage the club’s debt with reputable lenders who, confident the money will be repaid, are charging far less in interest - saving Everton tens of millions of pounds every year.