It’s the first day of Everton’s new financial year, and still I read that some supporters don’t believe we have any cash with which to buy the players Koeman and Walsh have identified. Rumours of ridiculously low bids “We must sell to buy”, “Moshiri is not the real thing” etc etc. It’s part of spring turning into summer, a seasonal right of passage, it’s part of being an Evertonian.
However, a reasonable projection of Everton’s financial performance last year, puts all these rumours to bed, forever (well at least, as long as the broadcasting revenues continue to pour into the Premier League.)
I’ve gone through the major financial events of the last year, transfers, player sales, contract increases and factoring in the enormous increase in revenues from broadcasting.
I’ve made a number of assumptions based on previous years’ accounts. I’ve also had to make assumptions on the cash flows surrounding players coming in and out (to simplify matters I’ve determined that all transfers are paid over two years, thus the cash flow arising from transfers is effectively half any surplus or negative balance.)
The reason for doing this is to demonstrate that we can comfortably afford a significant transfer budget without considering any major player sales (notably Lukaku or Barkley), nor any cash injections from Moshiri.
I must stress that these figures are my own projections, they’re not based on any information from within the club, but they do accurately reflect information in the public domain re transfers and contract values. Thus, they’re open to interpretation and I’m sure 20 similar projections from other so-minded fans will come up with different figures, but from my perspective they satisfy the basic question asked “Do we have transfer funds available this summer without selling?”
OK, here we go, I’m presenting last year’s accounts alongside my projections for 2016/17. From that we can estimate the probable cash position (assuming no major changes in credit policies re suppliers/broadcasters etc)
Estimated Profit & Loss Accounts 2016/17 £m
| 2015/16 | Est. 2016/17 | |
| Broadcasting | 82.50 | 130.00 |
| Gate receipts | 17.60 | 18.00 |
| Sponsorship | 9.30 | 11.90 |
| Commercial | 12.10 | 12.70 |
| Turnover | 121.50 | 172.60 |
| Wages | -84.00 | -94.00 |
| Operating expenses | -30.40 | -33.44 |
| Expenses | -114.40 | -127.44 |
| EBITDA | 7.10 | 45.16 |
| Exceptional items | -11.30 | -5.00 |
| Player amortisation | -22.40 | -41.35 |
| Depreciation | -1.80 | -2.00 |
| Operating Profit | -28.40 | -3.19 |
| Profit on player sales | 7.80 | 55.30 |
| Profit before interest & tax | -20.60 | 52.11 |
| Interest payable | -3.70 | 0.00 |
| Tax | 0.00 | 0.00 |
| Proft/(loss) before tax | -24.30 | 52.11 |
So, what does that mean in cash terms?
At the end of May 2016 we had £2.8 m in cash. Moshiri repaired the balance sheet with an £80 million undated, interest free loan.
Debt was paid off, a sum of £58 m.
That leaves an increase in cash balances of £22 million.
The accounts suggest (with the qualifications above) that cash levels within the business will have increased by something between £60 and £70 million – using the assumptions mentioned above the figure is £68 million.
Thus, the club should be, prior to any additional exceptional expenditure (the figure already includes Koeman and Walsh’s acquisition costs), sitting on cash somewhere around the £90 million mark.
The one item of expense not considered is Bramley Moore dock. It has been reported that we will pay around £24 million for the acquisition of the land (prior to any stadium build costs). I’m going to suggest that money is “ring fenced” – sorry, I know that term has negative associations for many blues.
That leaves us with a cash balance of around £66 million.
Using a similar basis that transfer fees are paid over a couple of years, not all up-front then not even the most pessimistic Evertonian can deny that there are adequate funds within the club without resorting to selling players first.
The theoretical war chest should no longer be just theory, even using very large margins of error on my projections will still demonstrate there is cash in the club.
If we use the assumption that Barkley may be sold, and even if Lukaku’s valuation is not met, then the cash position becomes even rosier.
As mentioned previously, STCC should not present a limiting factor given the removal of non-core players from the wage bill and the likely player trading profits in this new financial year (2017/18)
The limiting factors in our transfer activities will be player’s desire to join us, and our ability to get the deals over the line.
It is most certainly not our cash position.