Record losses for 2018/19 but future pathway clearer with USM naming rights option

As widely forecast, Everton have published record losses for the extended financial year 2018/19.

financial overview

However the news of a £30 million right of first refusal for naming rights provided by USM will grab the headlines.

In addition Sasha Ryazantsev was able to provide more details of the primary stadium lenders, being JP Morgan and the Japanese bank Mitsubishi UFG.

The financial headlines are as follows:

  • Loss for the 13 months to 30 June 2019: £111.8 million (2018: loss of £13.1 million)
  • Operating loss for 13 months to 30 June 2019: £29.7 million (2018: loss of £22.9 million)
  • Despite extended period revenues fall to £187.7 million (2018: £189.1 million)
  • Reduction in player sales sees player trading profits fall to £20.3 million (2018: £87.8 million)
  • Continued investment in playing squad plus a reduced number of players sold sees the amortisation cost rise to £95 million
  • Wages increase from £145.5 million to £160 million (85% of turnover)
  • Exceptional costs relating to Bramley-Moore of £7.3 million
  • Commercial income falls from £43 million to £41 million
  • Farhad Moshiri contributed a further £50 million in 2018/19, plus an additional £50 million post the year end
  • As a result of Moshiri’s further financial support, debt falls to £9.2 million
  • Farhad Moshiri continues to fund losses and cash requirements increasing his loans to the club by £100 million to £350 million in total.
  • USM increased their Finch Farm naming rights contribution from £6 million previously (2017/18) to £12 million.

Profit and sustainability

The losses for 2018/19 push Everton closer to the three year accumulated loss limit of £105 million, but not over it.

At last the club have presented a plan to reduce future profit and sustainability concerns. Essentially three elements will reduce pressure on the business and provide breathing room for Ancelotti in the summer.

Player trading profits will improve the P&L – current profits for this year standing at around £60 million.

Secondly, the capitalisation of the costs of developing Bramley Moore will occur either in this financial year (2019/20) if planning approval is granted before June 30th 2020 or in the next financial year if after. Current accumulated costs are running around £43 million.

Finally, and most importantly, the contribution from USM.

Naming rights for Bramley Moore stadium

USM are providing a £30 million injection for a right of first refusal to acquire naming rights for Bramley Moore. Without seeing details, this will be treated as income thus significantly contributing to the club’s P&L in 2019/20.

This is a significant and welcome development, perhaps other than Moshiri’s continued commitment, the most significant

Other areas of note in the accounts:

As always, away from the headline figures there’s always one or two interesting pieces to pick up in the accounts.

The cost of employing Directors has risen substantially in recent years, rising from £770,000 in 2015/16 to £1.62 million in 2016/17, £2.48 million in 2017/18, and £3.61 million in 2018/19. The highest paid (but unnamed Director) received £916,000.

Staff numbers increased from 427 to 456 employees. The club also employs an average of 411 temporary staff on match days.

Trade debtors (amounts owed to Everton) within a year reduced from £64.3 million to £51.8 million. Meanwhile trade creditors (amounts owed by Everton) increased from £56.2 million to £73.5 million (due within a year) and £34.4 million beyond a year.

Summary

Everton have clearly invested to become more competitive, to increase the chances of success on the pitch. The return on the investment made so far has been poor, but with Brands and Ancelotti we have the right management experience to move us forwards.

Issues still remain with an expensive squad with many players surplus to requirement.

Moshiri remains the 4th largest benefactor in English football. USM’s contribution to the club increased significantly with the Finch Farm naming rights doubling and of course, the right of first refusal for naming rights on Bramley-Moore.

Further analysis to come.



Categories: Bramley Moore, Everton, Everton finances

Tags: , , ,

4 replies

  1. Paul, would you know if the £30m ‘option’ payment by USM has any conditionality? Is it repayable, if ,say, planning permission is refused, or even delayed beyond a certain date?

  2. So, given that even his close friend is unlikely to just throw £30m at Mr Moshiri and not take up first refusal….it’s the USM Arena in three years time then. I can live it tbh, it’s not Goodison but there you go, it can’t be and we are. Ovine on. PAUL, I’m assuming that the actual naming rights deal for say ten years is over and above the £30m ? Which if correct would suggest we could be looking at £7m to £10m pa, over ten years, so a decent addition commercially…..or could this be much higher in three years time ? £15m pa ?

    • The £30 million Mark is just to secure USM’s right of first refusal. Any naming right income would be in addition to this. I have no idea but given USM are now spending £12 million a year for Finch Farm a much higher figure can be exppected

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: