Everton finances

Record losses, partly attributed to Covid, Moshiri’s funding plans & stadium finance update

There are two headlines from today’s release of the report and accounts to June 30 2020. One is a record loss of £139.9 million of which the club attribute £67.3 million directly to the impact of Covid-19. However, that fails to acknowledge underlying losses of £72.6 million resulting from expenditure remaining much higher than income.

The second item of note is the continued financial support from Farhad Moshiri, £350 million up to the end of the accounting period, a further £50 million in November 2020, and a commitment to further fund the club through a placement of new shares, more of which below

Financial Year 2019-2020


£m 2019/20 2018/19* Change %
Broadcast 98 132.70 -26.15
Matchday 11.9 14.20 -16.20
Sponsorship/Ad/Merch 63.7 29.10 118.00
Other commercial 12.3 11.70 5.13
Total 185.90 187.70 -0.96
  • Broadcast revenue reflects the following: 31 out of 38 games played in the period so only reflects the pro-rata revenue. The revenue from the remaining 7 games will appear in the 2020/21 accounts
  • Matchday reflects the absence of supporters from the March lockdown onwards
  • The club are making big claims on the increase in commercial income. Whilst no doubt commercial income has increased, these figures include the £30 million received from USM in relation to the naming rights option. Remove the £30 million (which is a one off payment) and commercial income has grown by 12%, a reasonable performance but still relatively low if the objective is to catch up rivals.
  • The accounts show a total loss of revenue arising from Covid-19 at £33 million (plus £34 million of associated costs, see below)

Operating expenses

2019/20 2018/19* Change £m
Staff costs 164.8 160 4.8
Other operating costs 33.1 43.1 -10
Depreciation 6.9 6.5 0.4
Operating costs pre player/management trading 204.8 209.6 -4.8
Bramley-Moore costs 19.9 7.2 12.7
Provision for onerous contract 4.4 0 4.4
Pension revaluation 0 0.5 -0.5
Operating expenses and exceptional items 24.3 7.7 16.6
Operating loss pre player/management trading -43.1 -29.6 -13.5
  • Staff costs increase by £4.8 million to £164.8 million (88.6% of turnover)
  • Other operating costs fell by 23% to £33.1 million
  • Bramley-Moore costs £19.9 million reflecting planning application, revised design and preparatory expenditure
  • Operating loss increases by 45.6% to £43.1 million

Profit/(Loss) including player trading

£ millions 2019/20 2018/19* Change £m
Staff costs 164.8 160 4.8
Other operating costs 33.1 43.1 -10
Depreciation 6.9 6.5 0.4
Operating costs pre player/management trading 204.8 209.6 -4.8
Bramley-Moore costs 19.9 7.2 12.7
Provision for onerous contract 4.4 0 4.4
Pension revaluation 0 0.5 -0.5
OC and exceptional items 24.3 7.7 16.6
Operating loss pre player/management trading -43.1 -29.6 -13.5
Operating loss pre player/management trading -43.1 -29.7 -13.4
Amortisation -99.2 -95.1 -4.1
Impairment of player registrations -26.3 -2.5 -23.8
Amount payable to former employees -6.6 0 -6.6
Profit on player trading 40.5 20.3 20.2
Statutory loss before interest & tax -134.7 -107 -27.7
Interest and tax -5.1 -4.9 -0.2
Statutory loss -139.8 -111.9 -27.9
Loss directly attributable to Covid-19 67.3 0 67.3
Underlying loss -72.5 -111.9 39.4
  • Onerous contract charges of £4.4 million relate to the re-valuing of an existing contract due to Covid-19. Contract unspecified by club due to commercial confidentiality
  • Amortisation increased to £99.1 million reflecting continued investment in the playing squad
  • The value of player registrations dropped by £26.3 million reflecting the lower value of players in the Covid-19/post Covid world
  • Marco Silva and his staff’s departure cost £6.6 million
  • Player trading profit increased to £40.5 million through the sales of Gueye, Lookman, Vlasic and Onyekuru
  • Interest and tax costs £5.1 million
  • Statutory loss of £139.9 million of which the accounts claim £67.3million is directly attributable to Covid-19. This is calculated by the £33 million loss of revenue plus the impairment charges

Whilst the club is right to highlight the impact of Covid-19 on revenues and the additional costs in terms of impairment, it should not escape anyone’s attention that even without Covid losses since Moshiri acquired 49.9% in February 2016 amount to more than £190 million despite over £210 million in player trading profits. Add in Covid and that rises to more than £250 million.

What is clear is that costs continue to outstrip income. This arises from the legacy of 2017/18, the failure to increase commercial income beyond that of USM, and the ongoing costs of Bramley-Moore. When planning permission is eventually granted those costs will be capitalised and will improve the Profit and Loss account by some £40 plus million.

How have we funded such losses?

We have funded the losses from three sources

  • Player trading (see above)
  • Shareholder loans
  • External debt

I have already noted the £210 million in player trading profits since Moshiri arrived in 2016.

Since his arrival (to the date of the accounts 23 November 2020) Moshiri has provided the club with a total of £400 million in shareholder loans.

External debt (partially as a result of Covid) has grown too

  • £40 million secured against future broadcasting revenue supplied by Rights and Media Funding
  • £18.7 million through Metro Bank through the The Coronavirus Business Interruption Loan Scheme

Connected Parties

Those that read the detail of the accounts may notice that USM no longer appear as a connected party in the accounts (due to Moshiri’s shareholdings in USM and Everton). Moshiri’s shareholding in USM has changed to the extent that USM are no longer considered to be a connected party to Everton. As a result the accounts will no longer detail the degree of financial support USM provide Everton.

Moshiri’s continued financial support

The club announced their intention to issue new shares to Farhad Moshiri through Blue Heaven Holdings Limited. The shares will represent up to £250 million reflecting his previous loans and his recent commitment to a further £50 million injection in November. As a result (including the November injection) at least £100 million will have been provided and up to £150 million of existing shareholder loans will be converted into shares. At a price of £3,000 a share Moshiri’s shareholding in the club will increase to above 90% assuming he takes up the full placement offered. Moshiri continues to support the continued holdings of smaller shareholders and I am informed that intention will not change.

It should be noted also that the financial support is directly from Moshiri, it is not of Usmanov’s doing, Moshiri should be given the credit for his financial commitment.

Bramley-Moore Funding

The club continue to make progress on the funding package for Bramley-Moore. Ostensibly there are two options, the type of funding used by Arsenal and Tottenham Hotspur in the early days of their stadium financing – so called construction funding (before converting to long-term debt) or as Everton hope, to be the first club to achieve long term funding through private placement during the pre-construction/construction phase. The club is currently completing their due diligence obligations to potential lenders through JP Morgan and Mitsubishi Bank. When completed the club will have access to draw down facilities to be used through the construction progress. It is hoped that the interest costs of such lending will be capitalised until the stadium is operational (a standard practice on construction lending, less so in the private placement market). If Everton achieve a private placement in the pre construction/construction phase it will be highly innovative.


It is clear that Covid-19 has impacted the financial performance of the club in the year 2019/20. That impact will continue to be felt in 2021/21. However it is also clear that even in normal conditions the club continues to have costs greater than income. This can only be addressed by reducing the number of unproductive players previously acquired plus a much greater concerted effort to build revenue streams around the globe, even in a post Covid world.

The issue of Premier League Profit and Sustainability rules, let alone  UEFA’s Financial Fair Play have not been addressed in these accounts partially due to the effective suspension. However, when looking though the impact of Covid-19 it is clear we would not comply to the previous existing rules and regulations.

Having an owner prepared to soak up losses is an enormous luxury. As I have consistently spoken of, we must become sustainable through increasing income whilst reducing costs not least because of Profit & Sustainability and Financial Fair Play. Continual player sales and/or shareholder bailouts are not a sustainable model.

Moshiri for all his financial support must address the management of the club at board and executive levels and bring people in who can make his business sustainable. He (and the club) are carrying a huge cost in not doing so.

Having someone to fund losses is not (despite his apparent willingness to do so) good news. Having people who turn losses into profits is far more preferable

15 replies »

  1. Thanks for the detailed analysis, as always. Paul, we met nearly 3 years ago and the feeling I had was that the value of the business is directly linked to the progression of BMD. Bearing in mind that actually going to the game is no longer a habitual thing, due to the covid, I wondered whether you think the size of the ground needs a rethink? With Moshiri now becoming owner of over 90% of the shares, I also wondered what you think his motivation is bearing in mind these figures, though accepting these are plagued by the covid? What do you think he is getting out of it all?

    • Hi Ian, I hope you are well. There is no thought that in the medium long term attendances at football will reduce once the vaccination process is largely completed, thus no plans to change the capacity of the ground.

      Re Moshiri’s motivation, he is clearly dedicated to providing Everton with the resources required to become a success, the major issue I have is that he is putting faith in people who are unlikely to provide him that success, wasting huge sums of money in the long term. Post construction I suppose the club’s value will reflect the investment he has made should he wish to sell.

  2. Hard to argue with your conclusions. I wonder who would. Feels like we exist under a golden goose. Hope it doesn’t get Covid. Hope the club follows some if not all of your thinking.

  3. Thanks for the analysis. I really appreciate that you translate these things for the fans.
    However, I feel like you’re painting a false picture in terms of our (lack of) improvement. We’re not going to become a champions league club turning a profit over night.
    Moshiri ballsed up with the hiring of Koeman, Alladyce and Walsh and we are still suffering the consequences. A long period of large losses was always going to happen in order to attempt to stay competitive and replace that old, relegation level squad with little sell on value. Should we have stuck with what we had to avoid increasing losses? Would Niasse, Williams and Martina have kept us in the league? Even if they would have, we would have missed out on the asset value we have made on players like Richarlison, Kean and Digne and would never have built a squad strong enough to attract Carlo.
    Since that period, the board has changed plenty so I don’t know why you think these guys are at fault. The playing squad and management/coaching has enormously improved with a proportionately low increase in cost. We have to remember that we were comfortably the unluckiest team in the league last season with injuries and we were only awarded 1 penalty. A season with average luck would have seen our income be much higher with a potential Europa campaign this season. This has obviously had a huge effect on income so we can’t look at this new set of accounts as though it is the norm and we can’t act as though the plan is definitely a bad one when we don’t know where we would be otherwise. Unfortunately, that injury luck has bled into this season as instead of buying successors/competition to Coleman, Digne and Richarlison we had to buy a CB and yet more CMs. Again it’s not the board’s fault that they made reasonable choices about priorities in the transfer market and then get punished in the worst possible way with injuries and suspensions.

    Anyway that’s my little rant about the growing criticism from yourself and the fans about the running of the club post Steve Walsh which I feel is unfair. I understand that maybe when you talk about sustainability you’re mainly wanting higher income from sponsors and sales but I think we have to bear in mind the importance of the team’s success in our income and how that has been artificially, significantly lower than it would be due to misfortune. We are facing yet more bad luck this season and I hope the fan base has enough perspective about it to avoid becoming hostile towards Ancelotti, Brands and Moshiri who in my mind are making broadly good decisions and will succeed long term.

  4. Jamie, I appreciate you taking the time to write a detailed response and offer an alternative view to my own. Unfortunately, I hold the view that the corporate culture set over many years by the Chairman and his appointed CEO will never deliver the results I believe our club is capable of achieving. Of course, it is not my decision and the majority shareholder seems willing to continue his trust in them. I happen to disagree and believe only a significant clear out at the top of the organisation will produce the results required within the scale and timeframe required for us to be competitive once more.

    Thanks again for explaining your views

    • Thanks for responding!
      I think the struggle I’m having with your arguments about the Chairman and CEO in particular is that they are often very high level. I’ve listened to your podcasts (and Roger Armstrong’s) quite a lot and read your articles and I’m very sure that you don’t like what they’re doing but I have no idea exactly what they’re are doing wrong in your view.
      Obviously, you feel our commercial income is too low but in what way are they failing to increase it? Is not the main issue that are on pitch performances don’t attract big money? A 12% increase sounds good to me. Is there an obvious way to do better that they’re missing? We’ve seen the advertising campaign that came with the signing of Rodriguez. Surely, that’s a good sign for the future.
      I don’t actually know if you like Brands or not. Do you consider him part of the problem? I think the major doubts around his transfers are being answered this season with Kean succeeding at PSG and Carlo putting a lot of faith in Iwobi. I get the impression you feel the academy has been run incorrectly but, again, I think there’s a lack of explanation (though maybe this point should be directed more at Roger).

      I suppose what I’m getting at is that I would love to read an article from yourself about exactly what you would do. Maybe a hypothetical example of a board that you would construct and how it differs to now. That would help a layman like myself understand better where you’re coming from. As, to be honest, the shots you often take without (from my view) a full explanation comes across quite poorly.

  5. I think if you piece together my articles and many of my podcasts you ought get a clear idea. A properly functioning board with a “heavy duty” Chairman capable of both leading the board but also representing the interests of the club externally with all the many stakeholders plus having the skill set to grow the club’s presence internationally.

    A functioning board that provides oversight and directs the executive team. An experienced commercially focused CEO; a footballing structure that has the DoF in charge of all footballing matters; an academy that operates under a single footballing philosophy consistent with the requirements of the first team; a commercial development team that focuses on revenue opportunities local, national and international; a radical change in corporate culture – much more aggressive; a clean break with the charity from an organisational and management perspective – although offering financial support each year; a complete revamp of communications strategy; a total reorganisation of our outsourced arrangements with Fanatics focused on growth, wider availability of merchandise nationally and internationally; a clearly defined strategy to dominate the City and City region; engagement in schools, soccer camps and general wellbeing with children – all designed to assist them but build a rapport with the club – I could write pages of what I would do.

    Above all an absolute commitment to excellence and winning back our position within the elite of the game. To be recognised as the best run football club (in every respect) in the game.

    • “I could write pages of what I would do.” Please do! It would make for a great article! Maybe all this information is out there already but it’s harder to piece together than you might think.
      I would love for this comment to be fleshed out long form. I want to know which of those we’re already doing/trying to do and which we aren’t. Should I infer that we’re not doing any of them? Surely, in some cases, the board are trying to achieve the same thing within a different structure.
      Why is breaking from the charity a good idea?
      What makes you think the DoF doesn’t have control of all footballing matters?
      What do you mean by “dominate the city region”?
      Why can’t assume that the club is committed to excellence? The level of investment suggests we are trying to be excellent. Especially, in hiring people with great track records like Ancelloti and Brands.

      I know that this is just something you do in your free time so don’t take any of the above as a demand. I’m just keen to understand as much about the club as possible.
      I want to reiterate that I appreciate you putting this information out there for the fans and I appreciate you taking the time to indulge my comments.

  6. Paul, your article, 12 December , 4:06, displays the dynamic, focussed thinking that I , as an outsider from the business, think is absent currently. As Jamie says, please do expand on it.

  7. Very good summary. I don’t think I could name another business where the executives would retain all responsibilites with such poor financial results, but as you’ve written before, it is a reflection of the corporate culture and governance in the organisation.

    It’s also interesting to note the (new) auditors have insisted on a letter of support from the majority shareholder to sign off the accounts. Understandable given the financial position/performance/current audit environment etc. though it’s not sustainable and i doubt he’s going to want to do that every year.

    It’s a shame there isn’t more disclosure in the accounts about how the onerous contract provision has arisen (not insignificant given the size of the business).

    • Thanks Richard, I totally agree – I did ask Sasha Ryazantsev for more details on the onerous contract but he was not prepared to divulge any further information

  8. Interesting stuff, very informative as ever.

    Two questions. Firstly Impairment of Player Registrations. This still counts against FFP I assume? It did pre Covid, depends what the regulators decide I suppose.

    Secondly, naming rights option of £30m.

    How does this work? I’d have thought that the PL, and beyond that certainly UEFA if they qualify, would be wanting a look.

    • Thanks for your comments. Yes the impairment charges count against both the PL and UEFA’s financial regulations.

      The naming rights option is treated as commercial income (although the accounts should have treated it as an exceptional income item). The PL looked at it at the time it was announced and found no issue with it. I suspect UEFA have not done so due to us not qualifying last season

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