So where are we financially? The last set of accounts takes us to 30 June 2022. It is possible to project forward 12 months to see how we enter this current financial year.

For the avoidance of doubt, the figures below are projections. However they present an indicative and reasonable picture of how we sit financially.

Projections

Profit and Loss Account
I had projected earlier in the year, after the sale of Gordon to Newcastle United that we ought to be at or near break even for 2022/23. Sadly I have revised those figures to include lower revenues, higher costs, and the impact of a survival bonus for Sean Dyche, provision for Lampard’s departure and some of the compensation for loss of office for our departing directors.
As a result I project losses of around £49 million for the year 2022/23. ( 2021//22 -£44.7 million)

Turnover
For the second year in succession, I am predicting a reduction in turnover. A small increase in gate receipts, largely flat broadcast revenues plus a reduction in sponsorship revenue due to the loss of USM and associated companies sees projected turnover fall from £181 million to £166 million.
I project match day income at £17 million, Broadcast £113 million, Sponsorship £18 million and commercial revenues £18 million.

Costs
On the expense side wages I project wages fall by £7 million to £155 million. This represents a very high wage/turnover ratio of 93.4%, (2021/22 89.5% ) The reduction in turnover results in the wage/turnover ratio remaining much higher than the levels (70%) considered sustainable in the Premier League.
Other operating costs, I have projected to increase by slightly less than inflation (assuming some operational efficiencies have been found. Projected operating costs of £39 million (£36.3 million 2021/22)
Costs relating to the new stadium no longer feature in the profit and loss account as they are now considered a capital cost given the increased certainty of the project being completed. I’ll cover what we may have spent when looking at cashflow.
Unlike in 2019/20 and 2020/21 I have assumed there were no impairments of existing player registrations nor onerous contracts
As a result of previous impairment charges, sale of Richarlison in previous financial year and the gradual unwinding of the excessive purchases of the early Moshiri years, I have projected amortisation to continue to fall from £68.3 million in 2021/22 to £62 million in 2022/23. An improvement of £6.3 million.
Interest costs rose in 2022/23 reflecting the increase in external debt and rising interest rates. Interest costs on external debt I have projected to rise by 40% to £14 million..

Player Trading
The sale of Gordon in January 2023 and the previously agreed sale of Moise Kean to Juventus suggests player trading profits of approximately £55 million – a fall from the previous year’s profit of £67.7 million .

Cashflow – the life blood of every business
Cash can be generated from day to day operating activities, from investing activities (player trading, shareholder equity injections) and from financing activities (borrowings).
Cash outflows include wages, operating expenses, interest payments, capital costs including both the stadium and the balance of player acquisition/disposals and the agreed payment schedules.
Everton ended the last financial year with a positive cash balance of £32.4million

Operations
For 2022/23 I am projecting negative cash flow of around £42 million (2021/22 – £28.4 million). This assumes no change in balances of creditors and debtors. Even if there was a significant improvement it is clear that at the operational level Everton remains cash negative.

Investing
Investing activities include cash inflow/outflow from player disposal and acquisitions. It also includes the amount of money we have had to pay in the building of Bramley Moore.
Player acquisitions resulting in cash payments included Onana, McNeil, Maupay, Garner and Gueye. Player disposals include Gordon and Moise Kean. There is of course, the balance of trade creditors and debtors from previous seasons as well.
I have forecast positive cash movements of between £25-40 million for the year 2022/23
Whilst it’s possible to forecast cash movements regarding player trading, without actually knowing the terms and payment schedules to Laing O’Rourke it is impossible to be precise. What I can say with some degree of comfort is that spending on the stadium development is likely to be close to the previous year. However, given the difficulties the club faces, let’s assume we renegotiate the payment schedule. With the likelihood of the MSP money arriving soon this is not an outrageous assumption. Let’s project £175-200 million ( 2021/22 -£210.5 million.)
As a result investing activities saw a total projected cash outflow estimated to be in the range of £135 – 175 million. There is obviously a large margin for error in these figures. Regardless, it is very clear that in the building phase of Bramley-Moore, cash outflow is going to be extremely heavy.

Financing
For most of Moshiri’s tenure at Everton, our losses and the expenses of building Bramley-Moore have been met by capital injections from Farhad Moshiri and in recent years an increase in external debt through the funding arrangements with Rights and Media Funding and from the Covid period, Metro Bank (the club’s bankers).

The Rights and Media facility increased from £150 million to £200 million in the year 2022/23.
The Metro Bank facility has in all likelihood reduced (as in 2021/22) by £3.75 million
Farhad Moshiri contributed an additional £70 million. He also provided (albeit with no legal or contractual obligation) an assurance to continue funding whatever was required.
Taking the opening cash balance of £32.4 million, the projected cash flows from operations and investing activities of minus £179-234 million we can see that the business, even after further financing of £120 million (Rights and Media Funding and Farhad Moshiri) is in need of further funding.

MSP/Andy Bell etc
Investment in Everton either through further loans or some form of convertible debt has been on the agenda since at least the beginning of the year.
What we do know is that Andy Bell has provided a short term facility (thought to be £40 million) and that following an SEC filing MSP have raised $165 million (£130 million approximately) to be invested in Everton. It is thought, but not confirmed in the public domain that MSP have also contributed £10 million prior to the closure of their deal with Farhad Moshiri.
It is assumed that the bridging facility provided by Andy Bell will be repaid upon completion of the MSP deal.
The need for the MSP deal to be closed and closed quickly is very apparent from the projections above.

So what conclusions can we draw?
Firstly, I apologise for blitzing the article with numbers, many of which are projections. But in the absence of news from the club and no prospect of their communications strategy changing in the short term, they’re as good as I can do – I am of course open to alternative projections and indeed corrections.
For me, not that it should be in doubt, it shows what a perilous position the club has found itself – the perfect storm of continued losses, a costly capital project and much reduced financing options driven by the owner’s circumstances and the lack of further credit facilities.
Lest we forget, we are a football club with a wafer thin squad that is in desperate need of new investment. Based on the above, the prospects for that seem slim. Without player disposals to fund purchases it is difficult to see how we fund player purchases.
There seems little point in discussing profitability and sustainability regulations given the cash resource issue the club appears to have, but the projected losses (and previous 2 years of losses) suggest compliance is again a potential issue.
The combination of perhaps altered payment terms with LOR, the short term funding provided by Andy Bell (and possibly MSP) plus the arrival of £130 million from the MSP managed LLP they have established will see us over this hump.
However without further funding this year (and new management working on reducing operational losses) we are just kicking the can down the road a little further.

Furthermore any claim of management expertise from the owner, remaining Chairman and further executives are blown away by such projections. The interim board has to be replaced with serious, professional operators, versed in corporate recovery aside from any business development skills they may have.
The challenge for the general partners of MSP, and the speed in which they have to turn matters around is significant on both counts. We cannot continue to be run in the manner in which we currently are, financially, strategically nor operationally.