In an interview with Sky Sports on 14th August 2024, Everton CEO Colin Chong gave a rare but brief update on the stadium construction, finances and the takeover situation. As one might expect, he presented the club’s situation in a positive light:

ICYMI here’s CEO Colin Chong on the progress of The Everton Stadium: pic.twitter.com/1sVnps2MYs

— Alan Myers (@ALANMYERSMEDIA) August 14, 2024

General terms, the takeover situation hasn’t impacted obviously the build process, it is something that we’re still looking at. TFG, our last counterpart, have been really helpful in providing us funding in the form of a loan to get where we are today, along with a number of other, I suppose, interested parties over the journey. 

But it shouldn’t have any further impact now. We’re pretty close to completion effectively we can self -fund from this position onwards and hopefully just finish it as we’ve always planned, which is this year with a fit -out taking place early in the new year. 

What exactly does this mean? Unfortunately Colin Chong gave no further details, but piecing together what is known it is likely that the pre-payments Everton have had to provided Laing O’Rourke during the construction of the stadium are now at or near the remaining costs for fitting out in time for completion  “early in the new year”. It is estimated that the fitting out of the stadium is approximately £45 million, which is less than the prepayments in the last accounts (£78 million) – what remains on the construction contract is not known.

If all the above had been funded from capital or profits, all would be well and good. The stadium would be a considerable asset in its own right and would promises future enhanced levels of income.

The reality though is different and this feeds into the apparent complacency of statements such as Chong’s and other commentators. The stadium has been funded predominantly  by short term debt – an argument the club is using and acknowledging in capitalising financing costs.

Chong’s comments give the illusion that the loans provided by 777 Partners and the Friedkin Group (counterparts and interested parties) are part of a planned funding strategy. The reality is that they are not. They are loans that carry high interest costs and require repaying in the near future. Excluding interest, the outstanding loans to third parties total close to £650 million.

A business that borrows in the short term to meet long term funding requirements is always vulnerable. Everton’s financing has the following scheduled repayment dates:

So Everton have huge cash calls ahead of them, the first (repayment of Friedkin) with 12 months. Therefore, the term “self funding” can only relate to our ability to pay contractors, not meet our liabilities to those that have provided the funds to date.

The second point is the cost of such as loans. As discussed in the last article, much of the interest costs will be deferred to assist cash flow, but that comes at a heavy price particularly when one considers the nature of the lenders and the circumstances in which the loans were provided. Much of the external debt in recent times has been distressed funding by unsuccessful potential acquirers. These figures highlight the need for a highly liquid future purchasers.

At an interest rate of 10%, the cost of servicing the debt is approximately £65 million a year, at 8% £52 million, at 12% £78 million. Using the 10% assumed cost that’s more than one third of our current turnover, or in stadium related terms each of the 52,888 seats is carrying an annual interest cost of over £1,200. With expected match day revenues of £55 million, once the stadium is opened our current levels of debt at these short term rates will cost more to service than the stadium generates.

Therefore, a capital restructuring, a debt refinancing is essential. The question is, and has been answered on numerous occasions on these pages, is that possible under the current ownership? The evidence is that it is not, therefore the change of ownership is critical. It must be resolved with the greatest of speed – not only to rid the club of Moshiri but to resolve our financial crisis.

To actually buy a football club with this club’s heritage and history, moving into a new stadium as a catalyst for growth is just such an exciting opportunity for somebody. 

Colin Chong’s closing remarks in his Sky interview. I don’t need to revisit all of the arguments I have presented previously about the difficulties in attracting new, competent, appropriate, future owners of Everton. As Chong said with masterly under-statement “it is something we are still looking at”.

The need for resolution is clear and apparent. Whilst I understand entirely the purpose of the Chong interview, sadly, in no way does it address the fundamental problems the club faces. Moshiri and Chong need to be questioned further by fans and media and more complete, accurate answers, acknowledging our position and how we are implementing solutions have to be forthcoming