To complete the analysis of Everton Football Club Company Limited Report and Accounts for 2023/24, Everton Stadium Development Limited warrants its own analysis, particularly in the context of the treatment of interest costs, the expenditure on the stadium and the funding issues particularly as the financial year ended.

The complete year, 2023/24 was constantly shrouded with the uncertainty regarding secure funding and the ability to continue as a going concern. The pursuit of 777 Partners as potential owners of Everton Football Club placed huge strain on the club, its employees and fans alike as funding became increasingly difficult as the costs associated with Bramley-Moore grew.

As at 30th June 2024, Everton Stadium Development Company Limited owed more than £800 million. Thankfully, that situation has been resolved through the Friedkin acquisition via their acquisition vehicle Roundhouse.

From the previous year’s analysis I had concluded the following

It is clear that the funding of the stadium, and indeed the very existence of the club is entirely contingent on the resolution of the ownership issues which has tormented the club for many, many months bringing undue stress and concern to fans and employees alike. We are very close to a resolution (good or bad, including the possibility of administration) one way or another, although I must stress I do not believe that Moshiri’s chosen new owners 777 Partners will succeed in their quest.

Moshiri’s role in this fraught, existential crisis should not be underestimated.

Everton Stadium Development Limited (ESDL) is a wholly owned subsidiary of Everton Football Club Company Limited (the Group). The sole purpose of the company is to “act as a development vehicle for future group activities in relation to the new stadium project”.

With the completion of the acquisition of Everton Football Club on 18 December 2024, John Spellman resigned from the Board to be replaced by Marcus Watts and Analaura Moreira-Dunkel. Colin Chong remains on the Board.

Results:

The profit and loss account is important in the impact that it ultimately has on the club’s overall PSR calculations. Obviously at this stage of the development, the company (apart from minimal interest on deposit balances) generates no income, therefore all expenses drop straight to the bottom line.

The audited accounts show a loss, after taxation, for 2023/24 2022/23 of £6,685,411 – compared to a loss in the previous year of £3.55 million.

The £6.85 million operating losses includes the cost of an average number of 15 employees costing £1.25 million (2022/23 £0.512 million).

Balance sheet

A company’s balance sheet displays the company’s total assets and how the assets are financed, either through debt or equity. In the case of ESDL the assets are the value of the stadium development at the end of the year, plant and machinery, debtors and cash in the bank. The assets were financed entirely by debt.

The value of the stadium is calculated by the cost of the development (including capitalised interest) at the end of the year. By 30 June 2024, it had increased from £410,607,997 to £730,175,632 an increase of £319,570,635.

 Until the stadium is completed this asset will not attract any depreciation.

The current assets are debtors £21.3 million and cash of £997,735 (2022/23 – £3.48 million)

 Included in debtors is advanced payments of £21.27 million to the main contractor Laing O’Rourke. This, as the stadium neared completion, contrasted sharply with the previous year’s balance of £69.9 million.

Creditors

Everton Stadium Development Company Limited’s creditors (i.e. people they owe money to) include trade creditors, amounts owed to the parent company, VAT, PAYE and accruals.

The company’s creditor balance (monies owed to others) grew sharply through the year. By 30 June 2024, creditors amounted to £802.12 million (2022/23 – £539.1million).

As at 30 June 2024, Everton Stadium Development Limited owed its parent company (Everton Football Club Company Limited) £575.15 million. That loan was unsecured. The interest cost has been capitalised within Assets Under Construction.

Additionally, Everton Stadium Development Limited owed £200 million in a “one year facility” secured by fixed and floating charges. These charges were in favour of Blythe Capital acting as security agents for various lenders including A Bell, G Downing and others. These charges were satisfied post the year end on 13 July 2024.

The loan attracted market rates of interest and those interest costs have been capitalised within Assets Under Construction – thus not impacting the profit and loss account.

Net liabilities

As a result of the above Everton Stadium Development Limited was in a net liability position at 30 June 2023 of £49.7 million (2022/23 – £43 million).

Post Balance Sheet events

The accounts presented show the finances as at 30 June 2024.

Subsequent to this date, Roundhouse Capital Holdings Limited (UK) acquired 97.2% of the shares in the club from Blue Heaven Holdings (the Isle of Man company owned by Moshiri) which included the conversion of the previous Moshiri shareholder loans (issued by Blue Sky Capital, an Isle of Man Company controlled by Moshiri) of £450.75 million to equity.  A further issue of shares totalling £233.44 million took Roundhouse’s holdings to 99.5% of Everton Football Club. Existing shareholders (around 1,400 including the estate of the late Chairman, Bill Kenwright) own the remaining 0.5% All existing debt was thus repaid.

Concurrent to this the club completed a comprehensive refinancing exercise which included a five year revolving credit facility with JP Morgan Chase for working capital purposes and a senior debt package of £350 million with JP Morgan Chase.

A more detailed explanation of the refinancing can be found in Part I – Analysis of the 2023/24 Everton Football Club Accounts.