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The Blue Union: We’re at a loss…
We’re no financial experts, far from it, we’re just ordinary matchgoing Evertonians, but we can read a profit & loss account and a balance sheet, so probably, like many, we’re at a loss after reading these latest revelations from The Guardian’s Andy Hunter.
In Hunter’s article David Moyes makes reference to the money the club obtained from the sale of Arteta, he stated, “I think everybody knows that the bank wanted the money. I think you all knew that.”
He went on to indicate that little funds would be available to strengthen the squad in this window when he said, “I would be surprised if we did. I don’t think that is going to be the case.”
Let’s make one thing abundantly clear, we’re certainly not advocating the spending of money that Everton doesn’t have on players to appease the manager; too many clubs have done that in the past and have suffered the tragic consequences.
Additionally, whilst we understand there’s a market rate, we also don’t expect Everton to pay astronomic wages to distinctly average footballers; but we’re struggling to understand why [it would appear] the manager is again about to emerge from yet another transfer window, unsupported financially by the board, when there has been significant additional income obtained since the last year end.
Directors have a legal obligation to act in the best interests of their business at all times; it’s stated in the 2006 Companies Act. Everton’s business is that of being a professional football team and as such they, the company, and therefore the board, need to invest in their team to maintain its wellbeing.
We really don’t understand why there’s a need for all this money to go to the banks; we’re not just talking about the Arteta money we’re talking about money from both last year and the current year; the £9m Bellefield money and the proceeds from the sales of Ruddy, Jutkiewicz, Pienaar, Vaughan, Beckford and Yakubu which is in excess of £20m plus the cost savings in wages in excess of £13m.
What should also be understood is that this money is in ADDITION to the £82m turnover which is derived from income from gate receipts, programme sales, broadcasting, sponsorship, advertising, merchandising, catering and other commercial activities.
We find it almost inconceivable that all of this additional income has been demanded by the banks. Look at the debt which is comprised of short term [overdraft and mortgages] payable within a year and long term debt such as the securitisation loan which the charge holders, Prudential, prevented Williams Tarr building and then leasing back the proposed Park End development. Haven’t we been told for years that it’s a manageable debt?
If the net debt is only a manageable £45m then are the banks really demanding all of this money or are the directors choosing to deliberately reduce the debt because they know they won’t get a high price when they sell the business which is now their only business plan.
Everton as a business has been decimated; all the tangible assets have been sold off, the methods of income have been outsourced, the next two years broadcasting money has been mortgaged, we have a dilapidated stadium and the smallest squad in the Premier League.
Any potential owner will evaluate the position Everton are in and will make an offer accordingly. Knowing this, and knowing that the value of the business is diminishing every year, are the directors reducing the debt so that their return on investment will be improved?
The sale price can be described as the “enterprise value”, that is the debt plus the valuation put on the business. If the club was sold for an enterprise value of £100m for example, £55m for the business and £45m for the debt as it stands, you can appreciate that if the debt was reduced to £20m the shareholders wanting to sell would obtain that extra £25m and receive £80m.
If this is the case, and we can see no logical reason for this money to be used to reduce the debt when the squad is crying out for investment, are the directors complying with their legal duty to act in the best interests of the business or are they acting in the best interests of their pockets?
Whatever the truth, Everton and David Moyes are in dire need of investment in their squad to ensure Premier League survival is guaranteed rather than left to luck. The performance tonight confirms our fall from the position we were at three seasons ago.
The Blue Union
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7 Comments
Good article keep the pressure on these shysters. We just want some transparency Kenwright treats us with contempt. How often have we heard from him that he’s just a fan and doesn’t know about finance. Bullshit! He’s made a fortune in the theatre and I bet he always read the paperwork of any deals then. Wake up fellow evertonians before its too late. We demand some answers . What are the finances really? Who’s being paid back? Philip green?
It does seem quite extraordinary and very depressing that after public assurances were given that at least some of the Arteta money would be available to spend on players it now appears it isn’t. If something has changed then why not say so? Why leave it up to the manager to make passing references to the money going to the bank, it’s very odd that no one has mentioned it until now. The tragic thing is this team two to three years ago was on the verge of challenging for champions league football, if things continue as they are relegation is a distinct possibility, probably not this season but soon. To stay in the premier league you have to invest in new talent otherwise you go backwards. On the bright side the team performed respectably tonight against a very strong Tottenham team, I for one feared the worst after Bolton , but Billy had one of his best games for us and Saha looked a little sharper then he has recently. Makes me think we just might get something at Villa!COYB!
You’ve hit the nail very squarely on the head here again. The only debt the financial institutions could ‘call in’ in such a fashion would be the overdraft facility. While I am sure this is sizeable it doesn’t seem possible that it would take all of the funds raised recently, nor would it be prudent for a bank to make such damaging demands on one of its largest customers. This decision has been taken by the directors to make the club a more attractive financial proposition while guaranteeing their own wedge isn’t compromised. No 1 fans my arse. Keep up the pressure lads.
Putting things in laymans terms. If you spent all your wages on paying off your bank loan you acquired for the purchase of your car. What sale price would you get for that car if it’s sitting on the side of the road with two flat tires and a blown engine, because you didn’t keep up with the maintenance required to keep the car running? Seems to be a case of robbing Peter to pay Paul!
Personally I think Everton are only firing on two cylinders now and the spare tire is flat. Not long now before where parked on the side of the road gathering dirt and grime.
On a more positive note, I believe Everton are a classic car in need of a classic car enthusiast to rescue them from their current owners neglect, rather than an old banger destined for the scrap yard.
I just don’t know how many flat tires we have to get before Bill decides it’s a zero sum game in holding out for the top price!!
Since 2002 the club have spent 107.01m on purchases
104.58 on sales
Net spend £2.43m
This figure does not include wages, which we are led to believe accounts for 58% of our expenditure.
Our last bona fide purchase was 200k for Apostolos Vellios.
Why are the bank so insistant to recoup our borrowing as opposed to other clubs borrowing?
I dont see them having a fire sale and lack of purchasing power.
Mikel Arteta, when interviewed said he had left for the good of the club! So why were we told we were too late to spend the cash that was generated, and furthermore why were we informed bythe chairman in Novemeber that we will have money to spend in January?
Is there a buy out on the horizon? Are the board no better than pigs at the trough?
Good Luck Blue Union, you have my unequivical support
Great Article and adeptly put into context in terms of gracious diplomacy.
I think now it is surely time for the fans of this once great club to make themselves heard and in greater numbers, it is there for all to see that that the Barrel of apples is rotting away because of more than one bad apple. All the excuses in the world will not paper over the cracks showing and the whole matter surrounding the Club’s finances is such an Obvious fault of the club’s hierarchy itself that there needs to be some accountablity excercised exactly what I don’t know but why should great paying fans put up with this???
SHAME ON YOU BILL KENWRIGHT, YOUR AS BAD AS PETER JOHNSON, HE SOLD BIG DUNCAN FERGUSON YOU SOLD MIKEL ARTETA YOU GOT YOUR MONEY NOW RUN AWAY, LIFELONG EVERTONIAN YOUR A JOKE GOOD LUCK BLUE UNION