interesting read about our finances

[toffeestillidie]

The New Straits Times Online......

Everton are also desperate to find a new cash-rich backer with their chairman, Bill Kenwright, recognising that rising interest rates will soon start to bite.

“We know what’s going on at the moment in the world,” he said. “The banks are tighter than they’ve ever been.” At the end of the 2006/07 season, the 20 clubs that then made up the EPL had combined debts of just under 2.5 billion pounds.

according to that article, only the likes of Hull, City, and Chelsea are safe from the financial crisis.

how do you think this will effect us, i hadn't considered it all that much, but maybe high interest rates were preventing a great deal of spending for most of the summer.

i can't imagine that we're in too terrible of a position though, we spend next to nothing every year compared to our rivals, so how can our debt be that much worse?

 

[The Esk]

Easy really. We make a loss almost every year and have no more assets to mortgage!
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[toffeestillidie]

do you know where we rank in terms of debt?

certainly we have to be in the top 5 for least debted right? if thats the case, and the markets really do hurt the heaviest debted teams, hopefully we'll finish as high as last year, with Hull as champions of course

 

[Bruce Wayne]

It doesn't really matter how much the debt is in total. What matters is how much debt you have in relation to your income. The likes of Man Utd and Arsenal have a lot of debt due to their takeoever and new stadium respectively, but both earn a shitload of cash each year too so can manage the debt ok.

 

[Sharpys top lip]

Were like the big issue sellers of the prem!!

It's a joke really.

 

[evertonianstu]

Des anyone have a link to our last financial report or like everything else, is that shrouded in mystery to?

 

[Sim]

As Bruce pointed out, the level of debt is not necessarily the same for everyone, if your going on level of debt compared with turnover then yes we must be one os the most in debt clubs in the premiership. Even with buying no players we struggle to make even a small profit. Our wage to turnover has increased quite a bit over the last few seasons as the squad has been increased in quality.

Where we're lacking compared to our rivals is how much we make through sponsorship by being in europe along with the prize money that brings as well as making less than them on matchdays.

The problem, especially for new investors, is that with our current debt level around the 60 million figure, along with the need for our share for a new stadium would mean an investor would be taking over a business with possilby £150 million debt.

 

[bobbyrob]

Diversion tatic from billy bullshit

 

[Sim]

Diversion tatic from billy bullshit

By commenting on the state of the current economic climate?

 

[bobbyrob]

Oh yes

 

[kenada_blue]

As Bruce pointed out, the level of debt is not necessarily the same for everyone, if your going on level of debt compared with turnover then yes we must be one os the most in debt clubs in the premiership. Even with buying no players we struggle to make even a small profit. Our wage to turnover has increased quite a bit over the last few seasons as the squad has been increased in quality.

Where we're lacking compared to our rivals is how much we make through sponsorship by being in europe along with the prize money that brings as well as making less than them on matchdays.

The problem, especially for new investors, is that with our current debt level around the 60 million figure, along with the need for our share for a new stadium would mean an investor would be taking over a business with possilby £150 million debt.

I agree. Your top 4 clubs are upwards of about 600million in debt. If Liverpool didnt qualify for the champions league or won anything in about 2-3 years they'd be in the [Poor language removed] and would sell assets, players etc to stay afloat. Its the same for Arsenal and Man Utd. I did read Chelsea would be okay being that Abramovich aint spent a penny of his own cash and just takes massive loans out. He'd just chuck in his own cash, sell a few assets and balance things out.
Just qualifying for the group stages of the Champs League bags you 12million -- which almost covers a chunk of the wages for the season for a team.

What an investor or buyer can do is bring collateral. Banks or whoever will throw money at a club with someone who can be vouched for. A man who's worth 100million can easily attract money from other sources because "he's worth it", he's bankable.

We dont have that, but we do have personell close to the club that can, Tesco Terry comes to mind, but they're either aint interested or dont want to get involved.

 

[Bruce Wayne]

[media]http://www.evertonfc.com/assets/_files/documents/jan_08/efc__1199722913_Report_and_Accounts.pdf[/media] is the latest account. The accounts from the last few years are available on the OS.

In 2007 our turnover was around £51m and we made a small loss (before player trading - after player trading we lost around £10m). The debt was around the £53m mark The interest on that debt was around £3m for the year.

I'm no financial wiz, but in times of strife liquidity is important (hence why many banks have been up the spout). The traditional ratio for measuring liquidity is the current ratio (assets/liabilities). Creditors generally prefer a high rating as it means they are likely to be paid back. Shareholders generally prefer a lower rating so more of the capital is employed in making money. Obviously you don't want to be too low that you can't meet your obligations however.

As it stands our ratio is 0.14. Pretty poop. Also when you're talking about liquidity it's better to have cash in hand rather than debtors or other less liquid assets. We have no cash in the bank according to the reports.

To determine the long term solvency you can use the debt ratio (total debt/total assets). Unlike liquidity ratios that are concerned with short-term assets and liabilities, debt ratios measure the extent to which the firm is using long term debt.

Our figure stands at 1.30 (roughly). Basically anything over 1 means you have more debt than assets.

All in all it's not a pretty picture and with the cost of credit rising the picture isn't going to improve without an injection of cash from somewhere.

 

[tadpole]

Banks are already hiking up interest rates and taking a much tougher line on debtors, and I wouldn't be surprised to see more British clubs going into receivership in the next couple of years.

Premiership clubs with their TV revenue streams are comparatively safe from that sort of fate. As the saying goes, a poor man is someone who owes £100, but a rich man is someone who owes £1 million.

 

[SuitsBlue]

consider.

goodison steelwork alone requires £500k per year maintenance.
goodison obstructed views guarantees we dont sell out - the recent derby hit 39k only.
goodison dickensian facilities means the supporters cant actually buy enough refreshments at half time thereby not spending more per person.
goodison has 10 corporate boxes? its beyond a joke - it simply wont do. arsenal make more from selling corporate boxes each season than they do from total fans through the gates. (look long and very hard at that last bit, and let it register)

the collosal hernia that is goodison to one side, everton still own bellefield, and have plans for a couple of million pound housing estate. everton now lease finch farm. everton do not own the david france collection - so if the vultures move in, that is safe (brilliant idea!) everton own goodison and surrounding property.

chang doesnt deliver enough cash, and our stadium has no naming rights to sell.

is it a case of waiting for the next prem tv deal to be made and hoping the increase in tv monies will save the day?

 

[Sim]

The finances of most premiership teams are a mess right now, everything is based on future earnings and borrowings etc. Its quite shocking to think what would happen if just a small amount of their income was to be reduced. All the teams seem to be working on the principle that the income will only increase, no one seems to be prepared if the problems in the finance markets across the world carries across into football, which no doubt, it eventually will at some stage.

Even if an investor did come in, he's unlikely to use his/their own money to wipe out our debt, which leaves us in quite a dangerous position unless we make some serious plans on how to wipe out our debt and turn us into a profit making club.