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[DrEFC]

Bill is making it rain in Rude right now. Titanic girl has one eye on him..
(sorry Twitter reference for those who witnessed the meltdown of one lappy on twitter..)

 

[SerenityNigh]

But to continue your anology, instead of spending the 100 cash on Belgium waffles we have have spent it on a Belgium player - Lukaku. Unlike waffles, which are a depreciating asset, Lukaku is hopefully a rapidly appreciating asset whose sale could potentially be used at a later date to offset that debt.

 

[Visitor22]

I'm aware it's a snapshot of a particular time, but from the way I am reading it Everton have now actually paid 17 million pound back to their creditors in order reduce their debt by 17 million? They have also bought Lukaku. Is this not the case?

If it is the case, then all it shows is that the accumulation of player sales and new TV money was enough for Everton to buy Lukaku and reduce our debt. We have two more tranches of extra TV money coming our way, and we are more than capable of servicing any form of debt that we currently have, and therefore I think there should be money to spend.

No. In 2013 money owed to creditors was £48m. In 2014, money owed to creditors was £49m. At no point was £17m extra paid to any creditors, it was simply sitting in the bank as a credit.

Any payments for Lukaku will not be included in these accounts as they end on 31st May 2014, months before Lukaku was bought.

The question is how the money was spent.

Did the money go towards paying off debt? This seems unlikely as the club have confirmed that they have taken on more short-term debt but not confirmed the exact amount.

Did the money go towards paying for Lukaku? This is what I think happened as I think Chelsea wanted a high amount paid upfront and the club has never paid this type of fee before and it coincides with a large amount of excess money in the bank account

We are guessing but either the debt was reduced (unlikely), or the money was used for Lukaku (very likely). It is not possible that both happened

 

[SerenityNigh]

I'm aware it's a snapshot of a particular time, but from the way I am reading it Everton have now actually paid 17 million pound back to their creditors in order reduce their debt by 17 million? They have also bought Lukaku. Is this not the case?

Lukaku was purchased in a different financial year, so this purchase is not on the books you're looking at. And as @Visitor22 wrote, "reducing the net debt by £17m" may not actually mean that any debt was repaid (at least not in that financial year), but instead that the balance sheet is in a better position in terms of assets/liabilities.

 

[Visitor22]

Where do you get that figure from?

Off the top of my head, just checked and the net book value of intangible assets (the team) is actually £34m

Btw, this is not my opinion of what the team is worth, it is just accounting practice. For what it's worth, the net book value of Messi to Barcelona is zero

 

[mrb85]

Updated:

Perhaps better to have done the 'best fit' line excluding the latest figures so as to see how we might have expected total revenues to have increased without the extra £20m TV money.

 

[toffee matt]

These threads always turn into tedious debates

 

[Foot Long Hot Dog]

That's the problem with players. Every day they are on a training pitch they could injure themselves and reduce their value to zero or learn a new skill that makes them worth £100m. It's just impossible to know, which is why, despite Bill's protestations, the net book value of the team is about £40m at the moment

The intangible asset value on the balance sheet is meaningless as a guide to the true market value of the playing assets.

As the value is purely based on the original capital cost, amortised over the original contract length, with homegrowns standing at zero.

So therefore Stones and Barkley are currently valued at circa £2m the pair on the balance sheet.

The net effect of this on the overall balance sheet of a football club, is that it's not a true reflection of the net asset value.

 

[Visitor22]

The intangible asset value on the balance sheet is meaningless as a guide to the true market value of the playing assets.

As the value is purely based on the original capital cost, amortised over the original contract length, with homegrowns standing at zero.

So therefore Stones and Barkley are currently valued at circa £2m the pair on the balance sheet.

The net effect of this on the overall balance sheet of a football club, is that it's not a true reflection of the net asset value.

Agree, as mentioned earlier, Messi is worth zero to Barcelona on the company accounts. Barkley is also zero

 

[SerenityNigh]

Perhaps better to have done the 'best fit' line excluding the latest figures so as to see how we might have expected total revenues to have increased without the extra £20 TV money.

There's enough data here, not sure it makes a difference. First, the TV money isn't going away, so it's not like the most recent data is bad. Also, use your finger and extend the line--you'll get a reasonable enough estimate.

 

[LinekersLegs]

Off the top of my head, just checked and the net book value of intangible assets (the team) is actually £34m

Btw, this is not my opinion of what the team is worth, it is just accounting practice. For what it's worth, the net book value of Messi to Barcelona is zero

Ha, even we could afford Messi at that price!

But in the real world we know that is not the case and the sale of Messi could be used to pay down any debts Barca hold and the same would go for us. How much of course depends on the health and performance of the player but that 34m is not a true reflection of the assets of the team vs our liabilities of long term debt of 28m and short term debt of 21m. Particularly not in a world where Adam Lallana alone is worth 25m.

 

[Dymak]

No. In 2013 money owed to creditors was £48m. In 2014, money owed to creditors was £49m. At no point was £17m extra paid to any creditors, it was simply sitting in the bank as a credit.

Any payments for Lukaku will not be included in these accounts as they end on 31st May 2014, months before Lukaku was bought.

The question is how the money was spent.

Did the money go towards paying off debt? This seems unlikely as the club have confirmed that they have taken on more short-term debt but not confirmed the exact amount.

Did the money go towards paying for Lukaku? This is what I think happened as I think Chelsea wanted a high amount paid upfront and the club has never paid this type of fee before and it coincides with a large amount of excess money in the bank account

We are guessing but either the debt was reduced (unlikely), or the money was used for Lukaku (very likely). It is not possible that both happened

Fair enough, and I agree with the club choosing squad improvement over paying off debt. Almost half our debt does seem to be short term in nature though, I think we are in a healthy state with more money on the way.

 

[mrb85]

I wonder how our accounts would look if we'd put any money into expanding/upgrading the stadium like most teams do. I would hazard a guess that Everton have spent less on GP than any other PL club to their stadiums since grounds had to become all seater.

 

[SerenityNigh]

I wonder how our accounts would look if we'd put any money into expanding/upgrading the stadium like most teams do. I would hazard a guess that Everton have spent less on GP than any other PL club to their stadiums since grounds had to become all seater.

They've spent quite a bit on various assets, but spending much at GP is a waste unless you're doing full redevelopment.

 

[SerenityNigh]

The intangible asset value on the balance sheet is meaningless as a guide to the true market value of the playing assets.

This entirely. Book value and market value don't even approach each other. If your books reflected real market values (and their fluctuations) your books would be in such a mess you'd be bankrupt on imaginary dollars. Market value is easy to determine--watch what values clubs are willing to buy and sell players.