By David Owen
December 15 – The sobering story of the 2019-20 Premier League financial results season has continued, with Everton posting a towering pre-tax loss for the year to end-June of £139.9 million.
This was even bigger than the previous season’s loss of £111.8 million, which left the club from the blue end of Merseyside bottom of the 2018-19 profits table.
Turnover dipped again, to £185.9 million – and would have fallen even more but for a strong performance by sponsorship, advertising and merchandising, proceeds from which more than doubled to £63.7 million.
This reflected a new agreement with USM Holdings, private holding company of the mega-rich former Arsenal investor Alisher Usmanov. Under this, Everton received a £30 million “option premium” for the purchase of a naming rights contract for the club’s future stadium at Bramley-Moore Dock at a “pre-agreed annual value and term”. The club hopes that remediation and building work can commence “in the early months of 2021”.
The club put the impact of Covid-19 on the results at £67.3 million, comprising £33.2 million of lost revenue and £34.1 million of additional costs.
While turnover remained stubbornly below £200 million, operating expenses stayed above £300 million, reflecting the high cost of attempting to re-establish the club as a regular top-six Premier League fixture.
Staff costs of £164.7 million accounted for just over half of these expenses. The club was also stung by a raft of exceptional costs. These were made up of £19.9 million of expenditure on the new stadium project: £6.5 million payable to former coaching staff, presumably Marco Silva and his entourage who were replaced by Carlo Ancelotti last December; a £4.4 million provision for an onerous contract; and a £26.3 million impairment of player registrations.
The club also blamed this impairment on Covid-19, saying: “As a direct result of the market conditions created by Covid-19 and the contraction of the transfer market, it became apparent that the club was carrying the registration rights for a number of players on the balance sheet at an amount greater than the recoverable amount”.
All told, the operating loss surged from £127.3 million in 2018-19 to an enormous £175.2 million.
It looks like the amount owed by the club to majority shareholder Farhad Moshiri’s (pictured) Bluesky Capital has risen again to £398.5 million. The consolidated balance sheet at 30 June 2020 showed that “other reserves” had increased to £348.5 million.
A note to the accounts stated that this represented an interest-free loan of £350.25 million from Bluesky from which loan arrangement fees of £1.75 million had been deducted. The note on post balance-sheet events disclosed that since year-end Moshiri had provided further interest-free loans of £50 million. Since these loans are to be repaid at a date agreed by Bluesky and Everton, they have been classified as equity.
The club’s website has reported that its board of directors is proposing to create and issue new shares to Moshiri’s Blue Heaven Holdings Limited.
The report states: “Mr Moshiri is currently the club’s majority shareholder with 77.2% and this proposal – representing up to an additional £250 million of investment – further underlines his long-term commitment to the club.
“The investment…will include the capitalisation of some previous loans made by Mr Moshiri into equity and greatly strengthens the club’s balance sheet.”
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