tag:blogger.com,1999:blog-487486960623783530.post4812830844023273286..comments2024-02-29T09:58:18.342+01:00Comments on The Swiss Ramble: Everton - No Blue SkiesThe Swiss Ramblerhttp://www.blogger.com/profile/11423088862174893998noreply@blogger.comBlogger67125tag:blogger.com,1999:blog-487486960623783530.post-21742921380794283902014-02-05T11:50:46.154+01:002014-02-05T11:50:46.154+01:00Excellent! Many Everton fans are aware of the immi...Excellent! Many Everton fans are aware of the imminent financial problems that the club faces and the less than professional manner in which it is being run and run-down, without any clear strategies of success, either sporting or financial.<br /><br />Accounts for the 2012/2013 have recently been published. May I ask if you plan to conduct any analysis into them? There are very many fellow 'Toffeemen' who would also be very interested in the conclusions you might draw from them. Many thanks for your excellent work here.Rieddu Sarduhttps://www.blogger.com/profile/07816640090163336542noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-25367319313239162172014-02-05T11:46:19.892+01:002014-02-05T11:46:19.892+01:00Great article! Thank you! I was sent here by a fel...Great article! Thank you! I was sent here by a fellow Evertonian, and I am very glad I have read this.<br /><br />Everton have just released their accounts for the season 2012/2013. May I ask if you plan to conduct any analysis of them? There would be very many 'Toffeemen' eager to read your conclusions, and I'd be very happy to recommend any such articles for fellow Evertonians to read.<br /><br />Thankyou. An excellent piece of writing.Rieddu Sarduhttps://www.blogger.com/profile/07816640090163336542noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-17197160766485578442011-12-19T16:55:14.512+01:002011-12-19T16:55:14.512+01:00the differance with these owners are its not only...the differance with these owners are its not only bill who is not putting money in what ?? about the others elstone greggs and the rest the grantchesters they seem to be at each others throats so no money goes in .thats the way i see it .. now we are too much in debt and no one can help .Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-21666700428612221882011-12-11T23:42:16.068+01:002011-12-11T23:42:16.068+01:00Swiss Rambler, as I expect you are aware already, ...Swiss Rambler, as I expect you are aware already, Everton have now published their last year's accounts.<br /><br />Any chance of a quick update from you on them?Franknoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-82600054801572907402011-09-27T22:29:33.648+02:002011-09-27T22:29:33.648+02:00This is a very detailed and technical article beyo...This is a very detailed and technical article beyond the understanding of lay people but if you are knowlegable of mergers and acquisitions and valuing companies then maybe you can comment with authority. Sadly my knowledge is limited so I won't offer a critique but there are good points here.<br /><br />The big problem for Everton is not enough liquidity. They have to keep borrowing but don't have the revenue to make the business viable. They can't even keep up with Villa or Tottenham. I would like to see perhaps more comments on how Villa and Tottenham manage to spend so much, presumably they are bank-rolled as well. <br /><br />The peoples club is just that loved in the city, admired by many traditional english fans but unknown beyond these shores except for those who recall 1985 and Rotterdam. Sadly football fans are too emotionally involved to see things clearly and thrash about in the hope that something will come up like a rich benefactor. However, do Evertonians really want to sell their soul to some rich individual? Man City have, the day they took the petro dollars Man City died what's on the pitch now is a bunch of rich footballers, mercenries who play for the riches offered. They have no integrity, this isn't Man City its a doppleganger - City in disguise. <br /><br />Back to Everton quite honestly the game is up once Moyes walks and he will its relegation. When even Stoke and QPR can muster more money than Everton you know its bad - the richest club in England in the 1960's - how many times have they broken the transfer record? has been reduced to a shell. Sadly Evertonian dreams died on the tragic night of Heysel in 1985 - rather ironic but not lost on Evertonians.<br /><br />Even if some rich benefactor was in the frame he could pick many other clubs across Europe in more advantageous and economically better positions. Sadly Liverpool is a city with real economic problems any business partner or investor will factor that in.<br /><br />Finally no mention of the ground share or not any detail - given that Liverpool fans inadvertently helped wreck the dreams of Evertonians it might be a form of coming together to go for a ground share - humility on the part of all sides 'love thy neighbour' show a solidarity in adversity and help one another. It's crazy in the current state of the economy to talk about stadiums - show the world that scousers can put aside petty differences. It would send a positive message out at a time when there is so much doom and gloom in the world.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-32639561678969232732011-09-26T08:49:30.741+02:002011-09-26T08:49:30.741+02:00excellent as always. I am an Aberdeen fan, for my ...excellent as always. I am an Aberdeen fan, for my sins in a past life, i would love to see a piece regarding my club, I am sure it would cheer all the Everton fans up.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-51827881437881271292011-09-22T16:55:42.117+02:002011-09-22T16:55:42.117+02:00If anyone is curious, Everton actually post their ...If anyone is curious, Everton actually post their financial report on their website at he end of the year.<br /><br />The numbers in this article match the numbers I pulled back then. The board are nice people, but not businessmen at all.<br /><br />And the amount of commercial revenue is dreadful, but it's hard to convince people you're a viable marketing outlet when you're second fiddle in a depressed city.openblackruinshttps://www.blogger.com/profile/08023535145111337175noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-12265810504969773702011-09-21T16:15:29.215+02:002011-09-21T16:15:29.215+02:00The false dichotomy equation peddled once again:
...The false dichotomy equation peddled once again:<br /><br />(Everton) (+) miracle working manager (-) awful board = current mess.<br /><br />The assumption is that no-one, other than David Moyes, could have done a better job in the last 10 years. Also, everyone other than David Moyes would automatically have done a worse job.<br /><br />Tell me, how much more money, how much additional profile, how much more attractiveness in terms of being bought, would Everton have achieved in the last four years alone had the manager been more ambitious in key games?<br /><br />I highlight just four:<br /><br />*Chelsea away (Carling Cup semi-final 2008)<br /><br />* Fiorentina away (Europa League 2008)<br /><br />* Chelsea (FA Cup Final 2009)<br /><br />* Sporting Lisbon home (Europa League 2010).<br /><br />All four of these pivotal games were surrendered because of the manager's negativity, not because of boardroom constraints.<br /><br />* Chelsea were down to 10 men in the Carling Cup tie, Moyes sat back at 1.1. Result - Everton lost 2.1 on the night and the tie was as good as over. Next level chance blown.<br /><br />* Fiorentina were not as good a side as Everton - in my opinion the best team potentially in the Europa League that season - but for some reason David Moyes introverted his tactics in Italy and the tie was effectively surrendered that night. The trophy was there for the taking, as Zenit, who beat Rangers, who beat Fiorentina, proved. Next level chance blown.<br /><br />* After labouring to a 0.0 draw in the semi final against a Manchester United reserve team, Everton were given a gift from heaven after 26 seconds of the FA Cup Final. Chelsea were reeling. David Moyes sat back. The rest was painful. Next level chance blown.<br /><br />* Everton were cruising 2.0 at home to a clearly inferior Lisbon and were threatening to score a tie-killing third. Instead David Moyes sat back. A killer away goal was conceded. The tie was psychologically over. Next level chance blown.<br /><br />David Moyes has been a good manager. He has taken Everton to a higher level than had been experienced for quite a while. He could have taken us to the next level, though. Too many assume that the next level is qualifying for the Champions League.<br /><br />No, the next level is and has been achievable by Everton. Winning trophies that were there for the taking. Thus raising profile. Thus increasing revenues (every penny counts at Everton). Thus increasing investment attractiveness.<br /><br />Everton's board has a lot of questions to answer. At the same time, though, so does David Moyes, who has been supported by that very same board with money we don't have (there's +£30m wrapped-up in Fellaini, Heitinga and Bilyaletdinov).<br /><br />The board and David Moyes are as good and bad as each other - in equal measure.<br /><br />Yet received wisdom is that David Moyes has worked miracles and the board has strangled his ambition.<br /><br />Until it is accepted that the truth of Everton's malaise lies somewhere between Devil Kenwright and Saint Moyes, then only half of the real story will be portrayed.<br /><br />David Moyes' very creditable league placings over 10 years have been offset by a truly appalling record in the domestic cups.<br /><br />I understand that there are greater cash prizes for finishing 5th than for winning the Carling, FA or Europa League trophies.<br /><br />But what prize profile?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-83504911165997017022011-09-20T18:04:09.024+02:002011-09-20T18:04:09.024+02:00No Swiss....that makes it a great deal clearer.
...No Swiss....that makes it a great deal clearer. <br /><br />I can now put my shoes and socks back on as the need for my version of advanced mathematics has now abated :)<br /><br />Sincere thanks for the patience and clarification.Stevenoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-20803606660549301622011-09-20T18:03:41.017+02:002011-09-20T18:03:41.017+02:00@Richard
No, you're just being an asshole plai...@Richard<br />No, you're just being an asshole plain and simple. When you want to give constructive criticism and feedback you should say: "Hey, thanks for your FREE work, i like xxxx but i suggest yyyyy and would consider you to change zzzzz." You do not say "Time to step it up", as if you're someones boss and you're paying him a salary.<br /><br />It's not so much you're opinion on how the piece should be written, everyone needs feedback, it's the way you've presented it. I recommend you view this perspective at least. <br /><br />As for Everton its extremely simple, they're a small to medium size team who are moderately well run and who are starting to live slightly above their means in the form of wages. The reason they do this is because they know a higher wage bill wins you more matches and they, as all the supporters, want to win more match, done.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-88363396395989618262011-09-20T17:46:05.195+02:002011-09-20T17:46:05.195+02:00"So, to answer your question, assuming that t..."So, to answer your question, assuming that they sell no players, Everton would have to find at least £22m savings for an accounting break-even and £3m savings for a cash break-even. Of course, this also assumes that the club buys no new players."<br /><br />I couldn't agree more. Everyone can rest easy now.<br /><br />SR, thanks for replying to mine and everyone else's posts. Also, keep up the good work on your excellent blog.<br /><br />Yours,<br /><br />RichardRichardnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-9454929140519818992011-09-20T17:14:36.154+02:002011-09-20T17:14:36.154+02:00@Steve,
Thanks.
I did include a commentary (and ...@Steve,<br /><br />Thanks.<br /><br />I did include a commentary (and graphic) on the club's cash flow statement, but appreciate that this is a little technical for the layman, so I'll try to explain.<br /><br />If we take 2010 as the latest example, Everton's operating loss was £17.7m. As you say, that included player amortisation and depreciation of £18.7m, which are shown as non cash flow expenses in the profit trend graphic above. In other words, if these items are excluded, then Everton have an operating cash profit of £1m, which is shown as EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation).<br /><br />So far, so good, but there are still a few issues here.<br /><br />Everton's EBITDA has been on a declining trend, partly because of the lack of revenue growth, partly because of the growth in the wage bill, in particular falling from £8m in 2009.<br /><br />Although important, EBITDA as a measure cannot be looked at in isolation, as buying footballers is clearly part of the normal business of a football club, so you must also consider this cost somewhere.<br /><br />As the great investor (and third richest man in the world) Warren Buffett once cautioned, “References to EBITDA make us shudder. It makes sense only if you think that capital expenditure is funded by the tooth fairy.”<br /><br />If we now turn to the club's cash flow statement, we can see what the club's operating cash profit is used for. First, they have to pay net interest of £4.5m, meaning that Everton is cash negative before buying any new players, though admittedly only £3m. They then have a net spend on player registrations of £3.5m, leading to a net cash outflow of £6.5m.<br /><br />Clearly, this loss is smaller than the accounting loss, but the point is that they cannot buy any new players unless they sell. This was perfectly illustrated in 2010, as the net player registrations of £3.5m actually consisted of £24.5m proceeds from selling players less £28m cost of purchasing players.<br /><br />So, to answer your question, assuming that they sell no players, Everton would have to find at least £22m savings for an accounting break-even and £3m savings for a cash break-even. Of course, this also assumes that the club buys no new players.<br /><br />I hope that makes it a little clearer.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-66820870948584385442011-09-20T16:50:10.495+02:002011-09-20T16:50:10.495+02:00Steve,
That is precisely the point. Based on last...Steve,<br /><br />That is precisely the point. Based on last year's accounts, which are now nearly 18 months out of date, excluding the net cash flow from player sales, Everton generated £968k of EBITDA.<br /><br />Unfortunately, this wasn't enough to service our debt, which is why we've seen some player sales and wage reductions.<br /><br />It's important to note that we got into this position from the previous year's operating EBITDA figure of a relatively healthy £8.1m which even included £1.3m of Kirkby costs (you could argue to strip these out).<br /><br />From 2009, wages increased by £5.2m and operating costs increased by £1.3m.<br /><br />This was ultimately our 'undoing' so to speak and why you'd have to question the sense in giving Arteta £75k p/wk.<br /><br />RichardRichardnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-47837015601468885032011-09-20T16:28:43.863+02:002011-09-20T16:28:43.863+02:00Richard does raise a significant point Swiss. Cred...Richard does raise a significant point Swiss. Credit is due for a finely crafted piece of work but does this all boil down to the old story of £20mn in the red being down to contract amortization - a figure which is fantasy accounting in the first place?.<br /><br />In cash terms does Everton face the need to find an extra £20mn per season to pay the bills and keep the club in business or not?. When the wage bill amounts to £54mn; other expenses amount to a, now infamous, £24mn and interest on loans is in the single-digit territory you'll understand that it is difficult, for the layman, to see where the £20mn shortfall comes from?.Stevenoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-55927545437405950862011-09-20T14:05:20.004+02:002011-09-20T14:05:20.004+02:00Dear Anonymous (7.03 am),
Well done for coming to...Dear Anonymous (7.03 am),<br /><br />Well done for coming to SR's defence but surely he's big enough to defend himself? Which, of course, he has done (admirably).<br /><br />If you disagree with anything I've posted then feel free to explain your point of view.<br /><br />As you will note from our above exchange, despite a difference of opinion, the discussion has been civil. 'Robust dialogue' is the term often used to describe such an encounter. Which is how it should be.<br /><br />I look forward to hearing the view of someone who enjoys calling a person he's never met an 'asshole' and narcissistic whilst hiding behind his PC.<br /><br />Yours,<br /><br />RichardRichardnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-82435475880738530542011-09-20T07:03:24.679+02:002011-09-20T07:03:24.679+02:00I just need to express that the sheer narcissism M...I just need to express that the sheer narcissism Mr Richard is displaying. I'm sure somewhere in "How to be an Asshole for Dummies" is the idea of taking something excellent for free and then throwing it back because its not good enough for them.<br /><br />To the Swiss Rambler, i hope to speak on behalf of all the silent majority who love the work you continually do but don't comment on this enough. Please continue with the brilliant analysis and don't let the others bring you down.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-63338192217571644382011-09-17T16:11:59.289+02:002011-09-17T16:11:59.289+02:00SR, Thanks again for the response. And thanks for ...SR, Thanks again for the response. And thanks for the kind offer, but I’m not after your help.<br /><br />I’m not sure how the term ‘normalised’ got investment bankers a bad name. I’d say they did that on their own by securitising lending to people without jobs in Texas.<br /><br />Since you’ve taken a dislike to ‘normalised’. I’ll explain it a different way. You haven’t mentioned anywhere in your article that, ignoring accounting profit from player sales, amortisation, depreciation, interest and tax, that Everton makes a cash profit.<br /><br />In 2009 it was £8m+ (more than enough to pay the remaining interest charge) but in 2010 it had declined to less than £1m. This was driven by an increase in wages and other operating costs. The sale of Lescott is irrelevant. The interest on the debt was irrelevant.<br /><br />Therefore, Everton does not need to sell players to survive, nor does it need to reduce its cost base to replace the sale of Lescott. Your analysis is misleading.<br /><br />The current round of player sales and wage decreases that we’ve seen is obviously as a result of a credit restriction. Much the same as every other business on the planet.<br /><br />Seriously, step away from the accounting analytical review and concentrate on the cash. Your blog will be richer for it.<br /><br />Yours,<br /><br />RichardRichardnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-49997381442155125612011-09-17T15:25:37.866+02:002011-09-17T15:25:37.866+02:00@Richard,
The line about achieving break-even is ...@Richard,<br /><br />The line about achieving break-even is obviously not "nonsense", as you put it, for the very reason that you yourself give in your next paragraph. I was clearly referring to an accounting profit break-even, which should be evident to anybody.<br /><br />While I do agree with you that "cash is king", I would make two further points on top of my previous response.<br /><br />First, the technical one, which is that ridiculous terms like "normalised operating" cash flow are the sort of terminology that gives the investment banking community a bad name. Cough, * Lehmans, SocGen, Merril Lynch, UBS *, cough.<br /><br />Second, Everton are only cash positive until they: (a) pay the loan interest and, yes, the capital element of the debt repayment; (b) buy any new players, which, after all, is a fairly fundamental part of a football club's business.<br /><br />I never said that the club does not need to borrow in order to pay the wages or operating expenses. That is a ridiculous thing to suggest, when in the section on debt, I actually stated, "The debt has been rising because the club has been spending money that it does not have on strengthening the team."<br /><br />That was a reference to the fairly lengthy earlier section focusing on the wage bill and operating expenses when discussing the "meaningless" accounting profit, which I did not want to repeat. At the risk of stating the blindingly obvious, these are key elements of both the P&L and the cash flow statement.<br /><br />If you don't see that, then I'm not sure that I can help you.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-82232585407276206952011-09-17T14:55:15.850+02:002011-09-17T14:55:15.850+02:00SR,
Thanks for replying. I think it’s a great ide...SR,<br /><br />Thanks for replying. I think it’s a great idea to address your blog to regular football fans rather than bankers. However, I don’t agree that this means you can write fundamentally misleading articles. Before, I go on, I don’t think you’ve done this intentionally and I have a lot of respect for your page but on this occasion your analysis is flawed. Here’s why:<br /><br />“To achieve break-even, Everton would have to reduce the cost base by £15 million, assuming that £10 million profit is made on player sales each year………That would mean cutting the wage bill by nearly 30% to £39 million.”<br /><br />I’m sorry but that is nonsense.<br /><br />You are talking about Everton cutting their costs in order to make their accounting profit ‘breakeven’. Why in the name of all that is holy would anyone do this? Why have you not pointed out that ‘cash is king’, accounting profit is meaningless and that Everton is a cash positive business (from a normalised operating perspective)? Furthermore, the accounting profit recognised on Lescott was substantially reinvested in the squad anyway, which again gets ignored by concentrating on PBT.<br /><br />The real reason we’ve increased our debt is by overspending on wages, and spending the little remaining operating EBITDA on some small signings, re-signings and then some.<br /><br />Also, thanks for making the debt ‘easier to understand’. Perhaps how you can explain how you came to the conclusion that we needed to borrow in order to pay £2.8m of interest, yet we didn’t need to borrow in order to pay £54m of wages, £23m of operating expenses or the capital element of our debt repayments (which also gets ignored when you only look at the accounting P&L)?<br /><br />There is no chance you can conclude that our debt has increased for this reason. Much better to focus on the large elements of our cash flow, noted above, or just not conclude at all.<br /><br />Yours,<br /><br />Richard - on behalf of the investment banking community ;-)Richardnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-7656601194465780432011-09-17T13:47:31.599+02:002011-09-17T13:47:31.599+02:00Very useful article indeed. Instead of just think...Very useful article indeed. Instead of just thinking of a single rich benefactor/sugar daddy to come in and basically start underwriting Everton's debt (which like you say is the difference between us and some other clubs) what do you think of a rights issue to fans? I think this would be a way of tapping into the resources of the high number of displaced Evertonians, particularly in London and the South East who may not get to many games but have financial resources. I think you'd be surprised how big this diaspora actually is.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-38484748212324924422011-09-17T11:10:14.847+02:002011-09-17T11:10:14.847+02:00@Neal Thurman,
Yes, soaring wage bills are one of...@Neal Thurman,<br /><br />Yes, soaring wage bills are one of the biggest issues facing all football clubs at the moment, not just Everton.<br /><br />The Football League has already implemented a salary cap in the lower divisions and has announced the introduction of a domestic version of FP for the Championship, so it's not beyond the realms of possibility that something similar would take place with the Premier League, though they have shown little appetite to date.The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-5459433948325634992011-09-17T11:01:31.418+02:002011-09-17T11:01:31.418+02:00@German Anonymous (11:06),
Thanks. I'd like t...@German Anonymous (11:06),<br /><br />Thanks. I'd like to take another look at the Bundesliga soon.<br /><br />The reconciliation between the cash flow and the P&L starts with operating profit (the blue shaded line in the P&L table), excludes the non-cash items, i.e. amortisation & depreciation and is then also adjusted for movements in working capital.<br /><br />Player movements are reported differently in the P&L and cash flow statement. If we take 2010 as an example, the profit on player sales shown in the P&L was £19.0m, while net player registrations were £(3.5)m. The latter comprises two movements: proceeds from player sales £24.5m less purchase of players £28.0m.<br /><br />The profit on player sales in the P&L represents the £24.5m proceeds from player sales less the net book value of those players in the accounts, i.e. original purchase cost less amortisation to date.<br /><br />The £28.0m cost of purchasing players is not booked 100% in the P&L on purchase, but is amortised over the length of the players' contracts. If those players were signed on 4-year contracts, then the amortisation would be £7m a year.<br /><br />It's a little complicated (unless you're an accountant), so I hope that makes sense!The Swiss Ramblerhttps://www.blogger.com/profile/11423088862174893998noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-11955986454115442992011-09-17T10:21:44.074+02:002011-09-17T10:21:44.074+02:00Have to comment to agree with Richard I'm afra...Have to comment to agree with Richard I'm afraid. This article is an excellent summary of all the different stats out there concerning Everton, but is not particularly helpful or insightfil in the way those stats are being analysed nor where the emphasis lies. Unfortunately, there are lots of fans who will now pick up on your concentration on the P/L and think we really do need to sell £20m of players each year just to break even which is, I'm afraid, just not true.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-55499735761319256932011-09-17T05:10:38.488+02:002011-09-17T05:10:38.488+02:00A great article, I just wonder whether a big club ...A great article, I just wonder whether a big club will actually go bust soon, Pompy was close! These levels of debt are not sustainable. You just wonder what would happen to Everton if the manager was offered another, dare I say it, better job. I look forward to your next postYellowplayhttps://www.blogger.com/profile/03146439984352968540noreply@blogger.comtag:blogger.com,1999:blog-487486960623783530.post-11952900698133681272011-09-17T00:57:34.791+02:002011-09-17T00:57:34.791+02:00Is that all we get about £4 million per year from ...Is that all we get about £4 million per year from Chang Beer! That's awful that, we need to defo be lookin to improve our commercial revenues.Anonymousnoreply@blogger.com