Everton’s accounts explained: Friedkin impact, PSR compliance, transfers to come after June 30

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When Everton’s accounts have dropped in recent years, they have been read with a degree of trepidation. Not quite so much this time.

Everton recorded a £53.2million ($68.8m) loss for the year ending June 2024 — a reduction of nearly £36m on the previous year — but remained compliant with the Premier League’s Profitability and Sustainability Rules (PSR) thanks to the late sales of Ben Godfrey and Lewis Dobbin.

Published on Monday, this was the seventh straight year in which Everton posted a loss. Across the last three sets of accounts alone, they were £180m in the red. During former owner Farhad Moshiri’s eight full seasons in charge, Everton’s pre-tax losses totalled £535.7m.

Yet it was confirmed in January that the club had remained PSR compliant and would face no further action from the Premier League after two points deductions last season for separate breaches.

These latest accounts again show the extent of the club’s investment in their new waterfront stadium at Bramley-Moore Dock, which is set to open at the start of next season.

Capital costs stood at £312.7m compared to £211m in the previous year, with the club having spent £730m on the stadium up to July last year. As such, Everton’s net debt position increased from £330.6m to £567.3m, “reflecting investment in the squad, stadium development and operational costs”. That is without including the £450m owed to Moshiri, which the club records as equity; including that, as most other clubs do, Everton’s debt sat at over £1billion at the end of last June.

The one persistent theme throughout the accounts is the involvement of new owner The Friedkin Group (TFG), which acquired Everton in December after the financial year’s end.

Dan Friedkin, left, and son Ryan, are now owners of Everton (Massimo Insabato/Mondadori Portfolio via Getty Images)

Were it not for TFG’s contributions, the outlook would almost certainly look much gloomier. But contained in these accounts were pieces of good news: confirmation of TFG’s refinancing package, which has replaced existing debt on more favourable rates, and the conversion of that interest-free shareholder loan of £450m from Moshiri to equity.

Everton said these measures “establish a stable and sustainable foundation as the club move forward”.

Here, The Athletic takes a look at some of the key talking points.

What are the headline figures?

The headline figure is the loss of £53.2m, another considerable sum but a reduction of £36m on the previous year. Given the tight margins at work and the importance of adhering to PSR, such a decrease is likely to have been pivotal in helping to achieve compliance during the 2023-24 season.

Everton’s turnover increased by nearly £15m to £186.9m, thanks in large part to a £13.2m spike in broadcast revenues.

But in other areas like gate receipts and sponsorships, there were only small improvements in revenue. This will no doubt be a key target area for TFG moving forward, with Everton on the lookout for a new stadium naming rights partner.

A total of £54.8m was spent on new signings, with Youssef Chermiti, Beto and Tim Iroegbunam joining on permanent deals and Arnaut Danjuma’s loan move from Spanish side Villarreal involving a small loan fee of around €3m.

Those deals were offset, though, by the sales of Alex Iwobi, Demarai Gray, Tom Cannon, Godfrey and Dobbin (for around a combined £60m), with Everton posting a £48.5m profit on player trading. Yerry Mina, Tom Davies and Andros Townsend were among those released when their deals expired at the end of the 2022-23 season. Everton’s net spend over the last three seasons was negative, to the tune of £38.1m.

Staff costs, a key drain on funding, fell marginally from £159m to £156.6m, while the cost of player registrations (amortisation) dropped by £13m. Everton are one of only two Premier League clubs whose transfer fee amortisation has fallen since 2018-19, reflecting reduced expenditure on the playing squad. Based on most recent figures, the club’s squad cost of £281.9m ranks 13th in the Premier League. Their ranking was seventh in June 2021.

Everton say their real-terms wage-to-turnover ratio fell from 89 per cent to 81 per cent when taking into account the outsourcing of retail and catering operations, “demonstrating the club’s commitment to financial sustainability while maintaining a competitive squad”.

UEFA’s benchmark for wage-to-turnover is around 70 per cent, with Everton still in the process of reducing costs and overhauling their squad.

What are the positive signs… and what should cause worry?

Let’s start with the positives. Although TFG’s December takeover came too late in the day to impact these numbers, the new ownership’s impact is already clear.

“Post balance sheet events within the accounts show Everton has completed comprehensive refinancing and repayment of existing borrowings,” the club wrote in their accounts. “The club completed a comprehensive refinancing exercise that involved entering into a five-year revolving credit facility with JP Morgan Chase Bank to meet working capital needs.

“As part of this exercise, the club’s existing borrowings were fully repaid, and the interest-free shareholder loan balance of £450,751,000 provided by Bluesky Capital Limited was converted into equity.

“The resulting impact on the club’s balance sheet is a substantial deleveraging of debt quantum and provides a solid and stable base for the club to operate upon.”

It was only a year earlier that auditors Crowe UK declared a “material uncertainty” over Everton’s ability to operate as a going concern in the event of relegation. While that suggested potentially existential issues on the horizon, most of those concerns now appear to have dissipated.

Everton’s accounts confirmed that TFG “had provided a letter of support that confirms, to the extent that it is required, financial support for a period of no less than 12 months from the date of approval of the financial statements will be provided to the club and its subsidiaries”. Such a measure is commonplace when clubs are liaising with auditors over potential future funding shortages.

TFG’s letter saw Crowe take a much more optimistic outlook on Everton’s immediate future. “We have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue”.

Everton’s new stadium will significantly boost their income (Christopher Furlong/Getty Images)

If there was another worry, it was over the steep £247m spike in the club’s debt to £567.3m as of the end of June 2024. This, though, captures a very specific point in time pre-TFG’s takeover and the picture has since changed again.

Writing in the accounts, interim CEO Colin Chong highlighted the “significant strengthening of our financial platform since the end of the accounting period”, brought about by TFG’s takeover, and said it has already had a “major impact on our long-term stability.”

“Despite the challenges we have faced in recent years, and during the accounting period covered by these accounts, the hard work of everyone across the club — on and off the pitch — has ensured we have continued to move forward,” he wrote.

“With new ownership, a world-class stadium opening at the start of the 2025-26 season, and a clear plan for ongoing sustainability, we can approach the next chapter of our Club’s future with confidence.”

Everton will still have interest to pay, but will now do so at more favourable rates. The Athletic has previously reported that interest is to be halved from the days when some short-term loans were at rates as high as 15 per cent.

Servicing such a debt in future will still be a consideration, particularly if interest costs are factored into future PSR calculations, but these numbers are much more manageable than before.

What is the impact on Everton’s PSR position going forward?

While reported publicly on Monday, the numbers in these accounts will have been common knowledge at Everton and TFG for a while, and thus come as no surprise.

It was clear as recently as January, too, that the club had remained compliant for the period in question.

So the next focus for the club will be on ensuring compliance this season, for the accounts ending on June 30. That cycle will include the loss of £53.2m in 2024, plus the greater £89.1m loss in 2023, with 2022’s restated loss of £38.3m dropping out of the calculation.

Once again, Everton will be permitted to strip out certain ‘good costs’, like spending on their academy, women’s team and community schemes from their final PSR numbers to meet the £105m threshold, after deductions, over a three-year period.

But the heavy £89.1m loss in 2023 means the club will need to carefully manage their situation before June 30, as they did through the sales of Godfrey and Dobbin last time around.

The Athletic estimates Everton could lose £45-50m this season and remain within PSR loss limits. In other words, they will need to reduce their 2023-24 loss a little further. The bumper sale of Amadou Onana to Aston Villa last July has helped, as will the fact the club hasn’t had to spend sizeable fees on legal bills to fight PSR cases this season. The costs of dismissing Sean Dyche and four of his backroom staff in January, who were out of contract at the end of the season, will offset some of those savings.

What will it mean for Everton’s summer transfer plans?

Expect a window in at least two stages: pre-June 30 and post-June 30.

In the first period, Everton are likely to tread carefully in the market. PSR will still have to be a consideration in the new cycle, which starts on July 1, but from next season the sizeable £89m loss from 2023 falls out of the equation.

David Moyes, right, may have to wait until July for his rebuild to kick in (Richard Heathcote/Getty Images)

Everton know a big summer awaits. With 15 players out of contract, the expectation is that significant money will need to be spent on a squad rebuild.

For obvious reasons, though, most of that will likely come after June 30.

How will Everton’s new stadium change things financially?

It has been a difficult road to this point, but Everton’s new stadium — known for now only as Everton Stadium — is likely to be a game-changer for the club financially.

They will have 13,000 more seats to sell than at Goodison Park and almost three times as many corporate boxes. There is the promise of additional partnerships at the stadium, a key focus for TFG, and a naming rights deal.

Everton will still have to repay the debts accumulated during the construction phase, as well as the interest agreed as part of the refinancing deal with JP Morgan, but next season’s accounts (for 2025-26) should show a major increase in turnover.

Anything else we need to know?

Everton incurred £10.4m in “exceptional costs” which they attribute to “the refinancing of debt facilities as well as costs associated with defending the club’s position at the Premier League’s profit and sustainability commission hearings”.

PSR, it seems, can be an expensive business.

It was revealed in February that the club missed out on £8.5m in merit money due to their two points deductions last season, with Everton slipping three places down the table as a result, although they did feature 23 times on TV — only six teams had more appearances — which may have come due to their precarious position in the table.

Also worth noting was the considerable drop in the remuneration of the club’s highest-paid director, from £3m in 2023 to £433,000.

These accounts show a club in the midst of change. The handover from Moshiri to TFG is complete and, for the first time in ages, there is scope and ambition to do more than merely survive.

(Top photo: Joe Prior/Visionhaus via Getty Images)

This news was originally published on this post .

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