New accountants find Everton survival in 'doubt'

14 April 2023 Consultancy.uk 3 min. read
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With Premier League football at Goodison Park hanging in the balance, Everton’s ability to continue as a going concern has been cast into doubt by the club’s latest financial results. The historic football entity’s accounts were signed off on by auditors from Crowe UK.

Upon the release of Everton’s latest accounts, Crowe UK, painted a picture of uncertainty surrounding the financial future of the Toffees. A statement from the firm noted that if Everton – currently outside the Premier League relegation zone only on goal-difference – should be consigned to Championship football next season, it will require “additional financial support” from its majority shareholder – who in turn is reliant on support of its own majority shareholder.

Crowe added, “[The majority shareholders] have indicated they are supportive of the group, but the support is not legally or contractually binding. These matters indicate that a material uncertainty exists that may cast significant doubt on the group’s ability to continue as a going concern.”

New accountants find Everton survival in 'doubt'

Until recently, Everton was audited by professionals from BDO. However, stories began circulating in the autumn of 2022 that the professional services firm was looking to exit the role, at a time when it was severing ties with a number of other ‘high-risk’ contracts it had inherited from Big Four accounting firms PwC, KPMG, Deloitte and EY.

The Guardian reported that BDO was set to resign its position, and had told Everton “it will not be conducting the work” – while suggesting “the Merseyside club is now believed to be searching for a replacement”. The report was fiercely contested by a statement from owner Farhad Moshiri’s spokesperson, who claimed “BDO remain our auditors and have not resigned”, disregarding unnamed sources, which had allegedly informed the paper BDO would exit, in a decision “related to Farhad Moshiri’s ownership of the Premier League team”.

In the end, it is tellingly a different organisation which has signed off on Everton’s accounts. And in those accounts, Everton has revealed another year of large financial losses – while it struggles with a costly proposed move away from Goodison Park, the lingering impacts of the pandemic, and fallout from the sponsor of its training ground facilities - USM Holdings – being hit with sanctions, due to billionaire oligarch owner Alisher Usmanov’s alleged ties to the Russian state.

Overall, Everton announced losses of £44.7 million for the 2021-22 season. While the loss is a significant reduction on the previous year’s figure of £120.9 million, it arrived in a year when Everton had made a £67.7 million profit on player trading – usually one of the club’s largest expenses – by offloading Richarlison, Lucas Digne and James Rodríguez, among other prize assets. It is unlikely that in the event the club should need emergency funds, it will command anything like that kind of price for its current batch of players.

Overall, Everton’s combined losses for the past three financial years now stands at £305.5 million – meaning that relegation, and potential loss of the Premier League’s colossal television revenues – could leave it on the brink. To make matters worse, however, Everton has also been referred to an independent commission over an alleged breach of Premier League financial fair play rules.

Over the last four years, it has lost a cumulative £417.3 million. Premier League rules allow clubs to lose a maximum of £105 million over a three-year period and Everton now face an independent commission for an alleged breach of that for last season. The club has worked closely with the Premier League on its financial dealings, and attribute £90.4 million of crystallised losses to the Covid-19 pandemic – and notably deny the allegation.

However, should the charges be found to be proven, the club will likely face a points-deduction this season. In its current position, that would all but seal Everton’s relegation, as happened to former Championship team Derby County in the previous campaign.