Everton has paid about £30m in interest charges to an opaque lender associated with a tax exile, corporate records suggest.
The charges appear to have reached about £438,000 a week, according to the troubled Premier League club’s most recent set of accounts, a figure more than three times the reported wages of the Everton and England goalkeeper Jordan Pickford.
However, most of that cash outflow has now been excluded from Everton’s most recent profit and loss account after a controversial change in accounting policy by the club that has allowed it to report lower losses – and which may give rise to a further points deduction by the Premier League.
The change in how the club accounts for debt interest comes amid intense scrutiny of its finances by the Premier League. On Monday, Everton was deducted points for the second time in the season for breaches of profitability and sustainability (PSR) rules.
The club’s auditors have also said there is “material uncertainty” over future financing “that may cast significant doubt about the group’s ability to continue as a going concern”. Meanwhile, 777 Partners, a prospective buyer of Everton, has spent six months attempting to raise the funds to complete its planned takeover.
Everton, a founder member of the Football League and the Premier League, is now believed to owe more than £500m to third-party lenders. Most of the interest charges reported in its annual report appear to relate to about £225m of debt built up with the club’s largest lender Rights & Media Funding (RMF). About £23m in interest was paid by the club in its last financial year and more than £7m in the two previous years.
RMF is a Cheshire-based company with zero employees that borrows its funds from opaque offshore companies in order to lend to football clubs. In total, about 70% of RMF’s loans have been provided to Everton, according to the most recent available filings to Companies House.
Documents relating to companies in separate offshore jurisdictions suggest the trail of Everton’s RMF debt leads to Michael Tabor, a Monaco- and Barbados-based racehorse owner and leisure entrepreneur.
He started his career as a bookie, building a chain of betting shops that he sold to Coral in 1995 and then made another fortune from an investment in the Next Generation chain of fitness clubs. Last year’s Sunday Times Rich List put his wealth at more than £600m.
Tabor has a series of interests including the LBC owner, Global, the BetVictor gambling brand, plus a string of thoroughbred racehorses.
His estimated wealth is far smaller than that of Everton’s owner, Farhad Moshiri, but Tabor’s money has seemingly played a role in keeping the club afloat financially. Tabor’s links to the companies that have financed Everton are documented in a string of onshore and offshore company records.
UK company filings set out how RMF has most recently been financed by two: Galloway (Cyprus) and Carroch (Bahamas).
Further records seen by the Guardian also lay out how Galloway (Cyprus) is owned via another company, the British Virgin Islands-based Balnom Incorporated, which separate offshore documents identify Tabor as the owner. The businessman did not respond to the Guardian’s request for comment.
It is not clear from the records who owns Carroch (Bahamas), although Tabor has been associated with historical loans to Everton via a company with a similar name and has also previously been linked to loans made to the club.
Interest charges depress a business’s cashflow and typically do the same to profits, which is a sensitive subject at Goodison Park after the PSR breaches. Under those rules the Premier League penalises any club that loses more than £105m over three years, part of efforts to make the game more sustainable.
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Everton’s most recent accounts set out how the club has changed its accounting policies to exclude £19m of the interest charges from its 2023 profit and loss account, as well as restating its 2021 and 2022 accounts to remove a further £6m of interest charges, thereby lowering its reported losses.
The club justified the move in its accounts by claiming the interest related to the construction of the new stadium at Bramley-Moore Dock and therefore should be classed as an investment and excluded from the profit and loss account.
However, Everton has previously repeatedly claimed that the RMF loans have nothing to do with that stadium.
In autumn 2022, when questioned by the Guardian about the interest costs on the RMF loan, a spokesperson for Moshiri said he and the club were funding Bramley-Moore Dock. The spokesperson said: “To date there has been over £300m of equity financing [for the new stadium] provided by the owner and club which includes the land acquisition, approvals, feasibility and land preparation etc.”
The spokesperson later added: “Let’s be clear Everton Stadium Development Ltd has no debt, with over £300m of equity having been injected into EDSL to fund this incredible project to date.”
An Everton spokesperson has also made similar statements to the Guardian and has specifically stated: “There is no stadium funding from RMF.”
All the statements were made during the financial year in which Everton has now removed £19m of interest payments from its losses – July 2022 to June 2023. The RMF debt is understood to be subject to interest charges of 5% on top of the Bank of England’s base rate – implying Everton is paying 10.25% in interest.
Had Everton’s accountants treated the interest charges in the same manner as previous years, the business would have reported losses of more than £100m in its most recent financial year, instead of the £89.1m in the club’s accounts.
Everton declined to comment. RMF did not respond to efforts by the Guardian to contact it.
Source: theguardian.com
