Everton’s potential Premier League relegation would plunge their ability to still operate as a going concern into doubt.
The stark warning from auditors Crowe UK LLP was revealed on Friday in the club’s latest set of accounts for the financial period in the 2021/22 season.
Goodison Park officials posted losses of £44.7 million which, although lower than the previous year’s tally of £120.9M, was mitigated by player sales.
Lucas Digne, James Rodriguez and Richarlison were among those to depart with the latter’s move to Tottenham boosting a £67.7M player trading profit.
The Blues’ Profit and Sustainability margin for the previous three years stands at £305.3M, more than £200M above the Premier League’s £105M threshold.
Top-flight chiefs referred Everton to an independent commission last week for alleged financial fair play breaches incurred in the 2021/22 campaign.
In total, they have made an eye-watering £417.3M worth of losses in the last four years which also included renumeration for Rafael Benitez’s brief tenure.
Parting with former Liverpool manager Benitez and his assorted coaching staff in January 2022, following seven months in charge, carried a cost of £10.5M.
Farhad Moshiri has provided an extra £70M in financial support but Crowe believe relegation would trigger ‘a material uncertainty’ in Everton’s going concern status.
Sean Dyche’s side currently sit two points outside of the league’s bottom three and have played a game more than all bar one of their survival rivals.
The auditors concluded: “The club remains reliant on the support of its majority shareholder, who has provided a letter of support to the board confirming the intention to provide ongoing financial support for a period of no less than 12 months from the date of approval of the financial statements but this does not represent a legally binding commitment by the majority shareholder.
“The board are confident that if the club is relegated funding will be secured or refinanced and that they will be able to achieve the levels of revenue and savings to allow the group to continue in operational existence for a period of 12 months after the date of signing these financial statements.
“However, whilst the directors acknowledge these uncertainties may cast significant doubt on the entity’s ability to continue as a going concern, they still feel it is appropriate to prepare the financial statements on a going concern basis.”