THESE ARE grim days for Everton and they could get even worse. They are struggling to avoid relegation, under investigation for possible breaches of profit and sustainability rules and they are losing money on an annual basis. Furthermore, they have not won a major prize for close to 30 years. For a footballing institution once known as the “Bank of England club”, with 15 major prizes to its name, the slump into mediocrity is hard to take.
Everton lost £ 44.7 million before tax in 2021-22, their fifth consecutive campaign of losses, which brings the total to £ 420 million over five years. Since 2021’s £ 121 million deficit, the club has been on a cost cutting exercise that their status in the Premier League could have done without, but needs must. In 2021-22, the bottom line was assisted by a significant improvement in Everton’s player trading profits, rising from £ 13.2 million to £ 67.7 million.
Revenues, however, declined by some £ 12 million to £ 181 million, largely due to reduced TV money as the broadcasting cycle readjuste. In addition, sponsorship income dropped, partly due to the measures taken against the club’s Russian sponsors. Nevertheless, commercial earnings were up slightly to £ 50.3 million and matchday recovered to £ 15.6 million as restrictions implemented during the pandemic were lifted.
Everton’s cost management manifested itself in a drop in players’ wages by more than £ 20 million to £ 162 million, which amounted to 90% of income as opposed to 95% in 2020-21. The ratio has been too high for four years and way above UEFA’s optimal figure of 70%.
Also very high is the club’s net debt, which is now £ 141.7 million compared to £ 58.2 million a year earlier. This rise is attributable to expenditure on Everton’s new ground at Bramley-Moore Dock and additional transfer activity.
Everton’s management insists the club is in a secure financial position, but it does seem as though they are over-dependent on Farhad Moshiri to ensure the club is a going concern. Moshiri provided an additional loan of £ 70 million and overall, put in over £ 200 million through conversion of past lendings into new shares and equity. The club has a £ 150 million five-year facility with Rights & Media and a £ 30 million CLBILS facility with Metro Bank.
Aside from any shortcomings in their business model, Everton’s followers should be concerned about Moshiri’s comments recently about the club facing existential threats. One of those is obviously the recent referral by the Premier League, while the threat of relegation and the simultaneous development of the new stadium could place the club in jeapordy. Moshiri undoubtedly knows that if Everton drop out of the Premier, more cash will need to be pumped in. According to media reports, the club has a 12-month assurance that funds will be made available.
Some fans want Moshiri out of the club, but it has to be acknowledged that he has spent a lot of money since he arrived. He has been vocal about getting further investment into the club and ultimately, he will be looking to sell. Before that can happen, Everton may need to get their house in order and that also means getting clear of any controversies around financial fair play.
In the past five years up to 2021-22, Everton were among the top six spenders in the transfer market with a net spend higher than their neighbours, Liverpool. Over 10 years, they were in the top seven. They haven’t spent well and they have nothing much to show for their outlay. They are currently in 16th place and by the end of the 2022-23 season, it will be three consecutive years below mid-table. Their last European campaign was in 2016-17.
They have 10 games to ensure they maintain Premier League status. Five of them – Tottenham, Manchester United, Newcastle, Brighton and Manchester City – are very tough, but when you’re in Everton’s position, all games are a big challenge.