Pandemic swells the Everton loss

EVERTON recovered some of their early season swagger in beating highly-fancied Chelsea at Goodison Park, but their fans will remain concerned about the current financial position of the club.

On the eve of their game against the Londoners, Everton revealed they made a loss of £ 139.8 million in 2019-20, their second successive annual deficit of over £ 100 million. Like many clubs, a significant percentage of that loss can be attributed to the pandemic (in Everton’s case around £ 67 million), but it is clear Everton’s expenses, including player wages, are still too high.

It doesn’t help the club that on their doorstep, they have a resurgent Liverpool generating three times as much cash, but Everton’s lack of European football also plays a part.  spite of the pandemic and behind closed doors football, Everton’s revenues declined by 1% to £ 185.9 million. Prior to the pandemic, Everton claimed they were on track to generate record revenues of around £ 220 million.

Inevitably, matchday income fell due to the absence of crowds, with Everton’s revenues falling from £ 14.2 million to £ 11.9 million. Equally, broadcasting income was down from £ 132 million to £ 98 million. The club has a strategy to reduce its reliance on broadcasting – in 2020, this represented 53% of total income versus 71% in 2019.

Offsetting the drop in matchday and broadcasting, Everton derived some consolation from their commercial activity, which increased to a record £ 76 million from £ 40.8 million. The club’s commercial revenues have more than trebled in the past five years.

Wages, which totalled £ 164 million in 2019-20 consume a concerning 89% of income and since 2015-16, the ratio has risen by 20 percentage points, almost doubling the amount paid out in 2015-16 (£ 84 million). The club insists the increased ratio was inflated by the loss of revenue due to covid-19.

The increase in wages since 2016 has not yielded significant success for the team, which finished 12th in the Premier League in 2019-20 after three years in which they were placed seventh, eighth and eighth. Everton have had five full-time managers in five years, Carlo Ancelotti was appointed almost a year ago, succeeding Marco Silva (who was sacked with £ 6.6 million of compensation), and is the first manager since Howard Kendall to have a win-rate in excess of 50%. Everton started this season well, but lost momentum after winning their first four Premier League games.

Everton have to thank owner Farhad Moshiri for his continued support. He injected a further £ 100 million into the club, taking his total outlay to £ 400 million since acquiring 77.2% of the club in February 2016. The club is also set to issue £ 250 million of new shares to Mishiri’s Blue Heaven Holdings Limited. Thanks to Moshiri, Everton’s net debt also decreased from £ 9.2 million to just £ 2.3 million. The club has also secured a new £ 80 million credit facility with Rights & Media and raised £ 20 million from Metro Bank. 

The financial downturn among football clubs hasn’t stopped Everton spending – in 2019-20, £ 113 million was spent on players, but the club posted a profit of £ 40.5 million on the disposal of player registrations. With the arrival of Carlo Ancelotti, Everton modified their strategy around transfers with an emphasis on the acquisition of experienced players, but the club has also announced the restructuring of their recruitment department, creating a number of new roles across Europe.

Everton’s hopes of competing with the Premier League’s top six depend, to a large degree, on their proposed new stadium at Bramley-Moore Dock, a project that aims to be completed by 2023. In preparation, the club spent around £ 20 million on planning in 2019-20. The new ground will cost approximately £ 500 million and will seat 52,000 people. Moving will be a wrench for some people, for only Burnley have been at their home ground longer.

Everton is a club with a fine history, but their last trophy was won in 1995 – 25 years ago. Their current finances highlight the challenge they face in moving the club into the very top bracket in English – and European – football. Ultimately, much will depend on that new stadium.

@GameofthePeople

Photo: PA

Everton record loss – better days ahead?

EVERTON’S pursuit of success isn’t working at the moment as evidenced by their financials for 2018-19. The club recently appointed one of European football’s most successful managers, Carlo Ancelotti, prompting great enthusiasm and hope that Everton can turn the corner. But the announcement of their financial performance, coming just after a Liverpool second string side knocked the Toffees out of the FA Cup, has really given Everton fans a dose of reality. There’s a lot of hard work to be done if Ancelotti is to fulfil his ambition of making Everton into a Champions League club.

Everton made a record loss of £ 111 million in 2018-19, a reflection of the club’s spending spree over two seasons, a strategy that has yet to bear fruit. It doesn’t help that across Stanley Park, Liverpool are in full flow, comfortably leading the Premier League and still going strong in the UEFA Champions League, the competition they won in 2018-19. The difference between the two clubs is captured by their revenue streams – Everton’s £ 188 million represents just 35% of Liverpool’s £ 533 million.

Everton’s income was more or less on par with 2017-18. Broadcasting contributed 70% of total income, a very high percentage even by Premier League standards. Liverpool, for example, derive around 49% of income from TV. Everton’s revenues from matchday (£ 14 million) and commercial activities (£ 41 million) both declined. Although the average attendance at Goodison Park for league games was 39,043 (98.66% full), the lack of European football was a key element in the drop in revenues. One statistic that should concern Everton fans is the wage-to-income ratio, which has grown to 85% (2018 – 77%). Wages totalled £160 million for the season.

In two successive seasons, Everton have spent over £ 100 million on new players, many of whom have yet to fulfil their true potential. They have been unfortunate with injuries, but others such as Moise Kean from Juventus (£ 25 million) and Alex  Iwobi (£ 28 million) have not settled especially well. Their biggest influx of players came in 2017-18, notably goalkeeper Jordan Pickford (Sunderland, £ 25 million – arguably the most consistent of all the new signings), Gylfi Sigurdsson (Swansea, £ 40 million) and Theo Walcott (Arsenal, £ 20 million).

The investment made in the playing squad resulted in an amortisation charge of £ 95.1 million, almost £ 30 million higher than 2017-18. In the past, the club has offset this cost by player sales, but in 2018-19, this amounted to little more than £ 20 million.

Everton have also been through a few managers in recent years. Marco Silva was sacked earlier this season after around 18 months in the job and a win rate of just 40%. His predecessor, Sam Allardyce, was hired in November 2017 but lasted six months (win rate 38.5%) as the club didn’t like his style of play. Ancelotti is the highest profile manager the club has had in decades, but it will be interesting to see how the published financials affect his transfer window. The club’s director of football, Marcel Brands, hinted that signings like Wilfried Zaha of Crystal Palace were currently beyond the club’s reach.

The extent of the club’s loss may ring some alarm bells around Financial Fair Play, as the three-year loss limit permitted is £ 105 million. Everton made a profit of £ 30.6 million in 2017 and has lost £ 13.1 million and £ 111.8 million in 2018 and 2019 respectively. It’s close, but Everton should avoid any punishment from UEFA. They certainly cannot afford another poor return in 2020.

More positively, Everton reduced their debts to £ 9.2 million (from £ 66 million). The club’s majority owner, Farhad Moshiri, has poured in another £ 50 million, taking his personal investment to £ 350 million on top of the £ 200 million he initially laid-out.

The club’s new stadium at the Bramley-Moore Dock promises a better future for Everton. They are poised to get the funding for the project from US bank JP Morgan and Japan’s Mitsubishi UFG. Furthermore, USM Holdings, part-owned by Moshiri and Alisher Usmanov, have paid £ 30 million for first refusal on the new stadium’s naming rights. While some fans are not happy about leaving Goodison, the club’s prospects really depend on the move to a new, bigger ground that can make them more competitive and also offer greater commercial opportunities.

There’s no doubt Everton have not had a good return on investment. The club had the seventh highest wage bill in the Premier League last season but Farhad’s money has not been spent wisely and that’s not necessarily been anything to do with the team manager. Going forward, much will surely depend on the dynamic between Ancelotti and the club’s director of football.

The club’s owner will be demanding a better performance on and off the field, Ancelotti would not have come cheap, but that big loss may compromise some of the new manager’s plans. Success is long overdue. This is, after all, a club that has not won a single prize since they lifted the FA Cup 25 years ago, the longest period without a trophy in their history.

@GameofthePeople

Photo: PA

 

 

Goodison Park – where games for the people are still played

CLOTH CAP nostalgia is a popular pastime among football folk as inner cities continue to be purged of their old football stadiums, replaced by smart, antiseptic structures of white steel and plastic. Horse manure no longer squelches underfoot as fans tramp through the streets and past red brick houses, the mildly eccentric fan with a transistor radio clamped to his ear has long gone. Like the street corner pub, the skeletal floodlights that once towered above tight rows of back doubles have largely been torn down.

The authentic football experience that characterised the 1950s, 60s and 70s is hard to find, but Everton’s Goodison Park encapsulates some of the endearing elements from a gentler, less commercially-driven era. Goodison is still something of an old fashioned football home that acts as a magnet for the local blue and white-scarved population.

It was a joy to visit a stadium that has witnessed some memorable football matches. Everton’s triumphs aside, the ground hosted five games in the 1966 World Cup, including the quarter-final between Portugal and North Korea, which saw the great Eusébio net four times. In 1894, Goodison staged the FA Cup final between Notts County and Bolton Wanderers.

The locals couldn’t get much closer to Goodison if they tried. Residents of the houses on Goodison Road stare at the backside of the triple-decker stand, erected between 1969 and 1971 and one of the first of its kind in Britain. Some occupants stand in their doorways, watching the matchday hubbub as vendors move into place and the human traffic scatterguns in different directions to various turnstiles. The Winslow Hotel, which calls itself “the People’s Pub” rests in the shadow of the stand. Goodison’s unique nature also extends to the famous church that was once very visible in the corner of the ground, sitting between Gwladys Street and Goodison Road.

It’s good – and heartwarming – to see that Everton’s legendary trio of Alan Ball, Howard Kendall and Colin Harvey is remembered in the form of a statue outside the church. These three players were pivotal figures in Everton’s 1969-70 league title winning team. Sadly, only Harvey is still around.

Everton remember their heroes. Dixie Dean, he of 395 Everton goals, including 60 in 39 league games in 1927-28, sits outside the stadium’s main entrance, adorned with flowers and still cutting an imposing figure. Dean was part of Everton’s golden era in the late 1920s and early 1930s when they won the league in 1928 and 1932 and the FA Cup in 1933. Their last trophy was in 1995 when they surprisingly beat Manchester United in the final. If they are potless come the end of 2019-20, it will be the longest barren spell in the club’s history – 25 years.

It is Everton’s misfortune that Liverpool, their rivals from across Stanley Park, are going through a renaissance at the moment. When Liverpool began their concentrated period of trophy winning in the mid-1970s, Everton fell away after being crowned champions in 1970. In 50 seasons since 1970, Everton have finished above their neighbours just six times – 1970, 1985, 1987, 2005, 2012 and 2013. Yet until Bill Shankly arrived at Anfield, Everton had the better record and bigger crowds.

At the moment, Everton have a consistent 39,000 watching their games at Goodison. For all its charm, Goodison doesn’t generate enough income for the club. In today’s environment, like it or not, to be truly competitive you have to have money and diverse revenue streams. The days when young talent can be nurtured and save a club millions have gone, perhaps forever. When Everton won two league titles in the 1980s, they had a young team that should arguably have won more, but it was impossible to sustain, especially as European football was denied to English clubs after the Heysel Stadium disaster. By the time the Premier League came along, Liverpool were no longer were not longer the eminent force but Manchester United had risen to the top, boosted by the financial advantages the club enjoyed at the time. As the Premier League became richer and billionaires moved in on the major clubs, Everton got left behind, becoming the seventh or eighth club in a league that became the jealously guarded property of half a dozen clubs.

But Everton have plans for a new stadium, a gleaming, ethereal super structure that could take the club back among the elite. Not everyone is happy about moving from Goodison, but if the club is to become Champions League compatible, they will need to place pragmatism ahead of nostalgia.

Everton have spent a lot of money on their current team, but they have yet to hit on a winning formula, or the right manager. Marco Silva was appointed in May 2018, joining the club from Watford. His two predecessors, Sam Allardyce and Ronald Koeman, between them, managed the club for less than 100 games. Before meeting West Ham United on October 19, Silva had been in charge for 52 games and had a win rate of little more than 40%.

Everton’s fans were a little worried as their club was sitting in the bottom three after a lack lustre start to 2019-20. They had lost four successive games, including disappointing results against Bournemouth, Sheffield United and Burnley. In today’s climate, Silva’s job could be at risk if performances and points remain elusive.

Everton bought around £ 100 million of talent in the close season, including £ 22 million on Barcelona’s André Gomes, £ 28 million on Alex Iwobi of Arsenal, £ 25 million for Jean-Philippe Gbamin from Mainz and most interestingly, they paid £ 27.5 million for Juventus’ Moise Kean. On paper, Everton’s squad looked good enough although there were some concerns about their defence.

Silva made a number of changes in a bid to end Everton’s dismal run, including the reintroduction of Tom Davies, a player who should really be starting to come into contention for an England cap. He burst onto the scene in 2015 but struggled in Silva’s first season at the club. He’s still only 21, but this is the time for players like Davies to impress England manager Gareth Southgate.

Everton’s Gylfi Sigurdsson (left) scores his side’s second goal of the game against West Ham. Photo: PA

Davies was impressive against West Ham and Arsenal misfit Iwobi had plenty of energy. Another Arsenal refugee, Theo Walcott, who has yet to win over the Everton fans since joining the club in January 2018, was recalled and did well. Everton took the lead after Walcott slipped the ball to Bernard and he eventually shot past West Ham keeper Roberto Jiménez after almost losing control. That calmed the Goodison nerves and before the result was settled, the theatrical Richarlison and Walcott both hit the woodwork. The second goal came in the 90th minute, a crowd-pleaser from Gylfi Sigurdsson, who rose from the bench and secured the three points for Everton.

There was a sense of relief from the home crowd as West Ham’s “I’m forever blowing bubbles”, which had been sung with gusto, faded away. Everton had responded well, but the gulf between two teams who form part of the middle ground of Premier league football and the top two or three is significant, certainly on the evidence of this game.

That couldn’t take away the pleasure of being at a ground where the fans have passion and the atmosphere is stimulating. Everton will need to bottle this intoxicating mix when they eventually move to a 21st century stadium. Relocating a club is one thing, but successfully exporting the spirit or essence is an altogether harder task.

 

@GameofthePeople

Photos: Game of the People, Press Association.