IF THERE is a club that seems to have the walls closing in on them it is surely Everton, who are not only fighting for their Premier League lives but continue to lose vast sums of money. On top of that, the club has been badly affected by the sanctions on Russian oligarch Alisher Usmanov and, consequently, has a gap in sponsorship income.
There’s also continued lack of stability on the management front, with Carlo Ancelotti surprisingly leaving at the end of 2020-21 for Real Madrid, Rafa Benitez sacked after just a few months in charge and now former Chelsea manager Frank Lampard presiding over a run of poor results that have pushed Everton to the fringe of the relegation struggle.
Everton’s 2020-21’s financials show a third consecutive £ 100 million-plus pre-tax loss. Although revenues rose by 4% to a record £ 193.1 million, Everton lost £ 120.9 million, admittedly better than 2019-20’s £ 139.8 million and 2018-19’s £ 127.3 million, but still worryingly high. In four years, Everton have lost close to half a billion pounds, but investment made in infrastructure and academy football should help them keep below fair play and sustainability limits.
Everton’s wage bill has caught up with them and despite the big loss, players’ salaries increased by 11% to £ 182.6 million, representing 95% of earnings. In five years, the wage-to-income ratio has gone up from 61% to 95%, and Everton have little to show for their generosity. The club’s last major trophy was won in 1995, 27 years ago and the longest stretch in Everton’s history without a single piece of silverware.
Everton have been among the biggest spenders in the last five years, their gross outlay amounting to £ 483 million, making them the Premier League’s fifth biggest spender. In 2020-21, they had a net spend of £ 62 million, their biggest signings being Allan of Napoli (£ 21.7 million), Abdoulaye Doucouré (Watford £ 20 million) and Ben Godfrey (Norwich £ 20 million). Everton’s record in the market is questionable, witness the write-down of the book value of the squad and the increased provisions for burden-heavy contracts. The club also saw profits on player trading decline from £ 40.5 million to £ 14.8 million.
Despite making a strong start to 2020-21, Everton faded miserably and finished 10th, enduring a dreadful home record in the Premier League. The malaise has continued into 2021-22, the 4-0 thrashing at Crystal Palace in the FA Cup being the latest setback.
The 2020-21 season was characterised by an almost complete lack of fixtures involving spectators, hence Everton’s matchday revenues fell 98% to £ 0.2 million. Only three of the club’s Premier League home games were played before a crowd. Fortunately, broadcasting bounced back by 49% to £ 146.4 million but the commercial stream was down by 38%. In response to Russia’s invasion of Ukraine, Everton have had to sever all connections with Usmanov’s companies USM, Megafon and Yota. This has cost the club some £ 20 million. The pandemic has been responsible for around £ 170 million of lost earnings although this figure could eventually head north of £ 200 million.
Everton’s net debt went up from £ 2.3 million to £ 58.2 million which was attributed to the investments made in the first team squad and the new stadium. The club has had to be buoyed by a £ 100 million share issue, providing new funds from the major shareholder and since the 2020-21 year-end, another £ 97 million was made available. The club has also secured a five-year facility with Right and Media (£ 90 million drawn), which includes a charge on club assets, and has also taken out a £ 30 million government-backed loan, repayable over three years.
The future revolves around the new Everton stadium at Bramley Moore Dock, but the situation in Ukraine means the original plan to name the ground after Usmanov has been shelved. The club insists its financial position is very secure thanks to stringent cost-cutting and the unwavering support of Farhad Moshiri, but they still has a very heavy cost base. All the more reason to ensure Premier League status is retained for 2022-23 – relegation would surely be a significant blow to their plans.