Everton desperately need good news

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.

Football’s golden goose is about to be toast

Do you want to hear a seasonal story about a goose? One with giants and big, bad evil kings sitting in castles, forcing peasants to hand over their money to help make the shiny knights even more rich? If you do, go along to your local Premier League club or any other major clubs in much of Europe. It’s not a pantomime or a dark tale from the Brothers Grimm – it’s how football is run today and will continue to be run, until people wake up and notice that the goose that laid the golden egg is floundering.

Dying swans

The global economy – well, in the developed world – is in the mire and will continue to be so until someone comes up with a solution. But footballers ride around in their golden chariots, remain champions of conspicuous consumerism and hog the attention of the media. Mostly, they are despicable characters who behave badly, have no loyalty to their clubs, despite signing hefty contracts that they quickly ignore and urge their agents to better, and on the pitch, they re-enact the dying swan at every available opportunity. And get this – they get paid sums of money that are more than double – or even treble the average annual wage. Per week.

This is why football’s future is very finite and that very soon, the game will experience a tsunami of default that could wash away some of Britain’s biggest, most loved and historic clubs. And it will not stop in Britain – it will affect clubs all over the world, but mostly in Europe.

The problem is, the fans – who despite their ignorant pleas that the club “belongs to us” – are perpetuating this false economy that flies in the face of good accounting, common sense and moral behavior. The fans do not have to back this death spiral – voting with the feet is the best way to show the people driving this folly that they will not tolerate it any longer.

Russian roulette

Look at the debacle going on in Russia. FC Anzhi Makhachkala are based in the Republic of Dagestan. They are owned by Suleyman Kerimov, another of the Russian Oligarchs. Given the unstable environment – described as “armed conflict” by Wikipedia –  the club’s players live and train in Moscow and travel to Makhachkala by plane to play their games against a backdrop of heavily-armed security.

Little wonder that Mr Kerimov has to pay top dollar to get decent players in. So should we be that surprised to hear that Cameroon’s Samuel Eto’o earns around £ 17m to turn out for Anzhi? He’s not the only big earner, either, but all the talent in the world, and a decent manager in Guus Hiddink, cannot guarantee success. Anzhi finished fifth in the Russian league last season.

What does this prove? We all know that football has become a rich-man’s plaything – witness the antics at the court of King Roman. But at least there’s some substance to the ambitions of Chelsea, Manchester City et al. But Dagestan is a tinderbox, a no-go area that any self-respecting player, let alone supporter, would want to steer clear of.  “I pay you lots of money, you play for me”, that is the message.

So every mercenary in the game will look to a club like Anzhi and take the money. The danger is, it has a knock-on effect on the rest of the league. Unless you have a pet Oligarch, you are scuppered.

Blame Bosman?

Likewise, in France. Paris St.Germain have never punched their weight internationally, but now they have the resources, they are reeling in the big names. Their ownership structure is embedded in the global financial system – a sovereign wealth fund from Qatar. They are paying the sublimely talented Zlatan Ibrahimovic a fortune, almost as much as Anzhi shovel into Eto’s [doubtless tax exempt] bank account each week. It’s a seller’s market these days, after all.

Who can we blame for a culture that is so geared towards the players? Why, to some extent, it’s none other than Jean-Marc Bosman, who changed the face of professional football, but derived very little benefit from his actions.  Arsenal, to name but one club, have suffered greatly from the Bosman ruling. At the same time, the Bosman case removed some of the shackles placed upon players by their clubs, but it has gone crazy when a player signs a deal and has no intention of seeing the term of his contract out. It has to change, though, because it is players’ wages that are pushing football towards its own fiscal cliff.

It’s not confined to the top levels of the game, either. Non-league football does its very best to ape the higher echelons. Balance sheets at non-league clubs are a nonsense but once again, the demands from very average players are making it impossible for your local “Ham and Egg Sandwich Albion” to make ends meet. In a vain attempt to do this, non-league is starting to price itself out of its own market. But again, the fans do little to discourage this, accusing boards of lacking ambition if they refuse to pay-out money they just cannot afford to commit to.

Just like the European financial crisis, muddling on will undoubtedly continue until something big happens. When an over-leveraged club cannot fund itself, or a benefactor turns on his heels after getting too much abuse, who will bail out Britain’s Premier clubs? There’s only so many Oligarchs or Sultans to go round….