The authoritative Swiss Ramble has examined Everton's accounts for 2017/18. The club went from a profit of £31m to a loss of £13m, a £44m deterioration, despite revenue growing by 10% (£18m) to a record £189m and profit on player sales up £36m to £88m, due to a huge increase (£70m) in player costs (wages and player amortisation) and £34m of exceptional items. These included changes in management (£14m) and new stadium costs (£11m).
Everton have now reported losses three times in the last four seasons with the exception being the £31m profit in 2017. In fact, in the 13 years since 2005, Everton have only been profitable four times – and one of those was just £26k (in 2008).
Only one Premier League club made a loss in 2016/17, thanks to massive TV money allied with wage controls, but two of the five clubs that have reported to date in 2017/18 are loss-making: Everton and Stoke £30m. In contrast, there were solid profits at the two Manchester clubs and Brighton.
The loss at Everton would have been even higher without a hefty £88m profit on player sales, mainly Romelu Lukaku, Ross Barkley, Gerard Deulofeu and Tom Cleverley. Not only is this more than any other club in 2016/17, but the second highest ever in England, only behind Tottenham Hotspur £104m in 2014. Everton have relied a lot on significant player sales: £179m in the last five years (2018 £88m, 2017 £52m and 2014 £28m). Excluding player sales, Everton’s 2018 loss would have been a frightening £101m, though 'only' £67m if exceptional items also ignored.
All revenue streams at Everton rose: broadcasting was up £12m (9%) to £142m; commercial up £4m (14%) to £31m; and gate receipts up £2m (16%) to £16m. The £189m revenue is £103m higher than the £86m reported just 5 years ago. The vast majority of the growth (£87m) is due to higher Premier League TV deals, though commercial is also up £17m.
Everton's revenue is the eighth highest in the top flight, though 7th placed Leicester £233m in 2016/17 was boosted by £70m Champions League money. However, it’s still far below the leading clubs, e.g. Manchester United £590m is three times as much, while Liverpool 2016/17 £364m was almost double.
Everton state that broadcasting is 69% of total revenue, but it would be 75% if Europa League TV money is reclassified from commercial (in line with other clubs). In fairness, 10 clubs in the PL earn 80-90% from TV. That said, the top six clubs have a much more balanced revenue mix.
Since 2013 the club's commercial income is up 131% from £13m to £30m, but the absolute growth of only £17m means that the gap to the leading clubs has actually widened, e.g., Manchester United have grown by £124m over the same period to an incredible £276m.
Everton earned €14m from the Europa League, which was the fifth highest from that competition, even though they were eliminated at the Group Stage, due to the large England TV pool. However, Liverpool got €81m for reaching the Champions League final.
Everton's wages to turnover ratio climbed from 61% to 77%, which was only 'beaten' by Crystal Palace and Swansea in 2016/17. This is much higher than major clubs that have reported in 2017/18, e.g., the two Manchester clubs are near the recommended 50 per cent level.
These figures show the scale of the task facing the club in trying to break into the top six.
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