Everton's loss fourth worst ever in Premier League

Everton's accounts for 2018/19 cover a thirteen month period which does impact on the bottom line. Writing from Zurich, the authoritative Swiss Ramble subjects them to his usual forensic analysis.

He notes, 'Everton's £112m loss is the highest reported to date in the 2018/19 Premier League, though Chelsea also suffered a deficit over £100m. This was significantly more than the worst reported in 2017/18 (Crystal Palace £36m). Both Manchester clubs posted profits.'

The loss is actually the fourth worst ever posted in the Premier League, though a long way below Manchester City £198m in 2010/11. Chief Executive Denise Barrett-Baxendale observed, 'These results reflect our position in the early stages of a long-term investment cycle.' [WG: Well, I suppose that is one way of putting a gloss on it. 'Investments' in players generate uncertain returns.]

Indeed, the Swiss Ramble notes: 'Everton could have reduced the loss with more player sales, but they looked to retain their key talent. As a result, profit on player sales fell from £88m to £20m, mainly Davy Klaassen to Werder Bremen and Funes Mori to Villarreal. Prior season included Lukaku, Barkley and Deulofeu.'

Even so, the club have increasingly relied on profit from player sales, which has averaged £53m a season over the last 3 years, compared to just £14m in preceding 7 years. Should also be fairly high in 2019/20, due to sales of Gueye, Lookman, Vlasic and Onyekuru. [WG: This is a trend that has been noted across many leading European clubs, and it is risky].

The club have made more money from player sales in the last six years (£199m) than Arsenal £177m, Manchester City £147m and Manchester United £76m. However, they will probably need to adopt this as a regular part of their business model to achieve sustainability in the short-term. [WG: This may conflict with football objectives].

If the club was a normal business rather than a football club the cumulative losses would be worrying. The Swiss Ramble reports, '[the club] have reported losses four times in last five seasons with the sole exception being £31m profit in 2017. Total deficit over this period was £123m, but £112m of this in last season. In 14 years since 2005, club has only been profitable four times – and 2008 was just £26k.'

In spite of the losses, the £188m revenue is 54% (£66m) higher than £122m reported just 3 years ago. Vast majority of the growth (£50m) is due to higher Premier League TV deal, though commercial is also up £19m. Note: if outsourced catering/retail were included, revenue would be £7m higher at £195m.

Everton consider with some historical justification that they should be a top six club. The Swiss Ramble points out: 'Despite Everton's £188m revenue being the second highest in the club’s history, there remains a huge disparity with the “Big Six”, where the lowest revenue (Arsnal £393m) is more than twice as much, while Manchester United £627m is around £440m higher. Also overtaken by West Ham United £191m last season.'

2018/19 revenue suffered a €14m reduction after failing to qualify for the Europa League, about which CFO Sasha Ryazantsev said, 'demonstrated why regular European football is so important for us financially'. CEO Barrett-Baxendale noted, 'Significant revenue from regular Champions League football creates considerable financial barriers to entry.' The earnings over the last five years reinforce her point, e.g. Manchester City €337m, Liverpool €264m and Spurs €236m, compared to Everton’s €22m.

Since 2013 the club's commercial income has more than tripled from £13m to £41m, but the absolute growth of only £28m means that the gap to the leading clubs has actually widened. In the same period, the Big Six have all grown by £84-123m (except Arsenal £48m).

Average attendance of around 39,000 was the ninth highest in the Premier League, only surpassed by the Big Six plus West Ham (Olympic Stadium) and Newcastle United. Season tickets have reached the cap with more than 10,000 on the waiting list.

The wage bill rose almost £15m (10%) to £160m, due to significant investment in the squad, despite number of players and management falling from 172 to 151, with wages to turnover ratio worsening from 77% to 85%. Wages are up by incredible £76m (90%) from £84m in last three years. [WG: Do Everton fans think value for money has been achieved?]

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The Political Economy of Football V2

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