The Soccer Blog: Got Money? EFC Needs You

Tuesday, 8 February 2011

Got Money? EFC Needs You

By: Brian | February 8th, 2011
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For those Evertonian’s that haven’t heard, Everton has released some of the basic number from their financial statement for the fiscal year from June 1, 2009 to May 31, 2010. The basic numbers are not all that awful, particularly compared to some of the numbers that have been thrown around. Turnover for the year was down slightly due to the lack of an FA Cup Final run, but thankfully the operating loss for the club was only 600,000 pounds. After taking into account the cost of servicing debt and bank overdrafts, the clubs pre-tax loss comes out to about 3.1 million pounds, which is down from the previous years loss of 6 million pounds.

Apparently no one told Everton that money grows on trees

Despite the fairly low losses, Everton debts has now increased to 44.9 million, although almost half of it is not due for at least 5 years which does provide some relief. Of course the biggest question is how to pay off the part of the debt that will be due soon. Obviously the easy answer is to sell players. In theory if Everton were to sell 3-4 players, then most if not all of the debt could be wiped clean, and that would help Everton by not only eliminating any interest payments, but also help the club look better to potential buyers.

Now before everyone grabs their pitchforks and rope, let me say that I do not want to see Everton sell players. When one takes a look at the team sheet, the type of players that would need to be sold to eliminate the debt include Rodwell, Fellaini, Arteta, Cahill, Jags, or even Baines. Currently the team could stand to lose Arteta, and maybe Cahill given how the team has performed these past 5 weeks. Although fans may not want to see either go, both players are going to enter the twilight of their careers soon, with Cahill already at age 31, and Arteta at 28. It is much better to get a maximum value for them now while the squad is fairly strong, rather than wait for both players to fall off in productivity. Yes both players are loved by the fans, but remember that the Ryan Giggs’ of the world are few and far between, and neither Arteta and Cahill are as good a players as Giggs has been over his career. Selling these two players and not bringing in high cost replacements would help the club service a lot of the debt that will be due within the next 5 years, and that in turn would allow the club to stabilize a bit more financially.

Another potentially troubling sign for the club is the fact that wages now represent 69% of operating costs, up from 62% the previous year. This number is also likely to increase next year due to the number of new contracts that were handed out in the summer of 2010. Mikel Arteta, Tim Cahill, Jack Rodwell, Leighton Baines,Seamus Coleman, and Victor Anichebe in signing new deals, and all of these players received salary increases, although getting Pienaar’s wages off the book, along with Yakubu’s for half the year will certainly help soften the blow. The only two solutions to this problem are for the club to either cut the wage bill by selling players and bringing in cheaper replacements, or to increase the various revenue streams.

Looking at the clubs income, the team received an increase in broadcast revenue for a total of 50.2 million. The increase was due to the television money from the Europa League despite receiving less domestic television money. Attendance was also on the receive with the average attendance per game rising to 36,729 from 35,667, which allowed the team to gain about 19.2 million pounds in ticket sales. In addition, sponsorship, merchandising, and other commercial ventures led to an additional 7.1 million pounds.

With any conversation about attendance comes an inevitable conversation about the need for a new stadium. There has been a lot of speculation about how there is no interest in the club because any new owner would immediately need to develop a plan and spend a fair amount of money on a new stadium. One way the club could help improve it’s image would be to at the very least have a plan set in motion that would only require the funds to be transferred for it to be built. The other option would be to actually go ahead and develop the ground, and take on the large amount of debt. Although unappealing, the nice thing about building a new stadium is that it would allow the club to develop the former site of Goodison Park into some sort of housing, or sell the land to a developer to help reduce the cost of the new stadium construction. Although there is certainly no perfect answer for the stadium expression, any long term solution to EFC’s financial situation needs to contain some type of stadium plan.

No one told these guys reinforcements aren't coming

On the sponsorship front, Everton recently extended their deal with Chang Beer which will see the club receive 4 million pounds per year for the next three years. This is a far cry from a team such as Spurs who receives 10 million pounds per year on a sponsorship deal. If Everton were able to get halfway to the Spur’s sponsorship deal, the team would have only lost 100k pounds before taxes. One would certainly think that a team with Everton’s history could command more than just 4 million pounds per year in a sponsorship deal.

Bottom line for Everton is that things are not extremely awful. Although the club has some debt, it is nowhere near the level of Manchester United, or Barcelona, or even what Liverpool use to have, which gives all fans heart. That said, until something changes, David Moyes will be forced to sell players such as Mucha, Yakubu, Vaughn, and Yobo before he can buy new ones , and this all but guarantees he will be priced out of the top talent and will have to continue to scout well if Everton have any hope of finishing in the upper half of the EPL. Additionally the club needs to find some sort of investment, ideally something where a potential owner is willing to purchase say 30% of shares, similar to what has been happening at Arsenal, just with a manager willing to spend the new funds. Until then the team really has to trust Moyes to get things right, and pray for some new investment. Until next time, COYB!

Category: Opinion

Tags: Arteta, David Moyes, Everton, Finances, Jack Rodwell, Leighton Baines, Marouane Fellaini, Opinion, Seamus Coleman, Steven Pienaar
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