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50-50 Challenge: Merseyside derby

Liverpool vs. Everton Sep 25, 2014
Read
May 1, 2014

Commercial performance still casts a shadow over Everton

The mere mention of the word "accounts" used to be enough to send shivers down the spine when it came to Everton. Who could forget the farcical summer of 2011 and the circus that followed in the ensuing months? "Where’s the Arteta money, Bill?" That question practically became a supporter catchphrase.

Fortunately, the financial picture is not quite as bleak these days, thanks to the outlandish sums of money being pumped into football through television deals, prize money and the pockets of the match-going faithful. The latest accounts showed a profit of 1.6 million pounds, the first annual figure in the black since 2005. Over the years, the ability of former manager David Moyes to work on a meagre budget covered any shortfalls. Moyes ended his Goodison tenure with an average annual net-spend in the region of 803,000 pounds.

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Released earlier in the season, the accounts came back into focus this week. Everton held the first of their reinstated annual general meetings on Tuesday, and it allowed the club to review the events transpiring since the June EGM (extraordinary general meeting), with the projected accounts for the next year chief among them.

The good outweighs the bad in these last 11 months, few would argue against that. Everton in the Community continued their sterling work, hitting their 1 million pounds fundraising target in February, manager Roberto Martinez has overseen a club-record Premier League points total, and fan interaction and involvement is much improved -- the occasional crest-related farce aside.

It is those dreaded accounts that continue to cast a shadow, however. Though the accounts as a whole are turning in the right direction, the commercial aspect -- propped up by broadcast revenue -- continues to disappoint, leaving Everton trailing their rivals.

Focusing on the overall picture, turnover reached a club-record 86.4 million pounds in 2012-13, and that will rocket, according to Everton's projections, to 116.8 million pounds for 2013-14. One factor is a 21 percent increase in season-ticket renewals, with 24,812 sold during the early-bird window; another reason is the attendance increase, as the average Goodison gate has risen to 37,636. Nine sellout home matches, with Manchester City this weekend among them, have also helped.

Despite estimated increases in wages and other operating costs, these positive numbers -- plus money via player sales, the impact of the new TV deal, and a rise in Premier League prize money -- put the Blues on course for a predicted pre-tax profit of 29.1 million pounds for 2013-14.

As such, the dark days of the sell-to-buy approach look over; Martinez confirmed as much at the AGM (annual general meeting): "The one thing everyone needs to know is that we are not in need of selling players. ... What is important as a football club is that you don't have to sell to survive. That is not going to happen."

Even so, while almost 30 million pounds profit is a sizable step forward, the reliance on broadcasting remains. Of the estimated 116.8 million pounds turnover, about 88 million is reckoned to be broadcast revenue. That is a staggering 75 percent of turnover coming from television. It merely underlines the need to improve commercially, as others reap similar benefits from the television deal, effectively nullifying much of the profit forecast.

This overreliance on broadcasting income masks commercial turnover that falls well below the standard expected, namely the renegotiated Chang deal. Though increasing by 4 million pounds, from the previous deal of 12 million over three years to 16 million across the next three seasons, the deal remains firmly in the shadow of competitors operating on another level.

A sportingintelligence study from the start of the current campaign reaffirms the gulf between Everton and their competitors. The new Chang deal, which returns 5.3 million pounds in each of the next three seasons, would put the Blues eighth in the shirt sponsorship stakes (based on this season's figures).

Yet that is nothing compared to the teams above them. Aside from Newcastle, who sit seventh at 6 million pounds per season, the remaining teams earn more per season than Everton will earn over the course of their three-year Chang agreement: Arsenal, 30 million pounds; the two Manchester clubs and Liverpool, 20 million each; Tottenham, 19 million; Chelsea, 18 million.

Further inspection of the respective club finances from this year, detailed in the Guardian on Thursday, merely underlines the commercial chasm that exists between Everton and the teams around them in the league.

Most clubs break their revenue down into three sections: match day, broadcasting, commercial. Everton break their commercial segment into smaller sections -- sponsorship, advertising, merchandise (7.6 million pounds), catering (1.2 million) and other commercial activities (4.4 million) -- so based on how others categorise their accounts, the commercial figure would most likely be 13.2 million, rather than the 6 million listed in the Guardian.

Sadly, though, this increase is of little relevance because, either way, the Toffees are languishing at the bottom of a pool dominated by the bigger fish. Bearing in mind Everton's commercial figure, whether it is 6 million pounds or 13.2 million, Arsenal netted 44 million, Tottenham 57 million, Chelsea 84 million, Liverpool 98 million, Manchester City 143 million and Manchester United 153 million.

Displaying ambition and no little self-belief on the pitch, led by a fearless manager, Everton require a considerable dose of these traits off it. Commercial improvements are imperative; otherwise, the already daunting financial gulf will only widen, leaving Martinez with a thankless task in his quest to establish the Toffees as a top-four team.