Everton’s 2017/18 financial results covered a season when they finished 8th in the Premier League and competed in the Europa League, but also saw the sacking of two managers: Ronald Koeman and Sam Allardyce. Majority owner Farhad Moshiri has provided around £250m of funding #EFC
#EFC 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 & player amortisation) and £34m of exceptional items. 
All #EFC revenue streams rose: broadcasting was up £12m (9%) to £142m; commercial up £4m (14%) to £31m; and gate receipts up £2m (16%) to £16m. Note that I have reclassified Europa League money from Other Commercial to Broadcasting to be consistent with other clubs.
#EFC wage bill surged £41m (39%) to £145m, while player amortisation (£67m) and impairment (£8m) also shot up £38m to £75m. There were £26m other exceptionals: changes in management £14m and new stadium expenses £11m. Prior season included £7m interest for early loan settlement.
So #EFC 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).
#EFC figures hit by over £50m of exceptional costs in last 3 seasons, including £26m payments for management changes (Martinez, Koeman & Allardyce). Possible Silva compensation still to pay. Also £11m new stadium costs, which can be capitalised once planning permission granted.
On the other hand, #EFC have relied a lot on significant player sales: £179m in the last 5 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.
#EFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which can be considered as a proxy for cash operating profit, as it excludes player sales and exceptional items, slumped from £27m to £7m, the same level as 2016 (before the new TV deal started).
As a consequence, #EFC EBITDA of £7m is one of the lowest in the Premier League. To place this into context, it is less than a tenth of Liverpool’s £74m (2016/17), while Manchester United’s £177m is more than 25 times as much.
#EFC £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 also up £17m. Note: if outsourced catering/retail were included, revenue would be £9m higher at £198m.
On the bright side, #EFC had the 20th highest revenue in the world in 2016/17 per the Deloitte Money League, benefiting from the new TV deal. That’s obviously a fine achievement, but it does not really help Everton domestically, as 13 English clubs feature in the top 30.
#EFC £128m Premier League TV money was much the same as the previous season, as a lower merit payment of £25m (8th place vs. 7th) was offset by higher facility fees £22m (team broadcast live 19 times vs. 18). Club has received £833m from the Premier League in the last 13 years.
#EFC 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.
#EFC 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 large England TV pool. However, Liverpool got €81m for reaching the Champions League final.
#EFC reported commercial revenue as £42.8m, but if Europa League TV money is excluded, this would be £30.5m, up £3.7m (14%) on the previous season. This comprises sponsorship, advertising & merchandising £20.7m, up £5.4m (35%) and other commercial £9.7m, down £1.6m.
#EFC had a new shirt sponsor (SportPesa) and sleeve partner (Angry Birds) in 2017/18, reportedly worth £9.6m & £2m a year respectively. Kit deal with Umbro plus £6m training ground naming rights deal with USM Holdings (where Moshiri is a shareholder). Lot lower than the Big Six.
#EFC average attendance fell slightly from 39,310 to 38,797, as Goodison Park’s capacity reduced following building works. However, this was still 5,600 (17%) higher than the recent low of 33,208 in 2011/12.
#EFC average attendance of just under 39,000 was the 9th highest in the Premier League in 2017/18, 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 proposed new 52,000 capacity #EFC stadium at the Bramley Moore Dock site would obviously make a difference, but the club will only submita planning application in H2 19. Cost estimated at £500m, maybe part funded by £250m council loan. Completion targeted for 2023/24 season.
#EFC wage bill rose almost 40% (£41m) to £145m, due to player investment and contract extensions, which means that wages have increased by an incredible £61m (73%) from £84m in the last 2 years. Headcount up from 391 to 427 with 21 growth in players and management.
#EFC player amortisation rose by almost 80% (£30m) from £37m to £67m, reflecting the club’s significant investment in the playing squad, especially the summer of 2017. This expense has tripled in just two years from £22m in 2016.
After many years of growth, #EFC other operating costs decreased £2m (6%) to £37m in 2017/18. The club did not provide much explanation, though there is a suspicion that last season included some expenses related to the new stadium (categorised as an exceptional item in 2017/18).
Since Moshiri’s arrival, #EFC net spend in the transfer market has exploded: in the last 2 seasons they have averaged £69m (gross spend £136m less sales £68m). In fact, according to CIES Football Observatory, they were the 6th highest spenders in Europe in the 2017/18 season.
#EFC report £75m debt: ICBC £43m + Santander £32m (both 3.5% interest), but Moshiri has also provided interest-free loan of £149m (increased by £100m post year-end). Everton classify this as equity, as no agreed repayment date, but other clubs treat such “friendly” loans as debt.
#EFC paid £2m interest on their loans in 2017/18, much lower than the previous season’s £12m (which included £7m penalty fee for early repayment of a loan). The fact that Moshiri’s loans are interest-free is a big plus, but interest will increase due to funding for new stadium.
For the first time in many years #EFC had negative cash from operations (£7m) before spending (net) £103m on players, £8m on stadium and £2m interest, leading to a £120m cash deficit. This was funded by £75m new bank borrowings and £45m additional loan from Moshiri.
Since 2009 #EFC had available cash of £266m, mainly £149m from Moshiri, £72m from operations and £35m loans. Around 70% (£183m) has been used to improve the squad with £23m on capex, but £48m on interest payments, emphasising the importance of Moshiri’s interest-free loans.
#EFC cash balance was largely unchanged at around £9m, significantly lower than Manchester United £242m and Arsenal £180m. Tottenham’s £200m s a bit misleading, as it is mainly due to loan advances for the new stadium development.
Backed by Moshiri’s funding, #EFC have invested significant money in an attempt to reach the next level. Arguably, much of this has been wasted under previous management, but the arrival of Marco Silva (and Marcel Brands as Director of Football) gives some cause for optimism.
That said, there remain many challenges for #EFC, especially how to fund the new stadium. Before then, it is difficult to see how they might progress without major growth in commercial revenue, which is easier said than done.
