After Rafael Benitez was sacked by Everton, the Spaniard released a statement, claiming that his task had been made harder by the “financial situation”, so here’s a quick look at the club’s challenges (in advance of the publication of the 2020/21 accounts) #EFC
#EFC have reported losses 5 times in the last 6 seasons up to 2019/20 with another hefty deficit anticipated in 2020/21, as almost all games were played behind closed doors. In fact, the losses in the last 2 seasons (£140m & £112m) are both in the top 7 ever recorded in England.
It is worth noting that the #EFC bottom line has been adversely impacted by the high managerial turnover since Farhad Moshiri arrived. Even before Rafa’s departure #EFC have paid out £32m in compensation and severance pay in the last 5 years.
At an operating level (i.e. excluding player sales & exceptional items), #EFC loss has shot up from £12m to £144m in just 3 years. In fairness, few clubs post operating profits, but Everton’s loss is the second highest in the last 2 seasons, only surpassed by #CFC £159m.
The #EFC wage bill has virtually doubled since 2016 from £84m to £165m. In the same period, revenue has only increased by around 50%, so the wages to turnover ratio has worsened from 61% to 89%.
Since Moshiri’s arrival, #EFC have spent big in the transfer market (until last summer). In the 4 seasons up to 2020, they splashed out a chunky £566m gross spend (£294m net), which resulted in player amortisation more than quadrupling from £22m to £99m.
This profligate approach has been essentially funded by Moshiri. Including £100m capital injections and loans in 2020/21, I reckon this now adds up to a hefty £450m. In fact, in the five years up to 2020, #EFC £350m owner funding was the highest in the Premier League.
However, Benitez’s biggest problem was probably linked to the PL’s Profitability & Sustainability rules (aka FFP). My estimate is that #EFC were way over target even after allowable deductions (including stadium costs), though were much closer after excluding COVID impact.
Given that the 2020/21 figures are likely to be even worse, #EFC have a tough challenge to be compliant with FFP regulations. This is almost certainly the reason why they spent less than £2m in the summer (on Demarai Gray) before the recent panic buys of Mykolenko and Patterson.
There is no doubt that #EFC owners have put a lot of money into the club. The problem is that they have not spent it very well. Whatever people think of Benitez’s managerial abilities, he seems to have a point when he talks about the difficult “financial situation”.
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An explanation of how the new format for UEFA competitions will work from next season, including an explanation of the revenue distribution.
The number of clubs in the Champions League will increase from 32 to 36 with the group stage of 8 groups of 4 teams being replaced by a single league of 36 teams, then a new knockout round, before reverting to the traditional last 16.
Total revenue distribution will increase by 21% from €2.7 bln to €3.5 bln. Lion's share will go to the Champions League €2.5 bln, followed by Europa League €565m and Europa Conference €285m.
Quick review of the money earned by England's Champions League representatives to date after this week's matches.
#MCFC lead the way with £93m, followed by the other quarter-finalists #AFC £80m. The two clubs eliminated in the group stage earned less: #MUFC £51m and #NUFC £29m.
Champions League TV money is split into 4 elements:
- Participation Fee
- Prize Money
- UEFA coefficient
- TV pool
Each club that reaches the group stage receives a €15.6m participation fee.
So Everton have been deducted 10 points by the Premier League for a breach of the Profitability & Sustainability Rules #EFC
I have frequently looked at their case, the last time during an overall review of FFP. The article can be found on my blog here swissramble.substack.com/p/financial-fa…
However, given the importance of this decision, I've attached a series of screen shots from that article that help explain the background #EFC
First, Everton's initial FFP situation over the monitoring period up to 2021/22, where they are a fair way over the maximum allowed loss #EFC
Analysis of Rangers' 2022/23 financial results, when pre-tax loss slightly increased to £3m, as revenue fell 4% to £84m and operating expenses rose £11m, partly offset by profit on player sales more than doubling to club record £24m #RangersFC
In terms of profitability, #RangersFC and #CelticFC were at the opposite end of the spectrum with Rangers posting a small £3m pre-tax loss, while Celtic generated a record £41m profit.
Given that both clubs qualified for the Champions League, the size of the gap might come as a surprise. Cost bases are very similar, but #CelticFC revenue is substantially higher plus once-off other income, partly offset by #RangersFC better player sales.
8 of the 9 highest revenue increases over 2020/21 came from English clubs. #LFC led the way with an impressive £106m, followed by #MUFC £89m and #THFC £82m. The biggest reductions were at two Italian clubs, troubled Juventus £44m and Inter £32m.