Everton Financials: What They Mean For The Future

Last week Everton Football Club released the club financials for what was essentially the 2012-2013 season. This was immediately followed by folks either moaning or celebrating. Really it all depended on your position. It is no secret there are two extreme camps of Evertonians, and the results were predictable. Both sides staked out their position by extracting partial information and imposing their views on the numbers. The truth is that the financial health of Everton is somewhere in the middle.

The basic numbers were good to Everton. Revenue rose from £80.5 million to £86.4 million. A nice little increase that came in part because of a 6th place finish, up from 7th in 2011-2012. The remaining increase in revenue came from an increase in attendance. An increase of 3100 fans in average attendance means Everton brought in an extra £3.5 million or so in ticket sales. Last year the relatively lackluster attendance seemed to play a part in a Goodison Park that did not live up to previous incarnations.

Perhaps the most important number, the wage to turnover ratio is down to 73% from 79%. This ratios is the percent of revenue that goes towards wages. The "healthy" number is thought to be around 50%, though a majority of clubs exceed this in the EPL.The news isn't as good as it appears though. Wages are approximately £63.5 million for the club, just about the exact same as it was in 2011-2012. The only reason the ratio decreased is because of the increase in revenue. There was no actual cutting of the wage bill. An important note about the wage bill. This value includes everyone at EFC drawing a salary. Players, coaches, marketing, groundskeepers, the whole group. Don't think this is just the players with senior contracts.

The final numbers are good though. This year the club made £1.6 million after tax. An almost £11 million improvement after losing £9.1 million after tax in 2011-2012. The net debt at Everton has also decreased, from £46 million to £45.3 million. This is the number that gives fans the most pause, but it isn't a prohibitively large number. The problems come in the commercial and sponsorship area.

We've said it before, and we will continue to hammer the point home. Everton's cash problems continue to come in the commercial area. Goodison does provide challenges for matchday revenue, but the deficiencies the club displays in commercial sponsorships and merchandise is astounding. In 2012-2013 the club received £12.1 million in sponsorships and merchandise. This includes the Kitbag deal (£3 million), as well as sponsorships with Chang and and any stadium sponsorships and advertising. The number is just too low. The Kitbag deal is pretty terrible, as we've discussed before. There is very little to no money coming in from the deal with Nike. Most of the larger clubs get a pretty nice sum from kit manufacturers, and we don't. The Chang sponsorship is also pretty poor at the tune of £6-7 million a year. While I wouldn't expect us to pull in something like Manchester United or Arsenal, it would be nice to hop above clubs like Aston Villa.

As for the future, things are looking up. The new tv deal is going to give the club an extra £20-30 million depending on which paper you read. That alone is going to give Roberto Martinez a nice transfer kitty. Also the sales of Fellaini, Jelavic, and Anichebe plus the arrival of James McCarthy haven't been accounted for. For those concerned about transfers, don't be. There should be plenty of money available unless Kenwright does something really stupid.

The debt is also manageable. While many fans get upset at the thought of any debt, the truth is all businesses have some debt. Even companies like Microsoft and Coca-Cola will take out loans for big projects. The important thing is that the club is always able to pay down the debt, and right now they could take care of it in 2 years without having to gut the squad. I'd say that is a win win for everyone.

Of course the big question is what Everton will do about a new ground. Reports from earlier in the year indicate the club hasn't forgotten about the problem, but any sort of stadium is going to require a massive investment, something that will cause Everton to become even more fiscally cautious in the transfer market. Anyone planning to hit the lottery soon?