Earlier this year we took a quick look at Everton's financials for the 2013-2014 season. The club had released what looks like a fairly rosy set of financials, and fans were quick to envision player upon player arriving at Goodison in a spending spree that would make Manchester City jealous. With Everton's season settling into mid-table mediocrity, it is time to take a deeper look at the financials and see what this cash influx means.
The big news for the 13-14 season was the increase in television money. Thanks to new television deals, the Premier League saw a stupendous increase in tv money for each club. For Everton this helped cause revenue to increase from £86.4 million to a staggering £120.5 million. The new TV deal accounted for a good £32.8 million of the revenue increase. From that increase, about £1.2 million came from finishing in 5th place instead of 6th place, and £2.4 million came from having 16 matches televised as opposed to 14 in the 2012-2013 season. That means about £28-29 million of the increase is a direct result of the television contract.
Of course television money isn't the only thing that helped the club's revenue. With the improved performance came an increased attendance. On average the club sold an extra 1,400 tickets per home match. According to club records this helped increase the gate money by £1.9 million, not a bad number at all.
The big limiting factor for gate money though comes from luxury boxes. As we've harped on before, Goodison Park has very few boxes and they are not exactly large. Unfortunately there isn't much Everton can do to fix this outside of a new stadium or a drastic renovation. When you look at clubs like Arsenal, Manchester City, and Manchester United these luxury boxes are where a lot of their money is being made. Corporate sponsors can be brought in with the lure of a luxury box as well as some sort of sponsorship deal.
On the commercial side, it is hard to describe the situation as anything other than terrible. Thanks to some changes to contracts, the club saw their commercial revenue increase to £8.4 million, up from £7.6 million the previous year though other commercial activities decreased by £1.1 million due to the lack of a payment for Everton player's participation in Euro 2012. Though the stadium situation is critical to Everton's success, the commercial side is the best area for immediate improvement, especially on shirt sponsors. It is ridiculous that our deal with Chang is so miniscule compared to other clubs. While we may not be able to get the exorbitant sums of clubs like Arsenal, we should do better than the Aston Villa's of the world. That's where Everton's ability to challenge for Champions League football can become realistic.
The good news is Everton will get at least £2.7 million from the Europa League this year, maybe more depending on if they decide to play actual football. That will likely help offset any drop in attendance the club sees due to the rather poor play of the club in the Premier League.
The big concern for everyone is profit and debt. The good news is Everton made £28.2 million after tax compared to £1.6 million the previous year. Again most of this money comes from the new television deal. Without it Everton would have likely lost a few million pounds this year. The dept also dropped dramatically, from £45.3 million to £28.1 million. That puts Everton in an excellent position for the future, especially to potential new owners. Another season like this could see Everton's debt paid down in its entirety or put towards the purchase of more players.
Speaking of players, the biggest way to assess the viability of a squad is percent of turnover as wages. The ideal situation is for wages to be 50% of turnover though many clubs exceed this. Last year Everton was approaching a dangerous level of 73%. That was unsustainable and had the club not received more TV money many players would have had to be sold. As it stands the club was still able to increase wages by about £6 million to improve the squad. This year the wages are likely to increase with several new contracts as well as the permanent addition of Romelu Lukaku and Gareth Barry among others.
The bottom line is that Everton is in a good financial position, but that position is not going to help them compete for Champions League football. Even if the profits from this year are put into the squad there is enough for maybe 2-3 players after accounting for wages. That will help the club get into Europe consistently, but it will still make things difficult when trying to finish in the top 4 places. As always we are left waiting for a new stadium or a new owner. And let's be honest, both options seem as unlikely as Everton finishing 4th.