Tuesday night Everton's Shareholders Association met at Goodison Park to hear some expert testimony about the new Premier League TV deal that has seen the club's income skyrocket. The presentation, by Evertonian and former business executive Joe Beardwood, was designed to help fans understand what the deal means not only for Everton's finances, but their chances of competing for trophies and Champions League football.
As we detailed earlier this year, Everton's 2013-2014 financials show a healthy increase in income and profit, but translating that to more funds in the transfer market is a mixed bag.
During the meeting Mr. Beardwood hit on one of the most important concepts that is rarely talked about, the importance of revenue outside of television. For the most part, every club gets an equal amount of money from the television contract. There are some differences based on final position in the table and number of live appearances, but it is all within the range of about £5 million.
The big difference comes from commercial revenue, ticket sales, and corporate sponsorships. That is how clubs like Manchester United, Chelsea, and Manchester City can afford to buy 15 star internationals at ease, it is why when Manchester United misses out on Champions League football it isn't a big deal, they still have millions and millions of pounds to pay players.
Sadly Everton is lacking here, in the 13-14 season the club was 9th in the non-TV revenue table which is a key indicator of performance according to Mr. Beardwood. Based on that number it would seem like the club vastly overachieved under Roberto Martinez. This state of affairs does not seem to be changing either, it hasn't improved over the past decade and the coming 10 years seems to be nothing but the status quo. Deals like the Kitbag merchandise agreement or the miniscule sponsorship by Chang Beer mean the club has little hope of improving their fortune.
Compare this to Arsenal who has increased their non-tv revenue by over £11 million per season over the past decade. Yes, Arsenal supporters may be frustrated by the lack of trophies until last year's FA Cup victory, but it is still a better position to be in than Everton's where a trophy is more of a pipe dream.
Wages were also mentioned, with few exceptions the 4 highest wage bills get Champions League football. Despite some of the silly spending we see by clubs, for the most part the bigger clubs buy guys who are at least going to get them into lucrative European football. The percentage of turnover as wages was also mentioned. The new TV money helped Everton lower that percentage into the upper 50's, before the number was creeping into the 70's, a very dangerous figure financially. The club would have needed to start selling high wage players without the new TV deal.
Joe also stated that he doesn't think the club needs a new stadium. That is one area I disagree with Mr Beardwood. Yes, one of the big concerns about a new stadium would be the corporatization of the grounds. It has happened at bigger clubs and ruins the fan experience. But with the right owner a new stadium can continue to cater to the existing fans as well as expanding the corporate revenue through luxury boxes. Goodison only has 12 of those boxes right now and they are rather poor. A new stadium could maintain a similar capacity and increase the number of boxes. A little bit of corporate outreach is not going to destroy the soul of the club. That soul comes from the fans, the players, and the staff. The proper balance would see Everton be able to increase the wage bill, increase the transfer funds available, and realistically challenge for Champions League football.
Now that said, doing all of this with Bill Kenwright at the helm is unwise. As much as Bill loves Everton, he is not a businessman and he has not hired any. He's the local lad that has made good, and it will limit Everton. The balancing act between remaining The People's Club and doing good business is narrow and something he would likely be poor at. Sadly it seems like Kenwright isn't looking to sell the club, he's merely looking for donations to help him run it. All that means is the outside challenge for 4th is the best we can hope for, maybe with a lucky cup run here and there.