Everton - Pressure Drop

Although Everton reached two domestic cup semi-finals in 2015/16 (something the club had not done since 1984), their performances were disappointing in the Premier League, as they finished 11th for the second successive season. As chairman Bill Kenwright observed, “Ultimately, our final league positions over the last two seasons were not good enough.”

This culminated in the decision to sack manager Roberto Martinez, replacing him with former Dutch international Ronald Koeman, who was tempted to leave Southampton for the project at Everton.

This was a clear statement of intent by new majority owner, Farhad Moshiri, an Iranian billionaire, who bought a 49.9% stake in the club for a reported £85 million in February 2016 after selling his Arsenal shareholding to business partner Alisher Usmanov.

Moshiri explained his managerial choice thus, “For our club to compete in the north-west of England, which is the new Hollywood of football with Guardiola, Mourinho, Klopp, we needed a star to stand on the touchline, so I got Koeman.”

The club also brought in a new director of football in the shape of Steve Walsh, who had been responsible for some astute player recruitment at surprise champions Leicester City by scouting the likes of Riyad Mahrez, N’Golo Kanté and Jamie Vardy.

"Rom, if you want to"

Everton had been looking to secure new investment for many years, but Kenwright is convinced that he has found the perfect investor: “I’m more positive now about the future of our great club than I’ve been during my time as Chairman. I have absolutely no doubt that in Farhad Moshiri we have found someone not only with the wherewithal - and we all know how important that is these days - but also with a deep understanding of the game and a growing appreciation of all things Everton.”

This new investment is key to Everton’s future prospects and should represent a substantial change after years of caution and thrift. Certainly, Moshiri is talking a good match: “The way to compete is to build a big stadium, to increase our merchandising and commercial income. That is what we will do.”

He added, “We needed a strong balance sheet, so I paid off the debts. We are now very flexible financially. We have no restrictions to spend.”

Before his departure, the ebullient Martinez said, “financially we can compete against anyone in world football”, which seemed a bit over-the-top, but for the first time in ages Everton do appear to have a solid plan. As part of the new strategy, Moshiri will clearly make funds available to strengthen the squad, which will give the Blues a fighting chance on the pitch.

The need for new investment was highlighted by the publication of Everton’s financial results for the 2015/16 season, which included a hefty loss of £24.3 million, considerably higher than the previous season’s £4.6 million, though the bottom line was adversely impacted by a significant  £11.3 million exceptional payment “to former employees and other costs in relation to the change in coaching staff in the year”.

 This obviously included paying out the remainder of Martinez’s contract. It is not clear whether the reported £5 million compensation paid to Southampton to secure Koeman’s services is also included, but my guess would be that will only be reflected in next year’s figures, given that the Dutchman signed his Everton contract on 14 June, i.e. after the 2015/16 accounts were closed. Furthermore, Martinez’s pay-off was reported in the media to be in the region of £10-12 million.

Revenue fell £4 million (3%) to £121.5 million from a record £125.6 million in 2014/15, when Everton reached the last 16 in the Europa League. This contributed to commercial income decreasing by £4.6 million (18%) to £21.4 million, as the club “missed out on performance bonuses from its partners and commercial revenues from UEFA.”

"Have I told you, Leighton?"

The absence of European football also meant that gate receipts were £0.3 million (2%) lower, though this was largely offset by reaching the semi-finals of the FA Cup and Capital One Cup. Broadcasting income was slightly higher at £82.5 million, due to Everton being shown live one more time.

Costs continued to grow with the wage bill rising £6.5 million (8%) to £84 million and player amortisation up £3.3 million (17%) to £22.4 million. Other expenses also increased by £1.5 million to £30.4 million.

In contrast, profit on player sales rose £4.5 million to £7.8 million, while net interest payable was £2.7 million lower at £3.7 million. It should be noted that the 2014/15 interest was restated following the transition to Financial Reporting Standard 102.

These financials were noting to write home about, as confirmed by chief executive Robert Elstone, “The results reflect a challenging year for the club. Performance on the pitch directly impacted commercial income with key deals reduced as a result of the club’s finishing position.”

Traditionally, football clubs have lost money, but the environment has largely changed in the Premier League these days, thanks to the combination of surging TV money and Financial Fair Play regulations, which has meant that top-flight English clubs have never been richer.

In fact, Everton are one of only two clubs that have so far published 2015/16 accounts that have reported a loss. The other one is Chelsea, and they would also have been profitable without £75 million of exceptional payments (mainly the termination fee for their shirt sponsorship deal).

At the other end of the spectrum, we find the two Manchester clubs with United and City announcing healthy pre-tax profits of £49 million and £20 million respectively. The other Premier League clubs that have released 2015/16 accounts to date were also profitable: Norwich City £13 million, Arsenal £3 million and Stoke City £2 million.

This continues the trend of the 2014/15 season, when only six of the 20 Premier League clubs made losses. This group largely comprised clubs that have been badly run (Aston Villa, Sunderland and QPR), but also included Chelsea, Manchester United and, yes, Everton.

In fairness, one of the drivers for Everton’s poor financial performance has been the lack of profits from player sales. This activity can have a major influence on a football club’s bottom line, as shown in 2014/15 by Liverpool (£56 million) and in 2015/16 by Chelsea (£49 million).

In contrast, Everton only generated £8 million of profit from this activity, mainly due to the transfer of Steven Naismith To Norwich City, though this was higher than the £3 million reported in 2014/15.

Of course, Everton have more often than not lost money, reporting losses in eight of the last 11 years. They were consistently loss-making between 2006 and 2012 (with a cumulative £45 million loss in those seven years), though they did at least restrict their annual losses to manageable levels. There was then some improvement in 2013 and 2014 before a return to losses in 2015 and 2016.

As we have seen, this is partly due to the declining impact of player sales in the last two seasons. Indeed, the £28 million profit in 2014 was almost entirely down to the sale of Marouane Fellaini to Manchester United. It is fair to say that in many years Everton have effectively subsidised their underlying deficit with the sale of a major player, despite Kenwright claiming that Everton are “not a selling club.”

Over the last decade, Everton’s aggregate loss before tax was £33 million, but this would have been significantly worse without £113 million of profits from player sales in the same period.

Next year’s accounts will benefit from the £47.5 million sale of defender John Stones to Manchester City, which will help Everton swing back into the black (along with the additional money from the new TV deal).

The club has noted that the balance sheet “substantially undervalues” players such as Romelu Lukaku and Ross Barkley, especially as no cost is ascribed to home grown players. Of course, Everton would almost certainly want to retain such talent, but they would boost their profits if they were to sell.

To get an idea of underlying profitability and how much cash is generated, football clubs often look at EBITDA (Earnings Before Interest, Depreciation and Amortisation), as this metric strips out player trading and non-cash items.

In Everton’s case this highlights their operational difficulties in the past two seasons, as their EBITDA has fallen from £25 million in 2013/14 to just £7 million in 2015/16 (excluding exceptional payments). The major improvement in 2014, following many seasons of cash break-even, was largely due to the first year of that Premier League TV deal three-year cycle, so we could anticipate a similar jump in 2016/17 with the new TV deal – at least £9 million based on the operating profit projection at Everton’s AGM.

This is much-needed if we look at EBITDA in the Premier League, which shows that Everton are a long way behind the elite with Manchester United leading the way with an astonishing £192 million, followed by Manchester City £109 million and Arsenal £82 million. In other words, United’s cash profit is an incredible 27 times as much as Everton’s.

The only Premier League clubs with lower EBITDA than Everton were Stoke City, Sunderland, Swansea City and Aston Villa, which is a shocking state of affairs for a club of Everton’s history. No wonder that Moshiri has been welcomed with open arms, as he will definitely grow the club’s revenue.

Everton made great play of the fact that 2015/16 was the “third successive year we posted turnover in excess of £120 million.” That’s one way of looking at it, but another less charitable view would be that revenue has essentially been flat for the last three seasons.

Since 2013 revenue has grown by £35 million (41%), though most of this is down to the increasing TV deal (£27 million), which is thanks to the central Premier League negotiating team, as opposed to the club’s board. In fairness, commercial revenue has grown by £8 million in this period, while gate receipts were unchanged at just under £18 million (though this is a bit misleading, as it does not take into consideration the club’s restatement of the revenue categories in 2014).

At the recent AGM Everton projected revenue of £172.5 million in 2016/17, a year-on-year increase of £51 million, almost all of which is driven by the new Premier League broadcast deal. The club’s challenge has been to differentiate itself from other clubs by growing commercial income. Although they have been unsuccessful in the past, Moshiri will surely change that for the better.

The importance of revenue growth is clear when we compare Everton’s £122 million to the Premier League elite, e.g. Manchester United earned more than half a billion, which is almost £400 million higher than the Blues. That’s an enormous financial advantage – every season.

In fact, the top four clubs all earn well above £300 million: United £515 million, Manchester City £392 million, Arsenal £351 million and Chelsea £329 million, while Liverpool and Tottenham generated £298 million and £196 million respectively in 2014/15. Little wonder that Moshiri referred to “a mini league emerging this year of six clubs”

Although it could be argued that Everton are not doing too badly in revenue terms, as they are the 8th highest in the Premier League, there is a distinct bunching of clubs in the £100-120 million range. In other words, Everton’s financial advantage over the other clubs is nowhere near as much as their disadvantage compared to the top six.

Moshiri acknowledged this when speaking about Koeman’s objectives: “He achieved eighth and seventh with Southampton. He needs to improve on that, but it is a very difficult landscape now.”

One point worth noting is that Everton’s revenue would be around £8 million higher if the gross revenue from the outsourced catering and kit deals were to be added back.

On the bright side, Everton had the 18th highest revenue in the world in 2014/15, which represented the club’s joint highest position in the Deloitte Money League. That’s obviously a fine accomplishment, but it does not really help Everton much domestically, as no fewer than 17 Premier League clubs feature in the top 30 clubs worldwide by revenue.

As Deloitte observed, “This is again testament to the phenomenal broadcast success of the English Premier League and the relative equality of its distributions, giving its non-Champions League clubs particularly a considerable advantage internationally.”

One technical aside: Everton include the commercial elements of TV deals within commercial income, even though most other clubs classify it as broadcasting income, and Deloitte have duly reduced commercial and increased broadcasting (though the total revenue is the same).

All these reclassifications make it difficult to analyse Everton’s revenue mix, but a couple of things are clear. First, match day has become progressively less important with only 15% of total revenue coming from this stream. Second, like so many Premier League clubs, there is huge reliance on TV money, which generates just under 70% of their turnover.

That might sound a little concerning, but it is fairly common business model in the Premier League. For example, in 2014/15 nine clubs actually had a greater reliance on TV money than Everton, with three of them (Burnley, Swansea City and WBA) earning 80-85% from broadcasting. This dependency will further increase with the blockbuster 2016/17 deal.

In 2015/16 Everton’s share of the Premier League TV money rose 3% (£2 million) from £81 million to £83 million, due to being broadcast live on one more occasion (18 vs. 17). The distribution of these funds is based on a fairly equitable methodology with the top club (Arsenal) receiving £101 million, while the bottom club (Aston Villa) got £67 million.

Most of the money is allocated equally to each club, which means 50% of the domestic rights (£21.9 million in 2015/16) and 100% of the overseas rights (£29.4 million). Merit payments (25% of domestic rights) are worth £1.2 million per place in the league table and facility fees (25% of domestic rights) depend on how many times each club is broadcast live.

There was also £4.5 million of commercial revenue awarded to all Premier League clubs, though I suspect that Everton might have reported this within commercial income, even though most other clubs classify it as broadcasting income. This would help explain why Everton’s total broadcasting income in the accounts was only £82.5 million, even though their Premier League distribution was £83.0 million.

"The Liberty of Mason Holgate"

Either way, Elstone was right to draw attention to the new TV deal stating in 2016/17: “We are also benefiting from the increased revenues under the significant new broadcast deal” The AGM projected an increase in broadcasting income to more than £130 million, based on 55% growth in the Premier League deal (70% domestic and 40% overseas). The importance of success on the pitch was also emphasised, as each league place under the new deal would be worth an additional £1.9 million, compared to £1.2 million for the previous deal.

Former Everton manager Roberto Martinez welcomed the new TV deal, as he believed that it would give the middle-tier clubs greater chance of success: “The new television contract has given an opportunity to every club to do something different. They can look at themselves, thinking this is the first time that we have been able to spend a certain amount of money, and suddenly you develop a belief that allows you to be competitive.”

Another way of looking at this is that Everton earned more from broadcasting in 2014/15 than Bayern Munich, Borussia Dortmund, Atletico Madrid, Roma, Milan and Paris Saint-Germain – even before the £45-50 million increase in 2016/17.

Everton have only qualified once for Europe in recent years, earning €7.5 million from the Europa League in 2014/15. This was a lot less than the €20.9 million that Tottenham received for reaching the same stage the following season.

Not only did the new UEFA television deal deliver 38% more money in 2015/16, but a greater proportion was allocated to the Europa League, so that prize money for this competition shot up by 71% (even though the rewards are still much higher in the Champions League).

Regular qualification for Europe would be highly beneficial for Everton, as can be seen by the money earned by English clubs over the last season. Chelsea lead the way with €253 million, largely thanks to their Champions League triumph in 2012, but maybe a better comparative would be Liverpool, who earned €77 million in this period, i.e. €69 million more than Everton.

This only relates to the broadcasting income, but additional revenue would also come from more gate receipts and higher commercial income via success clauses in commercial deals.

Everton’s gate receipts fell by £0.3 million (2%) from £17.9 million to £17.6 million in 2015/16, largely due to the absence of European competition, though the impact of this lost revenue was reduced by increased revenue form reaching the semi-final of both domestic cup competitions compared to third round exits in 2014/15.

The average attendance fell slightly to 38,132, though this was only the second time in 20 years that consecutive seasons posted averages above 38,000. Moreover, this season attendances have rebounded above 39,000, which would be the highest attendance since 2003/04.

Elstone commented, “We’re delighted to be projecting an average gate in excess of 39,000. We look set to be full for every game in 2016/17. Of course, the reason we’re full is almost 32,000 season ticket holders.”

This is partly due to Everton’s admirable commitment to affordable pricing. The club froze ticket prices in 2015/16, while they actually reduced all season ticket prices by 5% for the 2016/17 season, representing a free game compared to the previous season.

They have continued this trend by announcing that all season ticket prices will be reduced or frozen for the 2017/18 season and have introduced a 12-month payment option. The maximum season ticket price is £565, ensuring that no adult will pay more than £30 a game. There is also a new £380 season ticket for 22-24 year olds, so youngsters will only pay £20 a game.

Elstone explained the club’s philosophy: “We feel confident that our current pricing structure represents great value for money and holds up well when compared to our rivals. Most importantly, it makes football at Goodison affordable for young fans.”

As a result of these pricing initiatives, Everton’s match day revenue of £18 million will continue to lag behind the top six clubs: Manchester United £107 million, Arsenal £100 million, Chelsea £70 million, Liverpool £59 million, Manchester City £53 million and Tottenham £41 million.

Elstone confirmed the impact on the financials, “The outcome of this affordable pricing strategy is a significant drop in what we generate from each seat for each game”. However, he added, “We were conscious of the substantial uplift in the value of our media rights next season.”

"Working for the Yannick Dollar"

Of course, a new stadium would be a game changer for Everton. It would be a wrench to leave Goodison Park, one of the most atmospheric grounds in England, but it is simply not fit-for-purpose in the modern era with its limited capacity and inadequate facilities.

As Moshiri said, the club needs a new stadium that “rewards the loyalty and passion of our fans.” He continued, “We need a big stadium, no question about it. We have done the hard bit, because the club was restricted to move or expand Goodison by banking covenants, but I have paid the debts, so we are free to do what we want and we have the finances to do it.”

There have been a few false dawns with three other proposed stadium moves coming to nothing: first King’s Dock in 2003, then “Destination Kirkby” in 2009, most recently Walton Hall. However, it now feels like it could really happen.

"Enola Gueye"

There are two potential sites: Bramley Moore Dock and Stonebridge Cross in Croxteth. The dock site is clearly the club’s preferred option, as confirmed by Mayor Joe Anderson at Everton’s AGM, “Everybody in this room wants the waterfront site. This is the most exciting opportunity this club has had in decades.”

Elstone also favoured this site, though he did sound a note of caution: “The opportunities are much greater at that site, but so are the costs. We have to find answers to some of the uncertainties and risks, because it is the biggest decision the club will ever make.”

He continued, “(There has been) solid progress on many fronts, most encouragingly in our partnership with Liverpool City Council and its desire to support our efforts to find the money to make the stadium viable. We are optimistic about the new stadium prospects. It’s an optimism tempered by some significant issues that need to be resolved before we can move forward.”

The final word (for now) on the new stadium goes to Moshiri, which is fair enough, as he may well end up funding most of the required £350 million plus: “In our mind, we know where we want to go. We are committed.”

Everton’s reported commercial income dropped 18% (£4.6 million) from £26.0 million to £21.4 million in 2015/16, comprising £9.3 million for sponsorship, advertising and merchandising plus £12.1 million for other commercial activities. The fall was due to the absence of commercial revenue from the Europa League.

As we saw earlier, it is not completely clear what the club has included within commercial income and the Deloitte like-for-like figure for 2014/15 was adjusted downwards to £20.1 million, as they excluded the “commercial” element of broadcasting income. This meant that Everton had the lowest commercial revenue of any club in the Money League Top 20.

That said, the comparisons are a bit misleading, as Everton have outsourced their catering and kit deals. If they were to report these revenues gross (like most other clubs), their commercial income would rise by £8 million.

"Don't cry for me, Argentina"

Whatever it consists of, Everton’s commercial income of £21 million pales into insignificance compared to heavyweights such as Manchester United, who generate an amazing £268 million from this activity. That comparison might be a little unfair, but it is worth noting that Tottenham earned £60 million (in the 2014/15 season).

It is clear that Everton need to address their commercial shortcomings, as Elstone acknowledged, “We will continue to look for growth in all areas, in particular, as we approach the mid-point of the final year of the current Chang partnership, with a clear focus on our main sponsor opportunity.”

It is therefore very encouraging (“great news” per Elstone) that the club has “signed up £75 million in new revenues” in the past few weeks. The chief executive noted that the two deals already finalised will run over a five-year period, implying £15 million a year.

Elstone spoke of “a 300% increase in the value of our shirt sponsors”, which would suggest that the new deal would be worth £21.2 million a year, given that the current deal with Thai beer producer Chang is worth £5.3 million a year (£16 million over three years).

That would represent a notable increase, but there have been some suggestions that Elstone’s comments could have been misconstrued, e.g. if the 300% increase referred to the total value of the deal, that would imply £64 million over five years, meaning an annual value of £12.8 million. My guess is that the increase refers to the combined value of the front of shirt and additional sleeve sponsorship, but we should soon know.

Either way, it’s solid progress on the commercial front with talk of Kenyan online sports betting firm SportPesa being the new shirt sponsor. One possibility for a more lucrative deal would be to give the new partner first refusal on stadium naming rights.

Encouraging stuff, but to place this into perspective, the leading clubs have secured much higher shirt deals: Manchester United (Chevrolet) £56 million, Chelsea (Yokahama) £40 million, Arsenal (Emirates) £30 million, Liverpool (Standard Chartered) £25 million.

The club has also announced a significant new sponsorship deal for the Finch Farm training ground and academy. This is with USM Holdings, the holding company of Alisher Usmanov, Moshiri’s business partner. The fact that Usmanov is helping out his mate has raised some eyebrows, as the Russian remains an Arsenal shareholder, and it is likely that the deal would be reviewed for “fair value” by UEFA (assuming it is deemed a “related party” transaction) if Everton qualify for Europe.

Everton’s kit supplier deal with Umbro was described as a club record and is reportedly worth £6 million a season, which would be twice as much as the previous Nike contract, though the accounts suggest that it might not be so high in reality.

This is again a long way behind the deals at other clubs, e.g. Manchester United (Adidas) £75 million, Chelsea (Nike) £60 million, Arsenal (Puma) £30 million, Liverpool (New Balance) £28 million.

It will also be interesting to see if Moshiri reviews the 10-year Kitbag deal, which provides a guaranteed £3 million a year plus royalties for running the retail operation. Elstone has described this as a good arrangement that “de-risks Everton in a notoriously difficult business sector”, but it does betray a lack of ambition.

Everton’s wage bill rose 8% (£6.5 million) to £84 million, following continued investment in the squad, with the additions of Tom Cleverley, Aaron Lennon, Ramiro Funes Mori, Gerard Deulofeu and Mason Holgate. In addition, new contracts were awarded to James McCarthy, Kevin Mirallas, Mo Besic, Brendan Galloway and Bryan Oviedo.

Furthermore, the average number of employees increased from 274 to 315, including playing, training and management up from 98 to 108, youth academy up from 38 to 47, marketing and media up from 32 to 41 and management and administration up from 71 to 81.

The wage growth increased the wages to turnover ratio from 62% to 69%. Elstone said that this was still “below the Premier League average”, which does not seem to be the case based on reported figures, though it is accurate if we add back the outsourced commercial revenue, which reduces Everton’s ratio to 65%.

Following last season’s growth Everton’s wage bill is essentially “best of the rest”, i.e. the highest of those clubs outside the top six. However, it is still dwarfed by the elite clubs: Manchester United £232 million, Chelsea £222 million, Manchester City £198 million and Arsenal £195 million.

This disparity was noted by Koeman: “We have a lot of ambition and we like to do the best that is possible. But you have to look to the big clubs with the possibilities and the players they have. Nobody expected Leicester to win last season, but that will not happen again.”

Clearly, Moshiri will try to increase the wage bill to better compete. Indeed, Elstone has already advised, “Projected wages are set to increase significantly in the current season, reflecting a further commitment to player recruitment and new contracts for existing players.” The AGM forecast a wage bill of £111 million for 2016/17, an increase of £27 million.

However, Everton will need to consider the Premier League’s Short Term Cost controls, which restrict the annual player wage cost increases to £7 million a year for the three years up to 2018/19 – except if funded by increases in revenue from sources other than Premier League broadcasting contracts, e.g. gate receipts, commercial income and profits on player sales.

One thing that is quite striking in Everton’s accounts is the growth in other operating costs, rising from £22 million to £30 million in the last three years without any substantial explanation.

This seems quite high for a club of Everton’s size, especially as the retail and catering businesses have been outsourced, which means that other operating costs should be lower than other clubs (as net profits are reported in revenue).

Another cost that can have a major impact on the profit and loss account is player amortisation, which reflects investment in transfers. Basically the more that a club spends, the higher its player amortisation. In this way, Everton’s player amortisation has doubled from just £11 million in 2013 to a £22 million peak in 2016, reflecting increased spending in the transfer market.

The accounting for player trading is fairly technical, but it is important to grasp how it works to really understand a football club’s accounts. The fundamental point is that when a club purchases a player the transfer fee is not fully expensed in the year of purchase, but the cost is written-off evenly over the length of the player’s contract, e.g. Romelu Lukaku was bought for a reported £28 million on a five-year deal, so the annual amortisation in the accounts for him is £5.6 million.

Nevertheless, Everton’s player amortisation of £22 million is not that high for the Premier League and is obviously miles behind the really big spenders like Manchester City (£94 million), Manchester United (£88 million) and Chelsea (£71 million), though it should further increase next year following this summer’s acquisitions.

For the period between 2009 and 2014, despite Kenwright’s protestations, Everton were a selling club, averaging annual net sales of £7 million. However, the last three seasons have seen a return to spending, with average net spend of £21 million, including the club’s record purchase of Lukaku from Chelsea.

Last summer Everton splashed out £45 million to bring in Yannick Bolasie, Ashley Williams, Idrissa Gueye and Maarten Stekelenburg, though they recouped the outlay in one fell swoop by selling John Stones to Manchester City. As Kenwright put it, “While we may not have finally done the amount of business in the summer transfer window we would have liked, we still added considerable strength and experience to our squad.”

Despite the higher spending over the last three seasons, Everton’s net spend is still mid-table in the Premier League, a long way below the two Manchester clubs (City £299 million and United £275 million), though it was higher than Liverpool £55 million.

However, Everton have been one of the most active clubs in the January transfer window, already purchasing midfielder Morgan Schneiderlin from Manchester United for a fee rising to £24 million and 19-year-old forward Ademola Lookman from Charlton for £11 million. They have also reportedly made offers for Standard Liege forward Ishak Belfodil and Atalanta midfielder Franck Kessié.

Everton’s net debt rose by £23.5 million from £31.3 million to £54.8 million with gross debt increasing by £17.6 million from £40.0 million to £57.6 million and cash falling by £5.9 million from £8.7 million to £2.8 million.

At the time of the accounts, the debt comprised three elements: (a) 25-year loan of £20 million with Prudential, which bears a high interest rate of 7.79%, leading to annual payments of £2.8 million; (b) a short-term loan of £35 million with Rights and Media Funds Limited (formerly JG Funding), securitised on Premier League TV money, at a 5.2% interest rate; (c) overdraft with Barclays of £2.7 million.

This is all irrelevant now, as Moshiri provided an interest-free loan of £80 million with no agreed repayment data after the account were published. This was used to repay all of the external loans and to pay the exceptional items.

Hopefully, this will bring to an end Everton’s use of opaque loans taken out with mysterious offshore corporations that started with Vibrac, who are based in the British Virgin Islands, though the accounts did note that the club had secured similar funding via a facility repayable on 14 July 2017.

Everton’s debt is by no means one of the highest in the Premier League with four clubs having debt above £100 million, namely Manchester United £490 million, Arsenal £233 million, Sunderland £141 million and Newcastle United £129 million.

Everton also have contingent liabilities of £35 million (£18 million dependent on future appearances and £17 million loyalty bonuses if certain players are still with the club on specific dates), up from £20 million the previous season.

The high interest rate on Everton’s loans has meant that their financing costs have been among the largest in the Premier League. Although nowhere near as much as the interest paid by the likes of Manchester United and Arsenal, this has certainly not helped the club’s finances. The good news is that Moshiri’s interest-free loan should save them around £5 million a season.

This unwelcome burden is emphasised even more when reviewing the cash flow over the last eight years. In that period, Everton generated £84 million of cash, mainly from operating activities £56 million, though this was supplemented by additional loans (net) £18 million and the sale of the old training ground £9 million.

Around 40% of this cash (£34 million) was required for interest payments, which was only £7 million lower than the £41 million (net) spent on players, leaving only £10 million on infrastructure investment.

Looking ahead, there is a sense of optimism around Everton’s future following Moshiri’s investment. Obviously money is no guarantee of success, but it does make it more likely.

There are still some issues with Moshiri pointing out that the club will be somewhat restricted by FFP: “It is not the same as when Chelsea and Manchester City began their projects, which was before Financial Fair Play.” It’s also still not clear whether the Iranian will ultimately become the outright owner of the club.

"Williams, it was really nothing"

However, at least the club now has stronger backing, whereas for the past few years Everton have struggled to compete due to a lack of financial resources. In the shape of Moshiri, they evidently have a man with a plan, including reduction of external debt, increased commercial income and, of course, a new stadium.

Let’s leave the last word to him: “Bill and previous managers kept the club close to the elite for many years, but now we need to look at a sustainable base to be among the elite. It takes time, but we are committed, that’s why we’re here.”

He added, “It’s not enough to say you are a special club – we don’t want to be a museum. We need to be competitive and to win.”

Everton - Behind Blue Eyes

The 2014/15 season was not one of the best for Everton, as they slumped to 11th in the Premier League. Not just my assessment, but also that of the club’s hierarchy, as chairman Bill Kenwright drily observed that “last season was not the one Evertonians had hoped for.” Even the normally irrepressible manager Roberto Martinez noted, “2014/15 was a very tough and demanding season at times.”

This was particularly disappointing, as the previous season (Martinez’ first in charge) had seen Everton achieve a club record points haul in the Premier League era, finishing 5th and thus qualifying for the Europa League.

Despite a glut of injuries, Everton have returned to form this season and currently sit 7th in the league, while there is a decent chance of silverware in the Capital One Cup, where they have progressed to the quarter-finals.

"Spanish Steps"

In contrast to the travails on the pitch, chief executive Robert Elstone claimed, “We made great strides off the pitch in 2014/15”, though in truth Everton’s financial figures were a bit of a mixed bag. Yes, the club achieved record turnover of £126 million, but they also made a loss of £4 million, while net debt rose to £31 million.

In fact, the bottom line was £32 million worse than the previous year, as Everton moved from a £28 million profit to a £4 million loss. This was largely due to profit from player sales falling by £25 million to just £3 million, as the 2013/14 figures included the sale of Marouane Fellaini to Manchester United.

Revenue rose £5 million (4%), despite broadcasting income falling £3 million (4%) to £82 million, as a result of increases in both commercial income, up £7 million (37%) to £26 million, and gate receipts, £1 million (8%) higher at £18 million. On the other hand, there were substantial increases in the cost base: wages climbed £8 million (12%) to £78 million; other operating costs rose £4 million (16%) to £30 million; and player amortisation was up £1 million (5%) to £20 million.

This was slightly offset by net interest payable, principally from the servicing of securitised debt and bank overdraft, decreasing by £1.3 million (26%) to £3.8 million, due to a reduction in interest rates.

It should be noted that Everton have changed the way that they have classified revenue this year, including a restatement of the 2014 results. This has no net impact, but means that the figures reported for gate receipts and broadcasting income have reduced, while commercial income has increased (by £6.3 million in 2014). The club stated that this now represents a “more accurate presentation of turnover”, though maybe the board just got fed up with all the criticism received about the relatively low level of commercial income.

In fairness to Everton, it is no great surprise that profits have fallen, as this is the second year of the current three-year Premier League deal, so there are limited opportunities for significant revenue growth, while wage bills continue to grow. This can be seen by the fact that four of the seven Premier League clubs that have reported 2014/15 figures to date have announced lower profits.

That said, Everton are one of only two clubs that have actually lost money, the other one being Manchester United, whose £4 million loss is almost entirely due to their failure to qualify for Europe in 2014/15. Given the amount of TV money on offer, the expectation would be that most clubs in the top flight would manage to be in the black. Indeed, 15 of the 20 Premier League clubs were profitable in 2013/14.

Everton had the 4th highest profit in the Premier League that season with £28 million, only behind Tottenham £80 million, Manchester United £41 million and Southampton £29 million.

This shows how much a football club’s profitability can be influenced by profits on player sales. As an example, in 2014/15 Southampton made £44 million from this activity, manly due to the sales of Adam Lallana and Dejan Lovren to Liverpool plus Calum Chambers to Arsenal, while the previous season saw Tottenham Hotspur make an amazing £104 million (largely due to the mega sale of Gareth Bale to Real Madrid) and Chelsea £65 million (David Luiz to Paris Saint-Germain).

Everton themselves made £28 million from player sales in 2013/14, largely due to Fellaini’s transfer, but just £3 million in 2014/15. In terms of keeping their squad together, this is clearly a good thing, but obviously had a big adverse effect on their financial results.

To an extent, Everton’s small loss in 2015 is a return to their customary performance, as they had been consistently loss-making between 2006 and 2012 (with a cumulative £45 million loss in those seven years) before the improvement seen in 2013 and 2014

However, it is fair to say that in many years Everton have effectively subsidised their underlying deficit with the sale of a major player. Indeed, in the 11 years from 2005 Everton basically broke-even (making total profits of £5 million), but £128 million of this came from player sales. This has been a regular theme going back to 2005 when the £24 million profit was almost entirely because of Wayne Rooney’s big money transfer to Manchester United.

Not only that, but Everton have also been selling off the family silver with a number of sale and leaseback deals plus the sale of their Bellefield training ground in 2011, which generated an £8 million profit.

Given the impact that player sales have on the finances of a club like Everton, it is worth exploring how football clubs account for transfers, as it has a major impact on reported profits. The fundamental point is that when a club purchases a player the costs are spread over a few years, but any profit made from selling players is immediately booked to the accounts.

So, when a club buys a player, it does not show the full transfer fee in the accounts in that year, but writes-down the cost (evenly) over the length of the player’s contract. Therefore, if Everton spent £25 million on a new player with a 5-year contract, the annual expense would be only £5 million (£25 million divided by 5 years) in player amortisation (on top of wages).

However, when that player is sold, the club reports straight away the profit on player sales, which essentially equals sales proceeds less any remaining value in the accounts. In our example, if the player were to be sold 3 years later for £32 million, the cash profit would be £7 million (£32 million less £25 million), but the accounting profit would be higher at £22 million, as the club would have already booked £15 million of amortisation (3 years at £5 million).

This is all horribly technical, but it does help explain how clubs can spend big in the transfer market with relatively little immediate impact on their reported profits. Even though the annual cost of purchasing players is therefore somewhat reduced in the profit and loss account, it is worth noting that the impact of Everton’s increasing spend in the transfer market over the last two years has pushed up player amortisation, which has just about doubled from £11 million in 2013 to £20 million in 2015.

Obviously this is nowhere near as much as the really big spenders like Manchester United (£100 million), Chelsea (£72 million) and Manchester City (£70 million), but it is something that Everton will have to keep an eye on in future years.

The other side of the coin here is that all these signings have helped strengthen the balance sheet with player values (reported as intangible assets) climbing to £53 million, compared to only £24 million just three years ago. So what, you might say, but it is obviously good for any club to have better quality “assets” on the pitch.

In point of fact, the accounting treatment understates the value of Everton’s squad, as it does not fully reflect the market value of internationals like John Stones, Seamus Coleman, Phil Jagielka, James McCarthy and Leighton Baines, while attributing no value to homegrown players like Ross Barkley.

Given all the accounting complexities arising from player trading, clubs often looks at EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) for a better understanding of how profitable they are from their core business. In Everton’s case, EBITDA was only slightly above zero for many years before shooting up to £25 million in 2014, though it did fall back to £18 million last season.

This highlights the impact of the new TV deal in 2014, as the combined £43 million of EBITDA in the last two seasons is nearly twice as much as the club generated in the previous seven seasons.

This is pretty good, but at the same time helps to outline the challenge for clubs like Everton, as the EBITDA at the leading clubs is significantly higher, despite their larger wage bills: Manchester United £120 million, Manchester City £83 million, Arsenal £64 million, Liverpool £53 million and Chelsea £51 million.

Since 2009 Everton’s revenue has grown by 58% (£46 million) from £80 million to £126 million. Not bad at all, but much of this is down to the increasing TV deal (£33 million), which is thanks to the central Premier League negotiating team, as opposed to the club’s board. Commercial revenue has apparently risen by £17 million in the same period, while gate receipts have fallen £4 million, though this is misleading, as it does not take into consideration the club’s restatement of the revenue categories in 2014.

In any case, the growing TV money has allowed Everton to change their traditional business model, so they no longer need to sell to buy, which in the past led to the departures of players like Jack Rodwell, Mikel Arteta, Joleon Lescott and Andy Johnson.

Despite significant growth over the last two years, Everton’s revenue of £126 million is still a lot lower than the Champions League elite, e.g. the top four clubs all earn well above £300 million: Manchester United £395 million, Manchester City £352 million, Arsenal £329 million and Chelsea £320 million.

Little wonder that Kenwright once asked, “How does Everton do it? How do we consistently perform so well in these days of cheque book fuelled football?” This is a reference to Everton consistently outperforming their revenue level.

That said, Everton are not doing too badly in revenue terms, as they are the 8th highest in the Premier League, just behind Newcastle United, but ahead of Aston Villa, West Ham and Southampton.

In fact, if the gross revenue from the outsourced catering and kit deals were to be added back, then Everton’s revenue would be around £8 million higher at £134 million.

What’s more, Everton’s revenue is now the 20th highest in the world according to the Deloitte Money League, ahead of famous clubs such as Marseille £109 million, AS Roma £107 million and Benfica £105 million.

However, this does not help them much domestically, as there are no fewer than 14 Premier League clubs in the world’s top 30 clubs by revenue (and all of them are in the top 40). As Roberto Martinez emphasised, “The Premier League is the most competitive league in Europe week in week out.”

Everton’s revenue mix shows their reliance on Premier League TV money: broadcasting 65% (though this was down from 70% in 2014), commercial 21% and gate receipts 14%. As Elstone said, “Our financial performance, like so many Premier League clubs, was underpinned by the second year of a TV deal that beat all expectations.”

That’s certainly the case. In fact, in 2013/14 nine Premier League clubs had a greater reliance on TV money than Everton with four clubs getting more than 80% of their revenue from broadcasting: Crystal Palace, Swansea City, Hull City and WBA.

In 2014/15 Everton’s share of the Premier League TV money fell 5% from £85 million to £81 million. The distribution of these funds  is based on a fairly equitable methodology with the top club (Chelsea) receiving £99 million, while the bottom club (QPR) got £65 million.

Most of the money is allocated equally to each club, which means 50% of the domestic rights (£22.0 million in 2014/15), 100% of the overseas rights (£27.8 million) and 100% of the commercial revenue (£4.4 million). However, merit payments (25% of domestic rights) are worth £1.2 million per place in the league table and facility fees (25% of domestic rights) depend on how many times each club is broadcast live.

In this way, Everton were hurt by falling from 5th place to 11th, which cost them £7 million, though this was slightly mitigated by being shown live on one more occasion, which was worth an extra £1 million. There was also £4.4 million of commercial revenue awarded to all Premier League clubs, though I suspect that Everton might have reported this within commercial income, even though most other clubs classify it as broadcasting income.

"Heart and Soul"

This would help explain why Everton’s total broadcasting income in the accounts was only £81.7 million, even though the total Premier League distribution was £80.6 million and Europa League prize money was around £5 million (€7.5 million). Incidentally, this would also account for some of the reported growth in commercial income.

Either way, Elstone is right to draw attention to the new TV deal stating in 2016/17: “Of course, we are now less than a year away from receiving the benefit of the next deal and one that makes the current, outstanding deal look modest.”

My estimates suggest that Everton would receive an additional £37 million under the new contract, increasing the total received to an incredible £118 million. This is based on the contracted 70% increase in the domestic deal and an assumed 30% increase in the overseas deals (though this might be a bit conservative, given some of the deals announced to date). Of course, if they were to finish higher in the league table, they would earn even more.

Everton’s Europa League experience saw them earn €7.5 million. This was not much reward for their efforts in reaching the last 16, which included wins against Wolfsburg, Lille and Young Boys Bern, but was at least the highest sum received by the English entrants in that tournament.

Martinez has claimed that “being a regular team in Europe is what we want”, but also struck a note of caution when adding that it “unquestionably affects performance in the Premier League”, as it tests squad strength to the limit.

The big money is obviously in the Champions League with English clubs averaging €39 million in 2014/15 and is getting higher, as the new TV deal from the 2015/16 season is worth an additional 40-50%, thanks to BT Sports paying more than Sky/ITV for live games.

Everton’s gate receipts grew by £1.1 million (7%) from £16.8 million to £17.9 million in 2014/15 through a combination of higher attendances and more match day income from participation in the Europa League, offset by fewer home domestic cup games. Attendances rose from 37,732 to 38,406, the highest recorded since the 2003/04 season with 12 of 19 Premier League games sold out.

The club attributed the increase in attendances to “successful season ticket and hospitality membership campaigns” with almost 28,000 season ticket holders being 4,000 more than the previous season.

Although there were some small increases in ticket prices in 2014/15, these were frozen for the 2015/16 campaign. The club has emphasised its “commitment to affordable pricing and making football at Goodison accessible to young fans” with the continuation of the £95 season ticket for junior school children.

Despite all these encouraging initiatives, the fact remains that Everton’s match day income of £18 million is miles behind the top six clubs: Arsenal £100 million, Manchester United £91 million, Chelsea £71 million, Liverpool £51 million, Tottenham £44 million and Manchester City £43 million.

This was acknowledged by Elstone, “The real springboard to greater things will be the new stadium”, and the club remains in talks with Liverpool City Council over Walton Hall Park. However, Everton fans would be entitled to be sceptical about this project, as two other proposed stadium moves have come to nothing: first King’s Dock in 2003, then Kirkby in 2009.

Most obviously, there is the question of who would pay for a new stadium? Elstone has already said, “We would need to think very carefully about a new stadium that adds the burden of significant debt on the club.” The hope would be that Liverpool City council would put in “a level of investment” as part of a wider regeneration of the area, but this appears a tad optimistic given the spending cuts imposed on the council. Either way, it is clear that little tangible progress has been made with Elstone informing this week's AGM that no agreement had been reached on any partnership.

In that meeting, the chief executive once again spoke of the “fantastic opportunity for the football club”, but described it as “a hugely challenging funding project”. He has been seeking a potential naming rights partner, but these are difficult to secure, and he admitted earlier this year that this is proving slower than anticipated.

Although Kenwright has admitted that “leaving our beloved Goodison Park would bring a degree of sadness”, the need for a new stadium is now more important than ever with West Ham about to benefit from their move to the Olympic Stadium, while Tottenham and Chelsea have both announced major redevelopment initiatives.

Everton’s commercial income surged 37% (£7 million) from £19 million to £26 million in 2014/15, comprising £10.4 million for sponsorship, advertising and merchandising plus £15.6 million for other commercial activities. The sponsorship growth was due to “the long-term support of key partners such as Chang and Kitbag, as well as the club’s first year of the new kit partner deal with Umbro”, while other commercial revenue benefited from participation in the Europa League.

As we saw earlier, it is not completely clear what the club has included within commercial income. For example, if we add up the money from the three major deals (Chang £5.3 million, Umbro £6 million and Kitbag £3 million), we get £14.3 million, which is more than the total of £10.4 million reported for sponsorship, advertising and merchandising.

Whatever it consists of, Everton’s commercial income of £26 million pales into insignificance compared to heavyweights such as Manchester United, who generate £196 million from this activity. That comparison might be a little unfair, but it is worth noting that Tottenham earned £42 million and Aston Villa and Newcastle United also earned £26 million (in the 2013/14 season).

"All roads lead to Rom"

That said, the comparisons are a bit misleading, as Everton have outsourced their catering and kit deals. If they were to report these revenues gross (like most other clubs), their commercial income would rise by £8 million to £34 million.

This is not too shabby, but could be better, as Elstone admitted: “Our commercial revenues benchmark well against teams finishing below sixth in the table, but it is a fact that we lag well behind – and disproportionately behind – clubs playing regularly in Europe.”

Many supporters have criticised the 10-year Kitbag deal, which provides a guaranteed £3 million a year plus royalties for running the retail operation, replacing a deal with JJB worth £1.6 million a year. However, Elstone seems happy enough, "Kitbag is a great deal for this football club. It was from day one." He has also described it as a good arrangement that “de-risks Everton in a notoriously difficult business sector”.

However, it does betray a lack of ambition, especially when we look at some of the kit supplier deals secured by other clubs, e.g. Arsenal – Puma £30 million, Liverpool – New Balance £28 million, Tottenham – Under Armour £10 million, and Aston Villa – Macron £4 million.

Similarly, while it is laudable that Everton have the longest running shirt sponsorship deal in the Premier League, having first signed with Chang back in 2004, this does raise the question of whether they could get more elsewhere than the £5.3 million from the current deal (worth £16 million for the three years up to 2016/17).

The Umbro deal was described as a club record and is reportedly worth £6 million a season, which would be twice as much as the previous Nike contract, though the latest accounts suggest that it might not be so high in reality.

Everton’s wage bill rose 12% (£8 million) to £78 million, following continued investment in the squad, with the additions of Romelu Lukaku, Gareth Barry, Muhamed Besic and Brendan Galloway, together with loan spells for Christian Atsu and Aaron Lennon. In addition, new contracts were awarded to Roberto Martinez, Ross Barkley, Seamus Coleman and John Stones.

Furthermore, the average number of employees increased from 247 to 274, including unexplained growth in management and administration from 57 to 71.

The wages growth outpaced revenue growth, so increased the wages to turnover ratio from 58% to 62%. However, this is still the second best ratio the club has recorded in the last six years and is well within the norm in the Premier League with 13 of the 20 clubs grouped in a fairly narrow range of 56-64% the previous season. Furthermore, the ratio would fall to 58% if the club added back its outsourced revenue (retail and catering).

Everton’s ability to outperform their financial resources is underlined by their relatively low wage bill, which was only the 10th highest in the Premier League in 2013/14, behind Sunderland and Aston Villa. Even though this has increased to £78 million, to place this into context, it is dwarfed by the elite clubs, who all pay around £200 million: Manchester United £203 million, Manchester City £194 million, Chelsea £193 million and Arsenal £192 million.

Everton’s 2014/15 increase of £8 million is very similar to the growth reported by other clubs so far: West Ham £9 million, Southampton £9 million and Stoke City £6 million.

One thing that is quite striking in Everton’s accounts is the £4 million growth in other operating costs from £26 million to £30 million, especially as this cost category has shot up by 40% (£9 million) in the last two years without any substantial explanation.

This seems quite high for a club of Everton’s size, especially as the retail and catering businesses have been outsourced, so theoretically other operating costs should be lower than other clubs (as net profits are reported in revenue).

Even though Kenwright has argued, “We’re not a selling club. Never really have been.”, Everton averaged net sales of £7 million a year between 2009 and 2014. However, that has changed in the last two years with average net spend of £26 million, as the club has made no major sales, but invested significant sums on improving Martinez’ squad, smashing their own transfer record in the process when bringing in Lukaku from Chelsea.

Elstone accepted that things had changed: “In the past, when 85p in every £1 we earned was spent at Finch Farm, we had little scope to strengthen the club away from the training ground.”

He underlined the move away from the previous hand-to-mouth existence: “Increasingly, we’ve also been able to sign talented young footballers, who join us not as the finished article, but as great prospects and yet still command significant transfer fees. Players like Galloway, Henen and Holgate might not have joined with that singular focus on the first team.”

In fact, Everton’s net spend of £51 million in the last two seasons is the sixth highest in the Premier League. Although this was still a long way below the two Manchester clubs (City £151 million and United £145 million), it was surprisingly more than Chelsea £40 million and only juts behind Liverpool £57 million.

Clearly, fans will be concerned that Everton will be tempted to sell their young stars with Chelsea offering £40 million for John Stones in the summer and Lukaku and Barkley also worth large sums in today’s market.

However, Martinez says that Everton are no longer forced to sell their prize assets: “We don't fear that situation. What you fear is when you have to sell players to balance the books, when the owner says you need to cash in on two or three star players, that becomes a problem. But it is not the situation at Everton. That is not to say we are going to sell any player or not sell any player, but the decisions we make will be for the benefit of the squad and club going forward.”

Everton’s net debt rose £3 million from £28 million to £31 million, but the gross debt was actually cut by £9 million from £49 million to £40 million with the real driver being the £12 million reduction in cash balances, which fell from £21 million to £9 million. Thanks to higher TV money, not to mention the funds from the Fellaini sale, net debt has improved considerably from the £45 million level in the years up to 2013, which Elstone explained thus: “our pursuit of success has stretched our finances.”

There are basically two elements to Everton’s debt: (a) 25-year loan of £21 million, which bears a high interest rate of 7.79%, leading to annual payments of £2.8 million; (b) an annual loan of £19 million renewable every August, securitised on Premier League TV money, at a stonking 8.2% interest rate.

The short-term loan was taken out with Vibrac, a shadowy offshore corporation based in the British Virgin Islands, which has also provided funding to other English clubs, including West Ham, Southampton, Fulham and Reading. This loan was repaid in August, but has been replaced by another loan with the equally mysterious James Grant (JG) Funding.

Everton also have contingent liabilities of £20 million (£9 million dependent on future appearances and £11 million loyalty bonuses if certain players are still with the club on specific dates), up from £13 million the previous season. On top of that, the club confirmed that it has entered into net transfer agreements since the accounts closed of £22 million.

Like many other clubs, it is clear that Everton are spending as much as they can, thus building up their transfer debt, in order to give themselves the best chance of success, though this should not be a problem, so long as they avoid the nightmare scenario of relegation.

In fairness, Everton’s debt is one of the lowest in the Premier League with only seven clubs owing  less than the Toffees. In fact, five clubs have debt above £100 million, namely Manchester United £411 million, Arsenal £234 million, Newcastle United £129 million, Liverpool £127 million and Aston Villa £104 million.

The high interest rate on Everton’s loans mean that their financing costs are among the largest in the Premier League. Although nowhere near as much as the interest paid by the likes of Manchester United and Arsenal, this certainly does not help the club’s finances. Looked at another way, the £4-5 million paid out each year in interest would fund the wages of one world class player (or two very good additions to the squad).

The significance of interest payments is highlighted by looking at the 2015 cash flow. Cash generated from operating activities was £11m, but the cash balance ended up falling £12 million after a series of payments: £7 million net on player transfers; £4 million on those interest payments; £3 million on capital expenditure (stadium refurbishment and a new pitch); and £9 million repayment of loans.

This unwelcome burden is even more emphasised when reviewing the cash flow over the last seven years. In that period, Everton generated £61 million of cash, mainly from operating activities £49 million, though this was supplemented by the sale of the old training ground £9 million and other loans (net) £3 million.

Nearly half (46%) of this cash £28 million was required for interest payments, which was more than the £25 million spent on “good” things: £17 million for new players and £8 million infrastructure investment. The remaining £8 million simply increased the cash balance.

Of those clubs that have so far published their 2015 accounts, Everton and Southampton are the only ones to have reduced cash balances. Others have significantly increased cash, notably the “big boys”, i.e. Arsenal (up to £228 million), Manchester United £156 million and Manchester City £75 million.

Of course, those hefty interest payments to external finance organisations underline the fact that the current Everton directors have not invested in their club, in stark contrast to benefactors at other clubs, who have put in substantial sums without taking a penny of interest. This helps explain why some supporters are unhappy with the board, as seen by a hired plane flying over the match against Southampton in August trailing the banner “Kenwright & Co #timetogo”.

The club claim that they are open to a sale, but it has not gone unnoticed that they have been looking for a buyer for a long time. Back in 2012 Kenwright proclaimed, “My desire to find a person, or institution, with the finance to move us forward has not diminished. We will find major investment.”

"Born to run"

However, since then, nothing, nada, zilch. There were whispers of American interest recently, but one of the potential buyers, Rob Heineman, admitted that his Sporting Club group were never close to a takeover.

This has led some to believe that Everton are not entirely serious in their quest for investment, though to be fair other clubs such as Aston Villa and West Brom have also struggled to find a suitable purchaser in the last few years.

Elstone has maintained the party line: “The search for the funds that will allow the club to leap forward continues without any slowing down or any less enthusiasm. It is worth stating again, and very clearly, there are no unreasonable conditions on the sale of Everton. The only condition is one we think is perfectly reasonable - that the new owner has to want to, and must be able to, take the club forward.”

Fair enough, but if a club like Everton with the 8th highest revenue in the Premier League, relatively low debt, a mega new TV deal on the horizon, opportunities for commercial growth and a much-admired academy, cannot find a buyer, then something is surely amiss.

"Call me"

It’s not so much that Kenwright and Elstone have done anything wrong, it’s the fact that they appear to be relatively comfortable with the status quo, not showing the requisite ambition to drive the club forward.

The club’s Latin motto, “Nil Satis Nisi Optimum” (“Nothing but the best is good enough”), may feel a touch ambitious when competing against the riches of today’s elite, but as Martinez rightly said, Everton should “strive to be the best we can be.”

The manager added, “We want to build around young players – our strategy is to build something and keep what we see as the future. We want to achieve things and see how high we can go.” Spot on, Roberto.