The much-awaited release of the club’s accounts on Friday revealed that the club had managed to make significant reductions in their losses – a reduction of £76.2m from £120.9m a year earlier – and the ratio wages-turnover.
A large part of that was due to revenue generated from player trade, with Richarlison’s £60m sale to Tottenham making a big difference to the look of the accounts.
However, that was not enough to prevent the Premier League last week from referring Everton to an independent commission for an alleged breach of earnings and sustainability rules for this reporting period.
Clubs can lose a maximum of £105m over three years, but that decision still stunned Goodison Park officials, who have been working closely with the Premier League on the issue for more than a year, and have pledged to “strongly defend” their position.
And while the latest financial update has brought another loss, there are signs that the club, which has not turned a profit since 2017, is at least moving in the right direction.
Of the 15 clubs that have released their 2020-21 accounts to date, six – Arsenal, Chelsea, Bournemouth, Leicester, Manchester United and Tottenham – have posted bigger losses.
The effect of the global Covid-19 pandemic on the Toffees has been estimated at £90.4m over the past three years, but Everton’s sources, citing third-party analysis, argue the club has been hit the hardest. negatively due to the effect on player trading.
For over a year now the club have been undertaking cost reduction exercises across the board and that has resulted in a reduction in staff costs of £20.6m with a total reduction in the salary to turnover ratio. from 95% to 90%.
However, broadcast revenue was down by £31.3m on the previous year, mainly due to the delay in the conclusion of the 2019-20 season which fell on the previous financial year, with fewer matches broadcast and falling from 10 to 16 in the Premier League table.
Everton’s net debt increased from £83.5 million to £141.7 million due to investment in playing equipment and costs associated with building the new stadium at Bramley-Moore Dock.
Since the end of the financial year, owner Farhad Moshiri has provided an additional £70m of financial support to be used for stadium development and operating cash flow requirements.
Chairman Bill Kenwright reiterated the club’s stance that they have not breached any regulations, saying in the annual report: “The club is confident that it continues to comply with all Premier League financial rules and regulations and has always provided information to them in an open and transparent manner.
“That the club has always acted in good faith simply intensifies the disappointment experienced by last week’s news.”
Chief executive Denise Barrett-Baxendale stressed that Everton remained in a secure financial position “thanks to the continued support and commitment of our majority shareholder (Moshiri).”
“These accounts illustrate the pragmatism shown in navigating the economic turmoil created by the pandemic, a global financial crisis and a war in Ukraine,” he said.
“The club has continued to be completely open and transparent with the Premier League.
“As a result, we are extremely confident that we continue to comply with the Premier League’s profitability and sustainability rules.”