The Blue Union narrative of what is wrong at Everton tends to be long on accusations and short on facts. It’s like a laundry list of conspiracy theories. So let’s have a close look at some of the facts surrounding one of their key allegations. Let’s go to their constant insistence that the substantial rise in ‘other operating costs’ during the year that Finch Farm opened, as shown in Everton’s annual reports & accounts, represents something which hints at incompetence or which is suspicious, something in their words which is “still inadequately explained.”
The big jump in these costs, to which they refer, occurred when they climbed from £11.7m in 2006/7 to £21.1m in 2007/08. Of course there is an explanation. In the 2007/08 annual report this increase was described thus: “Further significant increases in operating costs were also incurred in the year following the opening of the new Finch Farm training facility. The additional operating costs compared with those incurred at Bellefield are seen as a necessary investment to provide the appropriate training facilities required by both first team players and academy players at a Premier League club of Everton’s standing.” So there you have it, crisp and clear, in the independently audited annual report.
Clearly the Blue Union are of the view that the club lies in its annual reports – an extremely serious accusation – and that the independent auditors, Deloitte’s, are complicit. But let’s look at it further. Is the explanation credible? Let’s run a few comparisons of the Finch Farm training complex and Bellefield.
Bellefield was 8.9 acres in size. Finch Farm is 55 acres, in terms of land alone over 5 times bigger. Finch Farm enabled the club to bring together the first team squad and the youth academy under the same roof, whereas previously they had trained separately. The facilities at Bellefield were built fifty years ago, in the early 1960’s, and to quote a Toffeeweb description: “state-of-the-art at the time, the place is now sadly well past its best.”
Construction of the new buildings and facilities at Finch Farm cost about £10m and it is currently valued at approximately £15m. The facility features 10 full-size grass pitches on three plateaus, one of which is floodlit, along with an additional floodlit synthetic pitch and specialist training areas for fitness work and goalkeepers, as well as an exact recreation of the pitch at Goodison Park. Inside the training complex there are extensive changing facilities for both the senior squad and Academy players. The indoor facilities include the following: gym, synthetic indoor training pitch, hydrotherapy pools, spa, sauna, physiotherapy rooms, media centre, video lounges, video editing suite, offices and catering facilities.
So the move from Bellefield to Finch Farm would have certainly caused a huge jump in the level of business rates, as well as substantial increases in all other costs too: electricity, security, personnel, cleaning, pitch maintenance, the list is endless.
So do we find the club’s explanation of this sharp jump in costs credible? – yes we do. Will the Blue Union? – probably not.
So let’s try another tack. Let’s look at another Premier League club with a modern new training facility, do a comparison and see how their ‘other operating costs’ compare with Everton’s. Sunderland’s training complex is called, unsurprisingly, The Academy of Light. It is described as having: gym, hydrotherapy area, treatment area, changing facilities, media lounge, offices and a refectory as well as 12 or more pitches depending on the size they are marked out to, but not apparently a sauna or synthetic indoor training pitch. So it sounds similar to Finch Farm. In the accounts of both clubs the ‘other operating costs’ item includes the costs associated with operating their stadia, training facilities, travel and accomodation, in short all operating expenses other than salaries, amortisation and depreciation. The Stadium of Light is a new state-of-the-art facility which the Old Lady, Goodison, certainly is not and the costs of keeping her going, are of course high, and one of the reasons a move to a new stadium is seen as essential. No two clubs are exactly the same of course, accounting policies will differ.
Sunderland’s turnover in the year to 31 July 2009 was £64.5m, while Everton’s turnover in the year to 31 May 2009 was £79.7m. So in terms of revenues Sunderland is 19% smaller than Everton. The item that interests us – ‘other operating costs’ – at Sunderland were £17.5m and at Everton £21.2m. Thus ‘other operating costs’ as a percentage of turnover at the two clubs is an identical 27%. So a comparison of two Premier League clubs, both with new-state-of-the-art training facilities to support, shows that they spend an identical proportion of their turnover on these facilities and all the other items that go to make up ‘other operating costs’. A coincidence – hardly. For us this validates the figure shown in Everton’s accounts and shows that it is consistent and credible.
Finally it is interesting to note that Sunderland made a loss that year of £24.1m while Everton lost £6.9m.
Will any of this satisfy the Blue Union? – probably not. Do we care? – no.