The latest set of annual report and accounts from Everton, published on Thursday, served to confirm how the sharp increase in TV broadcast income, which results from the Premier League’s new three year deal, has transformed the club’s financial position. For the year ended 31st May 2014 TV income amounted to £88.5 mln compared to £55.7 mln in 2013. Interestingly despite a fifth place finish in the league the club finished seventh in the broadcasting money rankings. This resulted from having only 16 live televised matches compared to Spurs who had 24 and Manchester United with 25 and both therefore finished above Everton, in fifth and sixth places respectively, in the TV money table.
The single most significant line in these accounts is the one which shows that net debt has declined to £28.1 mln from £45.3 mln in the previous financial year. Net debt had been stable at about £45 mln for a number of years and has been a cause of concern and a constraint on every aspect of the club’s activities.
Other aspects of the club’s finances have been transformed by this flood of TV money. Total revenue jumped to £120.5 mln from £86.4 mln and there was even a healthy after tax profit of £28.2 mln compared to £1.6 mln in the previous year. One keenly watched metric is the ratio of wages to turnover which has declined to 58%. This stood at 73% last year and while not as high as some – Aston Villa 86%, Fulham 92%, Stoke 90%, Sunderland 76% – it showed how stretched the financial situation was and how constrained was Everton’s ability to compete in the transfer market.
This latest snapshot of Everton’s accounts also puts into sharp relief the need for a modern, cash generative, stadium. Last season the average league attendance was 37,732, the highest for many years, yet despite this, gate receipts of £19.4 mln and catering revenue of just £934,000 were almost identical to those generated five years ago when the average gate was 36,729. Total ‘match day income’ per game last season was £924,000.
To put this in perspective Arsenal’s Emirates Stadium generates ‘match day income’ of £3.4 mln per game. And while the Emirates’ average attendance is much higher at 60,000, the bottom line is that while the Gunners get on average 38% more people through the turnstiles their income from every match is 70% higher than at Goodison. Thus Everton are locked into a low income stadium which provides little scope to generate new income streams and no opportunity to maximise revenues from premium priced seating, corporate hospitality and an improved food and drink offering for the ‘average’ fan. Even Sunderland at their modern, yet modest, Stadium of Light generate some £6 mln per annum from catering and conferences; six times more than Everton.
While the rise in broadcasting income has sharply increased Everton’s revenues and transformed its overall financial health, there still remains a huge opportunity to further enhance the club’s cash flows if and when it can replace its atmospheric and historic, yet sadly financially moribund, stadium. The strength of this latest set of accounts is probably a wholly necessary precursor to any further developments on this subject.