The scale of the off-field challenge facing Everton

I wrote last week about the reasons for feeling optimistic about Everton, the need for a change of management – now underway, and the need for changes off the pitch.

Now this is not going to be a personal vendetta against the individuals responsible, just an observation on how far behind our peers the club has allowed itself to drift, and the scale of the challenge facing Everton.

With due respect to Leicester City this year, who defied footballing and economic logic in their achievements, I’m going to compare the 2014/15 revenues of the following clubs versus those of Everton:

Manchester United, Manchester City, Arsenal, Chelsea, Liverpool and Spurs.

 

In £ millions	Broadcasting	Commercial	Matchday	Total
Man. United	108	201	87	395
Manchester City	135	174	43	353
Arsenal	128	103	100	331
Chelsea	136	113	71	320
Liverpool	125	116	57	298
Spurs	95	59	41	196
Everton	87	20	19	137
Average (ex Everton)	121.2	127.7	66.5	315.4
Difference	34.2	107.7	47.5	178.4

So there we have it – the average difference in  broadcasting, commercial and matchday income between Everton and the average of the 6 wealthiest clubs in the Premier League in 2014/15 was £178.4 million.

The worrying element (if the above was not bad enough) is that that gap can only increase in future years unless Everton address two key elements – commercial and matchday receipts. All of the 6 are making strenuous efforts to maximise revenues, Spurs with their new stadium, Liverpool with their large increase in executive seating, and each with enormous sponsorship deals and continued investment in their commercial operations. A 10% increase p.a. for each would increase the gap to £287 million per annum for example in 5 years or approximately £1 billion in total over that period.

The questions arising are (i) how on earth do you compete in such an uneven playing field? And (ii) what can you do to reduce the gap between our peers and ourselves.

Fortunately, as Leicester proved this year there’s not a perfect correlation between the amount of revenue you have and the success you have, at least on an individual season basis and of course, you always hope that you can employ a manager who can use his resources better than his wealthier peers. Nevertheless to assume you can do that consistently year in year out is not a viable business strategy, eventually things return to the norm. Whilst the new incoming manager of Everton will be aware of Moshiri’s initial squad investment, rumoured to be £100 million, he’ll also be aware that he needs self generated income to help him along.

So where does that come from?

• Higher league positions, and ultimately participation in the Champions League
• A properly run and resourced commercial operation with highly skilled professionals who understand not just the parochial aspects of marketing, but how to grow a global brand and to take advantage of our status as a club and the exposure the Premier League provides
• A resolution to the stadium issue – new stadium or redevelopment of Goodison

The final area, not covered in these figures is successful player trading. It might not be unreasonable to see an increase in player turnover in the next few years as the club tries to make good it’s income shortfall through transfer profits. There might not be the resistance to a Stones or a Lukaku being replaced every season, generating profits to be re-invested in the squad and infrastructure.

The big question of course is who can achieve this? Just as there were question marks over the suitability of the management team on the pitch, the same questions must be asked at board and executive levels.

The conclusion is likely to be that fresh faces are required to formulate strategy at board level but most importantly to execute at executive and lower levels throughout the organisation.

To get to where we the fans, and Mr Moshiri wants to go to there has to be change. He’s not ducked the first task of change on the pitch, and I doubt he’ll duck the change required at board and executive levels.

With that thought, I remain optimistic.