Opinion: The Harsh Reality

Having considered quietly and at length, I believe this accurately summarises Everton’s current predicament in relatively simple terms.

1. Everton’s expenditure on salaries, interest on existing loans, etc is more than its income from television, match day ticket sales, etc. In addition there is the ongoing cost of building the new stadium.
2. In order to balance the books Everton need an approximate additional £1m cash each and every day during at least the rest of the current season.
3. £1m cash a day can only be found in three ways:

• selling assets – but there is nothing to sell other than players which would weaken the playing squad further.
• borrowing money – but we would have to pay very high rates of interest which increases our cash requirement further, if indeed anybody is wiling to lend money to Everton.
• the owners putting more money in – but Moshiri appears to have limited available money to put in and the possible 777 sale is a number of months away, and even then there is no evidence that 777 have the cash to put in £1m each and every day.

4. If Everton cannot find £1m cash a day then Everton would be bankrupt and would go into what is called administration. Under Premier League rules clubs that go into administration suffer an immediate deduction of 9 points which would almost certainly result in Everton being relegated at the end of the season.

5. How did Everton get into this position?
The board of directors who have the responsibility for the running of the club made a number of mistakes:

• they spent too much money on player transfers and salaries.
• they did not grow the commercial income sufficiently, for example from shirt and other sponsors.
• they did not put in place long term borrowings akin to a house mortgage to fund the cost of building the new stadium when interest rates were low.
• they relied on Moshiri being able to provide all the cash that Everton needed as and when the club needed it, without considering the risk that something unexpected could lead to this changing.
• they did not consider the risk that the interest rate they would have to pay to borrow money would increase significantly.

6. Is there a way out of this mess? Sadly, and it is indeed a Harsh Reality, it is difficult to see any way out that does not result in bankruptcy and relegation.