Show Me The Money

In the past few years there has been tremendous progress in football fans’ knowledge of their clubs’ finances. Some might say that this is not a good thing and we should focus on matters on the pitch. That’s perfectly fair, indeed I would also personally much prefer to watch a great game, such as Borussia Dortmund’s recent demolition of Real Madrid, rather than investigate the minutiae of their balance sheets.

However, it is important that fans are aware of what is going on at their club, so that they understand the board’s strategy and any constraints that impact their activities, e.g. why a club might sell its best players every summer or why a club does not splash out on the world-class striker that might take them to the next level.

Traditionally, supporters have concentrated on a club’s profit and loss account, which is not surprising, because: (a) that is what the media tends to report – on the back of press releases from the clubs; (b) it is intuitively easy to understand, being essentially revenue less expenses (mainly player wages).

Nevertheless, the reported figure is an accounting profit, which is not necessarily a “real” profit, as it is based on the accountant’s accruals concept and this can be very different from actual cash movements. This was noted recently by, of all people, Simon Jordan, the former Crystal Palace chairman, on Sky’s excellent Footballers’ Football Show, as he claimed that the reported profit at football clubs was depressed by non-cash items.

"Jordan: The Comeback"

The perma-tanned, Spandau Ballet look-alike, actually has a point. As the old saying goes, turnover is vanity, profit is sanity, but cash is king. The main reason that football clubs like Portsmouth fail is cash flow problems. It does not matter how large your revenue is (or your profits are), if you do not have the cash to pay your players, suppliers or the taxman, then you are going to crash into the rocks.

Therefore, this blog is going to focus on the cash flow at each of the Premier League clubs in 2011/12 (the last season where all clubs have published detailed accounts). It will start with the familiar profit and loss account, highlighting the accounting shenanigans, and then reconcile this with the cash flow statement.

We shall then examine how football clubs really spend their money, revealing the different business models that are employed and explaining why certain clubs act as they do, including a review of the top seven clubs in the league (Manchester United, Manchester City, Chelsea, Arsenal, Tottenham, Everton and Liverpool).

Profit and Loss Account

The total turnover in the 2011/12 Premier League amounted to a hefty £2.3 billion, but still only produced an operating loss of £363 million, mainly due to wages of £1.6 billion, giving a wages to turnover ratio of 69%. There were also other expenses of £535 million and player amortisation, player impairment and depreciation of £544 million.

Only three Premier League clubs made operating profits last season: Manchester United £35 million, Swansea City £18 million and Norwich City £17 million. At the other end of the spectrum, Manchester City reported a massive operating loss of £104 million, followed by Aston Villa £58 million and Chelsea £46 million.

Clubs’ figures were boosted by £224 million profits on player sales (with the largest being Arsenal’s £65 million), though there is also £78 million net interest payable (most notably Manchester United’s £50 million), leading to £197 million loss before tax (and £179 million loss after tax).

Cash Flow from Operating Activities

The starting point for a football club’s cash flow statement is the operating profit (or more likely loss), which is converted into cash flow from operating activities via two adjustments: (a) adding back non-cash items such as player amortisation, depreciation and player impairment; (b) movements in working capital.

(a) Non-cash Items

First of all, we need to understand how football clubs account for transfer fees. Instead of expensing these completely in the year of purchase, players are treated as assets, whereby their value is written-off evenly over the length of their contract via player amortisation. As an example, Manchester United signed Robin van Persie for £22m on a four-year contract, so the annual amortisation is £5.5 million (£22 million divided by four years).

Similarly, tangible fixed assets like a club’s stadium and training ground are also depreciated, though their useful life is considerably longer. Player impairment occurs when the club decides that the value of a player in its accounts is too high, e.g. the player suffers a career threatening injury, loss of form or is in dispute with the management.

Incidentally, this also highlights why profit on a player sales is not a real cash figure, as this represents sales proceeds less the carrying value in the books. So, if van Persie were to be sold after three years for £7 million (i.e. £15 million lower than his £22m cost), there would still be a reported profit of £1.5 million, as his value in the accounts would be only £5.5 million (£22 million cost less three years amortisation at £5.5 million a year).

(b) Movements in Working Capital

Working capital is a measure of a club’s short-term liquidity and is defined as current assets less current liabilities. Changes in working capital can cause net income (in the profit and loss account) to differ from operating cash flow. Clubs book revenue and expenses when they occur instead of when the cash actually changes hands, e.g. if the club buys equipment from a supplier it would record the expense even before it pays the cash.

If current liabilities increase during the year, the club is able to pay its suppliers more slowly, so the club is (effectively) temporarily holding onto cash, which is positive for cash flow. On the other hand, if a club’s debtors increase, this means that it collected less money from its customers than it recorded as revenue, so that would be negative for cash flow.

In most years, the working capital movements will not be that significant, though it can be a high figure, e.g. £43 million at Manchester City and £39 million at Chelsea.

Adding back £544 million non-cash items and £(95) million working capital movements to the reported operating loss of £363 million does indeed make a big difference, as the cash flow from operating activities becomes a positive £87 million.

In fact, 12 of the Premier League clubs have positive operating cash flow (up from 3 with operating profits) with Manchester United leading the way with an impressive £80 million, followed by Norwich City £30 million, Arsenal £28 million and Tottenham £27 million. Even Manchester City’s negative operating cash flow of £53 million is only about half of their £104 million operating loss, mainly because their P&L includes an enormous £83 million player amortisation, arising from their big spending in the transfer market.

Cash Flow before Financing

The operating cash flow is in theory what is then available to the club to spend on buying players, investing in infrastructure or paying interest on loans and (occasionally) tax, though additional financing may be secured to cover any shortfalls.

(a) Net Player Purchases

This represents the genuine cash payments for player purchases less any sales and is often very different from the net spend reported in the media, largely because of stage payments, though it can also be affected by agents’ fees and conditional payments, e.g. based on number of appearances or trophies won. It is the only authentic figure publicly available for transfer fees, but it can also be misleading, as it may not cover the entire fee due to stage payments.

Paying transfer fees in stages can be a significant source of financing for some clubs, e.g. Juventus owed €93 million to other clubs (“for the acquisition of players”) as of June 2012, though they were in turn owed €41 million by other clubs.

On a cash basis, the highest net player purchases in the 2011/12 Premier League unsurprisingly came from Manchester City with £95 million (£123 million purchases less £28 million sales), followed by Manchester United £50 million, Chelsea £46 million and (shock, horror) struggling QPR and Stoke City, both with £23 million.

Four clubs actually made net player sales, i.e. used the transfer market as an additional source of funds: Aston Villa £16 million, Blackburn Rovers £12 million, Everton £11 million and Tottenham £6 million.

Arsenal just about balanced their books with £57 million purchases and £56 million of sales, giving net player purchases of £2 million. It is worth noting that this is considerably lower than the £65 million profit on player sales reported in the accounts.

(b) Investment in Fixed Assets

Clubs invested £142 million in fixed assets in 2011/12, mainly for development of the stadium and training centre, with 77% coming from just four clubs: Tottenham £42 million, Manchester City £30 million, Manchester United £23 million and Wolves £15 million.

(b) Net Interest Paid

This is very largely interest paid on bank loans net of any interest received from cash balances. One figure stands out here and that is the £46 million paid by Manchester United, which is over three times as much as the nearest “challenger”, namely Arsenal with £13 million. Given that United still had £437 million of gross debt at the time of the 2012 accounts, way more than any other club in the Premier League, this is not too unexpected. It has also not proved to be a major obstacle to United’s financial stability, as their cash flow is more than sufficient to cover the annual interest payments.

We should also note here that interest paid is not necessarily equal to the interest payable figure in the profit and loss account, as interest is sometimes accrued (so not paid), thus increasing the size of the debt, e.g. this is the case with a number of Championship clubs, including Cardiff City, Leicester City and Ipswich Town.

(c) Tax

Even though nine Premier League clubs reported profits before tax in 2011/12, only four (Arsenal, Manchester United, West Bromwich Albion and Tottenham) actually paid any tax. This is a very complex subject, but, essentially, use of prior year losses and other allowances helped prevent tax payments.

After all this expenditure, we have cash flow before financing, which is perhaps the purest reflection of how a club has run its business. By this metric, the newly promoted Norwich City and Swansea City shine with positive cash flow of £18 million and £6 million respectively. Most clubs clearly strive to break-even with many hovering around zero net cash flow.

Interestingly, and maybe disappointingly, the three clubs with the largest negative cash flows feature strongly at the top of the league: Manchester City £(184) million, Chelsea £(72) million and champions elect Manchester United £(41) million.

Financing

However, that is before financing and this is where the owners play their part, either via issuing share capital (Manchester City £169 million) or making additional loans (Chelsea £71 million, subsequently converted to capital). Other clubs required funds from their benefactors, notably QPR £39 million, Bolton Wanderers £24 million, Liverpool £24 million and Blackburn Rovers £16 million.

On the other hand, some clubs actually used funds to reduce debt, including Wigan £39 million (converted to share capital), Manchester United £29 million, Newcastle United £11 million, Arsenal £6 million and Norwich City £5 million.

Cash Flow after Financing

After this financing, we can see that almost all clubs are within the range of £18 million positive cash flow and a manageable £18 million negative cash flow. The one exception is Manchester United, which is a special case as a result of the Glazers’ leveraged buy-out. In 2011/12 alone, United paid £85 million to support this transaction: £46 million interest, £29 million loan repayments and £10 million dividends to the owners.

Let’s look at how cash flow has impacted the actions of the seven leading clubs in the Premier League.

Arsenal

Long admired for their financial prowess, Arsenal have consistently reported large profits. Not only did they register the highest profit before tax (£37 million) in the Premier League in 2011/12 on the back of £235 million turnover (3rd highest in England, 6th highest in the world), but they have also made an incredible £190 million of profits in the last five years. Indeed, the last year that they made a loss was a decade ago in 2002.

However, much of this excellent performance has been down to profits from player sales (e.g. £65 million in 2011/12) and property development (e.g. £13 million in 2010/11), while the operating profit has been steadily declining with the club actually reporting an operating loss of £16 million last season.

That said, once sizeable non-cash expenses (amortisation and depreciation) and working capital movements are added back, the cash flow from operating activities was £28 million, which was actually the third best in the Premier League.

The problem is that Arsenal have spent very little of this on improving their squad: in 2011/12 the net expenditure on player purchases was just £1.8 million – only four clubs spent less than the Gunners. Most of the available funds have instead gone towards financing the Emirates Stadium: £13.1 interest and £6.2 million on debt repayments. A further £8.6 million was invested in fixed assets for enhancements to Club Level, more “Arsenalisation” of the stadium and new medical facilities and pitches at the London Colney training ground.

Arsenal have cleared all their property development debt, but still had £253 million of gross debt arising from long-term bonds that represent the “mortgage” on the stadium (£225 million) and the debentures held by supporters (£27 million). Once cash balances of £154 million were deducted, net debt was only £99 million, but the interest/debt payment schedule remains punishing.

Despite the high interest charges, it is unlikely that Arsenal will pay off the outstanding debt early. The bonds mature between 2029 and 2031, but if the club were to repay them early, they would then have to pay off the present value of all the future cash flows, which is greater than the outstanding debt.

Another logical result of Arsenal’s years of reported profits is that they are one of the few Premier League clubs that pay corporation tax: £4.6 million last season (the highest in the league).

"Mind over Money"

So Arsenal’s self-sustaining approach is clearly evident in the cash flow statement, though they did have a small negative cash flow after financing in 2011/12 of £6.6 million. The supporters would almost certainly prefer to see the club spending more on players, rather than areas off the pitch, but the reality is that the debt and interest payments are not going away anytime soon.

This was made very clear by Arsène Wenger, “We want to pay the debt back from building the stadium and that’s around £15 million, so it’s normal that at the start we have to make £15 million or we lose money.” In fact, as we have seen, it’s more like £19 million, but the point remains valid.

However, the lack of investment in the squad is still galling, especially with Arsenal’s cash balances standing at £154 million last summer (almost as much as the rest of the Premier League clubs put together) following many years of positive cash flow, e.g. 2010/11 £33 million, 2009/10 £28 million, 2008/09 £6 million, 2007/08 £19 million and 2006/07 £38 million.

In the future, cash should be boosted by commercial income rising with the recent Emirates shirt sponsorship agreement and a new kit supplier deal, but Champions League qualification will also be important.

Manchester City

Despite rapidly growing their revenue to £231 million (4th highest in England), City still reported a pre-tax loss of £99 million, largely because of a £202 million wage bill, though in fairness this was nearly £100 million better than the previous year’s £197 million loss. The improvement is due to success on the pitch (2011/12 Premier League winners and Champions League qualification) and new sponsorship agreements, especially the Etihad deal.

City can add back £90 million for non-cash expenses, mainly £83 million player amortisation, but they also have £39 million negative working capital adjustments, due to an increase in debtors, leading to £53 million negative operating cash flow (the worst in the league).

Nevertheless, City spent much more than anybody else on player purchases (net £95 million) and £30 million on fixed assets, mainly on the Etihad Campus, including the City Football Academy, plus some stadium refurbishment.

"The minute you walked in the joint..."

They also have to pay £6 million interest, despite no debt from the owners Abu Dhabi United Group, as the club still has some old loan notes and finance leases.

That business model produces an enormous negative cash flow before financing of £184 million, which is then almost entirely covered by financing from the owner in the form of new share capital.

In the future, City should continue to grow their commercial income, while we have also seen a slowing of their player investment in the light of UEFA’s Financial Fair Play regulations.

Chelsea

Very similar to Manchester City’s strategy, but the football club actually reported a £1.4 million profit in 2011/12 after their Champions League success, though this was also due to an £18.4 million exceptional gain after the cancellation of preference shares owned by British Sky Broadcasting and £29 million profit on player sales. Net turnover rose to £256 million, but the £176 million wage bill was only surpassed by Manchester City, giving rise to an operating loss of £46 million.

Chelsea’s large non-cash expenses of £61 million are added back, but they also have £43 million negative working capital adjustments, mainly due to a large decrease in creditors, leading to £27 million negative operating cash flow.

Again, they spent heavily on players (net £50 million) and invested £5 million in fixed assets. Cash was also boosted by £6 million from the acquisition of a subsidiary, Chelsea Digital Media Limited, which was transferred from a joint venture to a 100% owned subsidiary.

"From Russia with Money"

All that produced a hefty negative cash flow before financing of £72 million, the second worst in the league, which was covered by an additional loan from the parent company, Fordstam Limited, owned by Roman Abramovich. As per previous years, this loan was subsequently converted into share capital, so the football club has no debt.

That said, it is not really true to say that Chelsea is debt-free, as these loans still exist in the holding company, amounting to £895 million as at June 2012. They are interest free, but are repayable with 18 months notice. It must be considered unlikely that Abramovich would ever call in this debt, but it is theoretically possible.

It looks like Chelsea are trying to reduce their wage bill to ensure they break-even, but their revenue will be under some pressure, as last season was boosted by the Champions League triumph, though new commercial deals were signed in 2012/13, notably Gazprom and Audi.

Liverpool

Despite their accounts only covering 10 months, due to a change in accounting date, Liverpool’s reported revenue of £169 million was still the 5th highest in England. Deloitte estimated that it would be £189 million for a full year. However, the Reds’ loss of £41 million was the second worst in the country, due to a £109 million wage bill (£131 million on an annualised basis) and £10 million of termination payments to coaching staff.

The £35 million operating loss was improved by adding back £46 million non-cash items (mainly £34 million player amortisation, but also including £9 million for player impairment), offset by £12 million working capital movements, to give negative operating cash flow of around £1 million.

Only five clubs had higher net player purchases than Liverpool’s £14 million, though this still placed them behind QPR and Stoke City, both with £23 million. This figure is a little misleading, as Liverpool spent relatively high on player purchases (£45 million), but largely compensated for this expenditure with £31 million from player sales.

"May you live in less interesting times"

Liverpool also made £3.7 million interest payments, though this was significantly lower than the sums paid during the dark days of the Hicks and Gillett era, which were as high as £45 million in 2010.

The £21 million negative cash flow before financing was fully covered by additional bank loans, leading to a small positive cash flow of £2 million.

Liverpool’s debt in the last annual accounts was £92 million, split between £70 million bank loans and £22 million to the owners Fenway Sports Group, but since then John W. Henry and his fellow investors have put in £47 million to reduce bank debt in August. These loans are interest-free, so interest payments should further reduce (at least until new loans are taken out for stadium development).

Redevelopment of Anfield should boost match day revenue in the future, though it will require substantial funding. In the meantime, Liverpool continue to sign impressive commercial deals, e.g. Chevrolet and Paddy Power, though lack of qualification for the Champions League places them at a severe financial disadvantage to other leading clubs.

Tottenham Hotspur

Tottenham made a £7.3 million loss before tax after revenue fell to £144 million (from £164 million the previous year), due to only qualifying for the Europa League instead of the more lucrative Champions League. The wage bill was held at £90 million, leading to an operating loss of £11 million.

Adding back £35 million for player amortisation and depreciation plus £3 million for working capital movements, due to a rise in creditors, means that cash flow from operating activities was a healthy £27 million.

This was boosted by net player sales of £6 million (player sales £33 million, purchases £27 million) with Spurs being one of only four Premier League clubs to generate cash from this activity.

"Stadium Arcadium"

At the moment Spurs are investing almost all their surplus cash in fixed assets, having spent £42 million last season on plans for a new stadium (Northumberland Development Project) and the new training centre in Enfield. This was more than any other Premier League club spent on infrastructure in 2011/12. In addition, they paid £4.5 million interest, as debt climbed to £86 million, made up of bank loans and securitisation funds.

After the significant investment off the pitch Tottenham’s cash flow before financing was a negative £13 million, partly financed by £8 million additional bank loans, leading to negative net cash flow of £5 million.

Tottenham’s financial future will be dictated to a very large extent by what happens with the stadium development, though they would be greatly helped if they could again qualify for the Champions League. The club estimated that the 2011/12 Europa League campaign brought in £31 million less revenue than the previous season’s foray into the Champions League.

Everton

Everton made a loss of £9 million from revenue of £81 million and a wage bill of £63 million (10th highest in the Premier League). The operating loss of £19 million was improved by adding back £14 million of player amortisation and depreciation less a working capital adjustment of £2 million, giving a negative cash flow from operating activities of £7 million.

Everton’s need to box clever is highlighted by the fact that even after net player receipts of £11 million (sales £23 million, purchases £13 million), they do not quite manage to break-even with negative cash flow after financing of £2 million. All other things being equal, they need to sell a player every season to stay afloat.

This is due to £4 million interest payments and £0.9 million repayment on assorted loans. The club’s debt stands at £49 million with an £11 million overdraft plus £24 million loan notes (borrowed against future season ticket sales) and £14 million loans (borrowed against future TV money). The lending arrangements with Barclays Bank expire on 31 July 2013, so these will have to be renegotiated in a few months.

Manchester United

Despite having the highest revenue in England (£320 million) and incidentally the 3rd highest in the world (only beaten by Real Madrid and Barcelona), United made a £5m loss before tax in 2011/12. This had very little to do with the club’s underlying business, as United’s £35 million operating profit was actually the highest in the Premier League, even after a £162 million wage bill.

No, the negative bottom line is due to £50 million net interest payable which is the consequence of the Glazer family’s leveraged takeover that placed over half a billion pounds of debt on the club’s balance sheet in 2005.

In fact, after adding back £46 million of player amortisation and depreciation less a minor working capital adjustment, United’s cash flow from operating activities is a highly impressive £80 million (in the previous year this was an almost unbelievable £125 million). To place that into context, this is £53 million more than the widely praised Arsenal. Quoting Staines’ finest, Hard-Fi, United are a veritable “cash machine”.

Over the last few years, relatively little of this wealth has been spent on improving the squad. Indeed, between 2009 and 2011, United actually had net sales proceeds of £3 million – though this was admittedly greatly helped by Ronaldo’s £80 million sale to Real Madrid. However, in 2011/12 the Glazers turned on the taps with United allocating £50 million to net player purchases, only surpassed by their neighbours Manchester City.

They also invested £23 million in fixed assets, mainly land and buildings around Old Trafford.

However, what really stands out is the £46 million interest United had to pay. This is by far the highest in the Premier League with Arsenal the only other club having to make a double-digit interest payment (£13 million). In fact, United pay about the same amount of interest as all the other Premier League clubs combined.

"Brass in Pocket"

A £3 million tax payment resulted in £41 million negative cash flow before financing, while £29 million loan repayments and £10 million dividends to the Glazers (to repay loans borrowed from the club in 2010) meant £80 million negative cash flow after financing – the worst in the Premier League.

It really is a game of two halves at United with £80 million of operating cash flow converted into negative cash flow after financing of £80 million. That £160 million swing can be broadly split between £72 million healthy spend (player purchases £50 million and property investment £23 million) and £88 million unwanted spend (interest £46 million, debt repayment £29 million, dividend £10 million and tax £3 million).

Although debt has been significantly reduced from the horrific £773 million peak in 2010, it still stood at £437 million (net £366 million after deducting £71 million cash) as at 30 June 2012, mainly senior secured notes attracting interest rates between 8.375% and 8.75%.

Looked at another way, without the burden of the Glazers’ debt, United could afford to spend £80 million every season on new players. And that is before the amazing new commercial deals with Chevrolet (shirt sponsorship) and Aon (training ground naming rights) kick in, not forgetting the likelihood of a major uplift when the kit supplier deal is re-negotiated (Nike runs to July 2015).

"Come on, Alex. You can do it."

Obviously, United have not done too badly in recent years, but they might well have done even better with those additional funds being made available to the manager, especially in Europe, where they have struggled for the last two seasons. Arguably, that’s the best argument in favour of the Glazers, namely that they have made it easier for other clubs to compete. Without their grasping presence, United would, quite literally, be laughing all the way to the bank.

That said, there are signs that this financial burden may be easing, as half of the proceeds from last August’s IPO were used to reduce debt to £367 million by December 2012, so annual interest paid should fall, though it is difficult to estimate a precise figure, given the many factors involved, such as exchange rates on the USD element of the debt.

If the club uses the additional revenue from its own commercial growth and the new Premier League TV deal (worth at least another £30 million a season) for more debt reduction, then the interest payments will become less significant, freeing up even more cash – though that might just be used to pay the Glazers dividends…

 "Running up that Hill (A Deal with God)"

Of course, the new Premier League TV deal that commences next season will benefit all clubs in the top flight and should make a real difference to their ability to generate cash, especially in conjunction with the new Premier League Financial Fair Play (FFP) regulations. These state that clubs are only allowed to make a total loss of £105 million providing this is covered by the owner (and £90 million of that is injected into the club in the form of equity).

Furthermore, clubs with wage bills above £52 million will only be allowed to increase their wages by £4 million per season for the next three years, though that restriction only applies to TV money, so clubs are free to spend any additional income from ticket sales or commercial deals on wage growth.

One of the objectives behind these regulations is that, in contrast to previous deals, the increase in TV money will not simply disappear into the players’ wage packets. This could markedly improve clubs’ cash flow, though there is a chance that any surplus may be simply used to pay dividends to the owners, as opposed to, say, reducing ticket prices, investing in youth development or improving facilities for the fans.

"A Change is Gonna Come"

Similarly, UEFA’s FFP regulations will encourage clubs to live within their means and are even more stringent. Wealthy owners will only be allowed to absorb aggregate losses of €45 million (£38 million), initially over two years and then over a three-year monitoring period, as long as they are willing to cover the deficit by making equity contributions. The maximum permitted loss then falls to €30 million (£25 million) from 2015/16 and will be further reduced from 2018/19 (to an unspecified amount).

To coin a phrase, this will be a whole new ball game for football clubs’ business models with the financing of large deficits by wealthy benefactors expected to significantly reduce. Whatever happens, those wishing to understand a football club’s finances and consequently the impact these have on its strategy should, as always, follow the money. That means not just focusing on the profit and loss account, but also dipping a toe into the mysterious world of the cash flow statement.

Everton - No Blue Skies

Football fans are rarely happy. After all, there are only so many trophies that can be won, so the majority of teams will end the season empty handed. That said, Everton’s fans seem to be particularly despondent these days, so much so that a coalition of supporters’ groups known as the Blue Union initiated a protest march before last week’s home game against Aston Villa.

Their principal complaint is that the club is stagnating under the current ownership, but their objective is rather more sophisticated than the customary “sack the board” knee-jerk reaction to adversity of crowds the world over. Instead, this campaign is more about freeing up Everton’s executives to focus on operational issues, such as growing revenue and cutting costs, while a “fully autonomous group of professional individuals” is brought in to expedite the sale of the club to a buyer who can drive the club forward.

Everton have effectively been on the market for many years, but the chairman Bill Kenwright has so far failed to attract the new investment that the club so badly needs. Therefore, the Blue Union’s suggestion is that the club introduces a similar arrangement to the one that (eventually) worked at neighbours Liverpool, when independent chairman Martin Broughton identified John W. Henry as the Reds’ potential saviour.

"Phil Jagielka prays for investment"

Specifically, they are not seeking Kenwright’s departure, though this would not have come as a complete surprise after details of their extraordinary meeting with the chairman were published. Even if the release of a detailed transcript of a private meeting was ethically dubious, it was to a large extent justified by Kenwright’s admission that the club’s financial situation was every bit as bad as many fans had feared.

Although this was nothing new to seasoned observers of Everton’s finances, the explicit revelation that the bank had forced the club to reduce its overdraft facility and was effectively preventing manager David Moyes from signing new players was still shocking news. Indeed, Kenwright confirmed that the proceeds from the sale of players and the club’s old training ground at Bellefield had gone towards reducing the club’s £45 million debt.

Kenwright is clearly a genuine Everton fan, but at times he seemed completely out of his depth during the discussion. Not only was he vague about the long-standing issue of a new stadium, but he was essentially clueless about the club’s financials. OK, maybe that’s a bit too harsh, but he was clearly confused and really should know a great deal more after so many years as chairman.

"Tim Cahill - up for the fight"

In fairness to Kenwright, in the past he has appreciated the main issue facing Everton, which is how to keep the team challenging at the top end of the Premier League without new investment. However, his strategy, for want of a better word, has seemingly consisted of little more than relying on David Moyes to continue to work minor miracles on a shoestring budget.

With some justification, Kenwright calls Moyes “the most important figure at the club”, describing him as “a manager who will go down as one of our all time greats.” Moyes himself is proud of his achievements, pointing out that in the 10 years he has been at the club, Everton have finished in the top 10 seven times. In fact, they have done rather better than that under his guidance, as his record includes two fifth places and a memorable fourth place in 2004/05, when the team qualified for the Champions League.

However, although Moyes refuted the fans’ charge of stagnation, even he admitted that he was operating under severe financial constraints, “Of course we want to be top of the league and winning cups, but at our club, we have got a level of finances, wages we can pay and stuff that we can do. We try and then get the best team and the best performances we can out of the players we have got.” It is fair to say that Moyes has got the most out of his resources, consistently outperforming teams that have spent more.

"David Moyes - a lot on his mind"

However, these results are slim pickings to a “grand old team” with Everton’s fine tradition. Only Arsenal have a longer unbroken spell in the top flight than the Blues, who have won the old First Division nine times, the FA Cup (when it meant something) five times and the European Cup-Winners Cup once. Four of those trophies came during a memorable period between 1984 and 1987, but the problem is that even though this might seem like yesterday to Everton supporters, it is nearly 25 years ago.

Since the introduction of the Premier League in 1992, Everton have struggled to live up to their glorious past, only winning the FA Cup in 1995. After the death of former owner John Moores, the club began to struggle both on and off the pitch. The Moores family shareholding was bought in 1994 by Peter Johnson, whose tenure was fairly disastrous with the club frequently involved in a fight against relegation.

Five years later, leading theatrical producer Bill Kenwright headed a consortium named True Blue Holdings Limited that bought the club in a deal that valued it at £30 million, though the source of the funds has never been completely clear. A series of ugly boardroom disputes ensued between Kenwright and fellow directors, Paul and Anita Gregg. Both sides tried to win over the Everton fans with ambitious investment plans, Kenwright’s version entitled the Fortress Sports Fund, but neither of these came to fruition. Finally, in 2006 the Greggs sold their shares to the entrepreneur Robert Earl, a friend of Kenwright, but all the infighting took its toll.

While professing to provide Moyes with “every available penny”, the reality is that the level of funds available to the manager has been diminishing. Indeed, the net spend has been negative over the last three seasons, adding up to £20 million sales proceeds. During the meeting with the Blue Union, Kenwright said, “On average, we give him £5.6 million every year. Nine years – that's £45 million.” Leaving aside the appalling arithmetic, that’s palpably incorrect in recent times.

In fairness to Everton’s board, they did break the club’s transfer record three times between 2006 and 2008: first for speedy striker Andrew Johnson £8.6 million, then Nigerian international Yakubu £11.25 million and finally powerful Belgian midfielder Marouane Fellaini £15 million.

However, since then Moyes has had to sell to buy. Everton’s last major splurge came in the summer of 2009 as the £22 million proceeds from Joleon Lescott’s transfer to Manchester City was spent on Diniyar Bilyaletdinov £10 million, Johnny Heitinga £6 million and Sylvain Distin £4 million.

Everton’s chief executive, Robert Elstone, summed up the club’s approach, “We have to be astute in the transfer market and the manager and the chairman have a good record in doing that.” He’s not kidding, when you consider that Moyes managed to secure the services of Tim Cahill, Mikel Arteta, Phil Jagielka, Steven Pienaar and Seamus Coleman for less than £10 million in total.

However, the lack of activity has become really pronounced in the last two years with only Newcastle having a lower net spend than Everton in the Premier League over that period – and that was largely due to the extraordinary £35 million sale of Andy Carroll to Liverpool. No wonder that Elstone drily observed, “It is fair to say we have not got a big transfer war chest. I can’t see us smashing our record transfer fee on a regular basis.” Quite.

In fact, even the three sides just promoted from the Championship have comfortably outspent Everton. Closer to home, it must be especially galling that Liverpool have splashed out well over £100 million on new players in 2011. In stark contrast, Everton have seen the departures of Pienaar, Arteta, Yakubu, Jermaine Beckford and James Vaughan since the turn of the year, with only a couple of loan signings coming the other way: Dutch misfit Royston Drenthe and unheralded Argentine strike Denis Stracqualursi.

Moyes confessed his concerns after yet another frugal transfer window, “It will be really difficult to finish in the top 10. I think we are going to have a big struggle. Look at the spending of Stoke, Sunderland, Fulham and West Bromwich Albion.” The only positive to take was that they did not also lose Jagielka, Fellaini and coveted left-back Leighton Baines.

Although Everton’s financial problems may not have attracted the media coverage of some other clubs, the fact is that their business model is bust. Essentially, their strategy has been to run the club at a loss every year in a gamble to achieve success and to fund this by steadily increasing their debt, but now the banks have stopped extending them credit.

It is not too difficult to see why they have made this decision, as Everton’s profit and loss account looks simply awful. Even with healthy turnover of £79 million, they reported a loss of £3 million. In fact, they have only managed to record a profit once in the last eight years – and that was only due to Wayne Rooney’s big money transfer to Manchester United in 2004/05.

Since “Wazza” was sacrificed, the club has suffered £30 million of cumulative losses: 2006 £11 million, 2007 – £9 million, 2008 – zero, 2009 – £7 million, 2010 – £3 million. Over half of that has been due to interest payments, which have risen to £4.5 million in 2010. However, the fundamental problem is that cost growth is significantly outpacing revenue growth. The trend is clear with EBITDA (Earnings Before Interest, Taxation, Depreciation and Amortisation) declining from £12 million in 2005 to just £1 million in 2010.

Once non-cash items like player amortisation and depreciation are included, we can observe the deterioration in operating profits, which were at break-even in 2005, but are now showing a hefty loss of £18 million in 2010. In that period, revenue has grown by £19 million (32%) from £60 million to £79 million, while total expenses have shot up by £37 million (61%) from the same level of £60 million to £97 million. The situation is actually even worse than that, as revenue has hardly grown in the last two years, while the cost growth shows no sign of slowing down.

On the face of it, last season’s £3 million loss does not look too bad, but this would have been much worse without the benefit of £19 million profit on player sales, almost entirely due to Lescott’s departure. Without that once-off boost, the 2010 loss would have been a truly depressing £22 million.

Player sales have had a disproportionate impact on the club’s results for many years, contributing £59 million profit since 2005. In other words, the losses would have been even higher if the club had not been selling players. The impact was most obvious in 2005 when Rooney’s sale resulted in a net profit of £23m, but you can also see its importance the following year when the club reported an overall loss of £11 million, as there was no profit from player sales.

As operating losses have increased since then, the importance of player sales becomes even more evident. The key point is that if Everton do not repeat player sales at the same level as 2010, namely around £20 million, then it is extremely doubtful that they will break-even in future. This is unlikely to be music to the ears of Everton fans, but it’s a harsh reality.

Given the above, it might seem a little bizarre that chief executive Robert Elstone said that this was “a healthy set of accounts”, but in comparison with some other clubs, you can sort of see what he means. Everton are by no means the only football club that struggles to balance its books and their loss of £3 million in 2009/10 actually made them one of the better financial performers in the Premier League.

In fact, just four clubs were profitable that season (Arsenal £56 million, Wolverhampton Wanderers £9 million, WBA £0.5 million and Birmingham City £0.1 million), while only one club (Blackburn Rovers) made a smaller loss than Everton. Half of the Premier League made losses over £15 million, while the losses at the clubs that finished in the top three places in 2010/11 were stratospheric: Manchester City £121 million, Manchester United £80 million and Chelsea £70 million. However, the difference between those clubs and Everton is that their owners have largely covered these losses.

Everton’s revenue of £79 million places them in a slightly strange position. On the one hand, this is the eighth highest in England and only one position behind Aston Villa, who enjoy the 20th largest revenue in Europe, according to the Deloitte Money League.

On the other hand, the problem is that their revenue lags way behind other major clubs. It’s significantly behind the so-called “Sky Four” (Manchester United £286 million, Arsenal £224 million, Chelsea £201 million and Liverpool £185 million), who benefited from Champions League riches in 2009/10, but it’s also a fair bit below Everton’s natural challengers (Manchester City £125 million, Tottenham £120 million and Aston Villa £90 million) with the gap expected to grow still wider when the 2010/11 results are published.

This disparity is important, as money tends to equate to success in football. For example, in 2009/10 the seven clubs that finished ahead of Everton in the Premier League were exactly the same as those above them in the Money League. Arguably, Everton could be described as being the “best of the rest”, though their revenue was only £3 million higher than Fulham’s.

The other major issue with Everton’s revenue is that it is not really growing. Elstone recently boasted, “We have signed record sponsorship deals and hugely increased our income”, but the reality is that any growth is almost entirely due to broadcasting revenue. This has risen from £28 million in 2007 to £50 million in 2010, but this has little to do with the club, being almost entirely due to the distributions from the collective sale of Premier League TV rights.

Those revenue streams under the club’s control have essentially remained flat for the last three seasons with commercial income growing slightly from £9 million to £10 million and gate receipts actually falling from £20 million to £19 million. This means that Everton, like many of the clubs in the Premier League, have become very reliant on television money, which now represents 63% of their total income.

In 2010 Everton’s TV revenue of £50 million largely consisted of £43 million from the Premier League plus £4.2 million for reaching the last 32 in the Europa League. The Premier League distribution has risen every time a new three-year deal is signed, as can be seen by the substantial increase in 2008, and there will be a similar £7 million increase in 2011 to just under £50 million, mainly due to the substantial increase in overseas rights.

Given its importance to Everton’s revenue, it is worth understanding how the Premier League allocation works. Each club gets an equal share of 50% of the domestic rights (£13.8 million) and 100% of the overseas rights (£17.9 million). However, facility fees (25% of domestic rights) depend on how many times each club is broadcast live, which hurts Everton, as they were only shown 13 times, a lot less than other clubs. This meant that they received £7.3 million, compared to Manchester United’s £13.5 million. Finally, merit payments (25% of domestic rights) are worth £757,000 per place in the table, leading to £10.6 million for Everton’s seventh position.

Of course, Everton’s 2010/11 TV money will be adversely impacted by the lack of European competition, though it’s only Champions League teams that receive the big bucks, e.g. last season the four English entrants boosted their coffers by an average of £35 million. Although the money was not so high 20 years ago, the ban on English clubs following the Heysel tragedy has undoubtedly cost Everton dearly. In fact, in his own slightly chaotic fashion, Kenwright pinpointed this issue in his chat with the supporters, “You can see the problem in football. United, Arsenal, Chelsea, they get double our TV money, placement money plus Champions League.”

Of course, that’s not Everton’s only problem, as can easily be seen by looking at their mach day revenue of £20 million, which is about one-fifth of Manchester United and Arsenal. Fair enough, their stadiums are considerably larger than Goodison Park, whose capacity is only 40,600. However, Anfield is not that much larger and Liverpool still earn more than twice as much as Everton. Even more striking is that Spurs generate nearly double Everton’s gate receipts, though their ground is actually smaller.

Looked at another way, each home game at Everton produces less than £750,000, compared to more than £3.5 million at United and Arsenal, despite what Kenwright described as a “magnificent level of support.” Average attendances have indeed held reasonably steady, though they did fall to 36,039 in 2010/11, but it’s the lack of decent corporate facilities that has really hurt Everton’s match day income, which actually fell £3 million in 2010 to £19 million. Even though there were three more home games, the previous season included a fair bit of money for the run to the FA Cup Final.

Although Everton have improved their commercial operations in the last few years, the revenue remains fairly feeble at £10 million. To place that into perspective, this is less than a third of Tottenham’s £32 million. Although the club complained that it was difficult to compete commercially with clubs “regarded as having a greater international profile”, such as Manchester United, Liverpool and Arsenal, Everton are surely at least as attractive a proposition as clubs like Spurs and Villa.

To be fair, the club outsourced its merchandising and catering operations in 2006 and its retail business to Kitbag in 2009, which means that their reported income is around £7 million lower than it would be if these activities were still in-house, but the relatively small sponsorship deals should still be questioned.

Everton have enjoyed a long-term shirt sponsorship deal with Chang Beer, which has been extended no fewer than four times, the latest running until 2014. This increased the annual payment from £2.6 million to £4 million (partly performance-related), but this is still only half as much as Aston Villa’s new £8 million deal with Genting and a lot less than Tottenham’s £10 million deal with Auresma. Of course, Liverpool and Manchester United are in a different commercial league altogether with their deals worth £20 million per annum.

The 10-year Kitbag deal is expected to generate more than £30 million over the duration of the contract. As part of the agreement, Everton switched kit suppliers from Umbro to Le Coq Sportif, the brand worn by the team during one of its most successful season in 1984/85, which should generate a further £3 million. This also led to the refurbishment of the megastore opposite Goodison and the Everton Two store, which boasts the inspired address of “Everton Two, Liverpool One”, as the latter is the name of its shopping complex location.

Like all other football clubs, the main reason for the cost growth is the wage bill, which has surged 76% (£23 million) from £31 million in 2005 to £54 million in 2010. This has caused the crucial wages to turnover ratio to rise during this period from 51% to an uncomfortable 69%, which is only just below UEFA’s recommended upper limit of 70%, though it would come down to “only” 64% if the outsourced operations were included in the club’s turnover.

Elstone commented that this “simply serves to underline our commitment to both signing the best available players and to securing the long-term future of those already at the club.” In 2009/10 Everton effectively replaced one international player (Lescott) with three arrivals (Bilyaletdinov, Distin and Heitinga), so had to cover two new salaries plus the loan cost of Landon Donovan. In addition, there were new contracts for Louis Saha, Tim Howard, Jack Rodwell, Joseph Yobo and Phil Jagielka.

There’s no doubt that it would be difficult for any club to remain competitive without participating in the salary “arms’ race”, a point that Moyes stressed in the summer of 2010, when he warned the directors that Everton risked losing their key players unless they broke the wage structure. This led to more contract extensions for Mikel Arteta, Tim Cahill, Leighton Baines, Seamus Coleman and Victor Anichebe. Arteta’s salary alone was reported to have increased from £45,000 to £75,000 a week.

It is therefore likely that the wage bill for 2010/11 will show a further increase (the Blue Union is estimating £58 million), before falling the following season due to numerous player departures and loans.

In fairness, Everton’s wages of £54 million are nowhere near the highest in the Premier League with five teams having wage bills more than twice that level: Chelsea £173 million, Manchester City £133 million, Manchester United £132 million, Liverpool £114 million and Arsenal £111 million. Other teams challenging for Europa League places also pay a lot more, such as Aston Villa £80 million and Tottenham £67 million. In short, Everton’s wage bill could be described as mid-table, so any league placing higher than this should be considered a bonus.

The other aspect of player costs, namely amortisation, has also been rising – from £10 million in 2007 to £17 million in 2010. When a new players is bought, football clubs do not write-off the cost immediately, but instead book it onto the balance sheet as an intangible asset and write it off over the length of the contract, as the assumption is that the player would have no value after his contract expires, since he could then leave on a “free”.

As an example, John Heitinga was bought for £6 million in 2009 on a 5-year contract, so £1.2 million amortisation is booked to the accounts in each of the next five years. Over time amortisation costs can have a real impact, which is what has happened at Everton. The 2010 charge of £17 million might be low compared to a big spending club like Manchester City (£71 million), but it’s a lot in the context of Everton’s £79 million revenue, though it’s likely to fall following the lack of transfer activity.

Everton’s other operating costs of £24 million are a similar level to Tottenham £27 million and Aston Villa £25 million, but they seem very high in relation to the size of the club. They represent 25% of total costs, only surpassed by Arsenal (due to the Emirates effect) among the leading eight clubs, and 30% of revenue, only below Manchester City, whose ratio will fall following their certain revenue growth.

The massive increase from £12 million in 2007 to £21 million in 2008 is unexplained, though it should be noted that theses costs averaged £17 million in 2005 and 2006. Part of the rise is certainly due to higher expenses at the Finch Farm training facility compared to Bellefield, but the lease here is no higher than £1.5 million. Kenwright did not exactly clear up the ambiguity of what is included here, when the Blue Union put the question to him, “When you say other operating costs what do you mean? I don’t know, I have no idea.”

The chairman was equally vague last year when discussing the club’s debt, “I do not understand why football clubs have such big debts, it is a mystery. Our debt is a big debt and a worrying debt, but it is manageable because of our performance on the field… but it is too much debt that every year is going to be added to.” That part’s certainly true, as the net debt has more than doubled from £20 million in 2005 to £45 million in 2010. It rose £7 million last year alone.

The debt has been rising because the club has been spending money that it does not have on strengthening the team. As Elstone put it, “our pursuit of success has stretched our finances.” The result of this risky strategy is clear to see, as the club is burdened with a 25-year loan from Bear Sterns (now at £25 million), which has the advantage of being long-term, but carries a high interest-rate of 7.79%, leading to annual payments of £2.8 million. The only way that Everton can manage to pay this is by increasing its bank debt, so the club has built up bank loans of £17 million and an overdraft of £5 million.

Although Everton’s debt is by no means excessive compared to other football clubs, the problem is that they appear to have no realistic way of paying it off. That is why the bank has capped the club’s overdraft at £25 million, which has meant that the £8 million received for the sale of Bellefield last December and the proceeds from this year’s player sales have gone directly to the bank.

"Tim Howard - shout, shout, let it all out"

Furthermore, the loans are covered by the securitisation of future revenue (TV money and ticket sales). The accounts also note a potential sting in the tail with up to £12 million of contingent liabilities for transfers, which are payable dependent on future appearances and loyalty bonuses.

Everton’s total liabilities are actually £95 million, leading to net liabilities of £30 million, so £50 million of value has been lost in just over a decade, as the balance sheet had net assets of £19 million in 1999. Most of the club’s assets have been sold off, which also increases costs for higher rents, while Goodison’s value is declining.

The only substantial assets left are the players themselves with a book value of £45 million, though Elstone points out that accounting conventions mean that players are recorded in the balance sheet way below market value. This is certainly true, especially as nothing has been included for home grown players, and the respected Transfermarkt website lists a value of £120 million. However, the problem is that for the club to access that value, they would have to sell those players.

The cash flow statement underlines the fundamental problems with Everton’s business model, as the cash flow has been negative for the last five years. Take last year, when the club’s revenue was just about at record levels, they sold Lescott for an incredible £22 million, they took out net new loans of £6 million – and yet there was still a net cash outflow of £1 million.

So is there anything that Everton can do? Is there a blueprint for success?

I can see five possibilities: (a) be successful on the pitch; (b) cut costs; (c) build a new stadium; (d) find a wealthy benefactor; (e) focus on youth.

"Marouane Fellaini has a hair-raising experience"

(a) As we have seen, higher places in the Premier League produce higher merit payments, but to make a meaningful difference to the revenue, Everton would have to qualify for the Champions League on a regular basis. Although they have managed that once during Moyes’ tenure, thus proving that it’s not impossible, this objective seems further away than ever today with the traditional “Big Four” being supplemented by Manchester City and Spurs.

Furthermore, fourth place does not guarantee qualification to the lucrative group stages, but only to a qualifying match, where the luck of the draw plays a huge part. Everton would be only too aware of that, as they were (unluckily) eliminated by Villarreal in such a tie in 2005.

(b) All football clubs could cut costs, but this approach would almost certainly condemn Everton to a regular struggle against relegation. To achieve break-even, Everton would have to reduce the cost base by £15 million, assuming that £10 million profit is made on player sales each year.

Assuming that operating expenses are reasonably fixed, that would mean cutting the wage bill by nearly 30% to £39 million. Only three clubs had a lower wage bill that that in the 2009/10 Premier League – and two of those were relegated. If Moyes has been fighting with one arm tied behind his back up to now, this would be tantamount to also binding his legs together.

(c) A new stadium would help address the low match day income, but it appears no closer now than when the search first started 15 years ago. A proposal to build a stadium as part of the King’s Dock regeneration was scrapped in 2003 when the club failed to raise sufficient money, while the government rejected the planning application to build a new 55,000 capacity ground as part of a retail park in Kirkby, on the outskirts of Liverpool.

On the face of it, this was a real blow to the club, as they had been putting all their energies into this scheme with former chief executive Keith Wyness going so far as to describe it as “the deal of the century”, because Tesco were going to pay a proportion of the construction costs, leaving Everton to fund the remainder by selling Goodison Park and Bellefield and charging for naming rights at the new stadium.

However, the rejection might just have been a blessing in disguise, as many fans never warmed to the idea of moving to Kirkby, prompting the formation of the “Keep Everton In Our City” (KEIOC) campaign. In addition, the financials did not seem to add up, as the assumptions behind the funding looked optimistic, while a study performed by Deloitte on behalf of Everton estimated a paltry £6 million extra profit a year and that was based on the club almost filling the 50,000 stadium every match.

"A man of Distin-ction"

The focus appeared to have switched to improving Goodison, especially after the announcement of a £9 million office and retail development, funded by partners, that will free up space inside the stadium for profitable corporate facilities. Elstone admitted that it was unrealistic to expect the club to be inside a new stadium within five years, later adding, “there is a shortage of a viable funding model”, which had always been obvious to most rational analysts.

However, to the surprise of nobody, this viewpoint was contradicted by Kenwright, who recently said, “There are six sites we’re looking at, three of which we’re really keen on: Edge Lane, Speke and another one.” Even with the support of Liverpool Council, who have proposed using the rapid transit Merseyrail line to ease transport access, the only viable way forward for a new stadium would be if a new owner were prepared to fund the construction.

(d) Although Bill Kenwright might be a great bloke, as he admitted himself, he is “a pauper when it comes to other chairmen.” The harsh reality is that the current owners have not put any money into Everton football club, which is in stark contrast to other benevolent owners, e.g. £187 million at Fulham, £115 million at Sunderland, £85 million at Bolton, £52 million at Wigan and £43 million at Stoke.

"Bill Kenwright - True Blue"

In the last annual report, Kenwright stated, “I continue to work tirelessly to find that rich and generous benefactor”, but he has been looking to attract other investors for years without success. He maintains that “no-one can sell the club better than me”, despite all evidence to the contrary, such as the recent admission that Everton allowed one potential investor to conduct due diligence in the belief that he was the head of ICI in the Far East, even though that company was taken over three years ago.

Some have questioned whether Kenwright is actually serious about selling the club, but, in fairness, there are many clubs searching for a benefactor and the tough economic climate has not helped.

Even David Moyes has got involved, suggesting that Everton would be an attractive investment, as they “could be very close to being very good for not an awful lot of outlay. It might not be one of those clubs that needs £300-400 million to turn it around.”

"Seamus Coleman - he's mustard"

He might have a point, but to do the job properly would require investors with very deep pockets. First, they would have to buy out the directors’ shares, which an investment bank estimated would cost £75 million, but they would also have to repay the loans £45 million, fund a new stadium £250 million, buy new players £50 million and inject working capital to cover losses £50 million. That doesn’t leave much change from half a billion.

(e) Probably the most realistic policy would be to focus on developing young players at the technically advanced Finch Farm academy, counting on profitable sales at a later stage. Everton are renowned for having a brilliant youth system that has produced the likes of Rooney, Rodwell and Ross Barkley. As Moyes pointed out, the flip side of not spending money on buying new players is that youngsters will always get an opportunity at Goodison.

Clearly, a selling policy would not prove universally popular with the fans, but it is not necessarily a negative strategy, as plenty of clubs have flourished by adopting such a business model, e.g. Porto, Lyon and Udinese. The other advantage for Everton is that they are quite close to operating this way in any case. At least it would be more under their control, rather than crossing their fingers and hoping for a new owner and/or stadium.

"Ross Barkley - here's to future days"

For many years, Everton under Moyes have been punching above their weight, but even the manager has embraced a new sense of caution, suggesting that it would be “a struggle” for his team to finish in the top half of the table this season. He added, “We have to be careful in what we believe Everton are capable of achieving.”

No matter how much Everton’s passionate following wants the club to return to its former glories, this will be virtually impossible unless there is a dramatic improvement in the financial position. The fans really do deserve better from the board: a clear, coherent strategy would be a step in the right direction.