As I write this, it is already the second week in November and a time that was supposed to offer so much has without doubt, significant questions requiring answers in the near term. Fortunately, within the space of two months, by the second week of January we will have a much clearer idea of where the club stands on many of the issues surrounding this beloved but potentially beleaguered institution of ours.
- League position – a poor start or a full blown relegation battle?
- The prospects of cup success?
- A change of manager?
- Bramley-Moore planning application, submitted or not?
- Publication of 2018/19 report and accounts
- Annual General Meeting
- Further clarification on profit & sustainability position, impact on transfer budgets and the need for further sales?
Footballing performance & the consequences
In the Premier League, we will know whether the current flirtation with a relegation spot has evolved into a full blown but hugely damaging affair or has become a distant but not fondly remembered dalliance.
Not only will our league position be clearer but we also know whether our dreams of silverware from one or both domestic cup competitions are still alive. Ideally we should be Carabao Cup semi-finalists and into the 4th round of the FA Cup.
Failure in the domestic cup competitions and/or the above mentioned and continued flirtation with a relegation spot will surely have meant that Silva will no longer be manager. In such a scenario will we have an interim manager or does Brands have a long term replacement waiting in the wings?
Whilst it will be most likely necessary (although I stress I would much prefer a huge upturn in results rendering it unnecessary) to replace Silva, either as a result of continued poor performance in the league or elimination from the Carabao Cup, there’s no doubt the loss of another manager will further damage the reputation of the club. From the time David Moyes arrived at the club many outsiders (but not a fair number of Evertonians) considered Everton to be a well run club, a club with an identity, with stability and relative security. The missing ingredient was always considered to be capital. Oh the irony that when the club was provided with all the capital it could spend whilst still being compliant it should lose all its other perceived qualities.
Not only might the deteriorating external perception of the club (Brands own reputation in the industry not withstanding) but the financial pressures currently present will mean any new permanent manager will have very little funds in order to shape his own squad. The challenge for any incomer will be either to improve the performance collectively and individually of existing players or find a way of bringing through our academy players whilst being competitive in the Premier League. A relatively small pool of potential managers from which to pick might be reduced further given the above consideration.
Financial Performance
The cost of failure is extremely high. League positions are extremely valuable. Not only do higher positions normally equate to more domestic TV appearances (worth approximately £1.1 million a match) but the final league position results in prize money which drops £1.9 million per place. A team finishing 12th but budgeting 6th would find a £11.4 million shortfall in expected incomes before considering any reduction in live appearances.
Furthermore, it’s not unreasonable to believe that the club budgeted for a top six finish in this current season. Top six would almost certainly guarantee Europa League football at a minimum. In commercial terms, group stage qualification should be worth £12 million on a conservative basis – revenue which would appear in the following financial year (2020/21).
This is set against a background of what will be the club’s worst ever set of financial results due to be published in the next few weeks. My own forecast is a net loss of approximately £95 million for 2018/19. Additionally the operating performance for 2019/20 (the current season) is forecast to be similar. The final loss figure will be an improvement on the 2018/19 figure but only due to a resumption of significant player trading profits as a result of player disposals. Nevertheless forecast cumulative losses of greater than £135 million over the period 2018-21 with little or no progress to show for it tell their own very bleak story.
Depending upon how close we might get to breaching the profit and sustainability rules for accumulated losses over three years, we might see further disposals in January and in the final month of the financial year June 2020.
The scope for improving the squad with permanent additions in January is extremely limited. Not only as a result of Brands’ aversion to purchasing in January, but the financial conditions indicated above.
Planning Application
Away from the performance on the pitch and our current financials, we ought to have a much clearer idea on Bramley-Moore. Assuming the club maintains its previously publicly advised timetable we will have submitted a planning application before the end of 2019. Within that application much greater detail regarding the stadium will become apparent including details of the internal specifications, facilities plus associated club development within the Bramley-Moore site. If the club is to maintain progress towards opening the stadium in time for the 2023/24 season it is essential there is no slippage in the planning timetable.
Report & Accounts 2018/19
As mentioned above it’s probable the club will have issued the Annual report & accounts for the extended financial year 2018/19 (to June 2019). Within that we will not only see the details of the trading performance of the club but further details of post balance sheet events including to what extent Farhad Moshiri added further financial support in the summer of 2019 to fund the later purchases in the window.
The performance of so many different aspects of the club and the consistently poor communications regarding its affairs have led to much angst among supporters.
There is a significant difference of opinion as to the performance of the board and senior executive team over the whole period of the Moshiri era but even more so as we enter this critical period of our future.
Proof of the pudding
If I looked at Everton as a business completely dispassionately, I might wonder what the probability of each of the significant events due to evolve over the coming weeks might do so successfully? Not unreasonably in most businesses, shareholders, in the light of a forthcoming AGM against a background of such uncertainty would be raising their concerns and seeking not only re-assurance but confirmation of the change in behaviour, policy and results to get the business performing in terms of sporting performance, financial performance, exceeding expectations in terms of delivering capital projects and presenting a future strategy for success backed by a credible, experienced management team.
The next few weeks will indicate whether we are progressing in the right direction, albeit not as smoothly nor as quickly as we would like or whether or not we are failing on all or most critical fronts.
The proof of the pudding is in the eating. Within two months, not only will we have more information but we will be in a better position to judge and assess the club’s response to what unfurls before us. Collective and individual accountability awaits.
Critical times.
Categories: Everton finances, Opinion
Terrific piece.
Thank you George
Critical times indeed Esk.
And for those that read this article and dismiss you as a merchant or doom, a keyboard warrior or even a crank, perhaps they should read it a second and maybe a third time to see that there is nothing in it that most fans cannot already see and appreciate.
An underperforming squad, albeit with injuries but with a manager who’s not exactly renowned for turning things around… a DoF maybe under pressure to replace the manager but who would probably prefer not to rush headlong from one poor appointment to another. I personally don’t see Brands wanting to go the route of an interim appointment, and certainly not one that he totally agrees with.
The future of BMD could be massively impacted were on-field matters to seriously deepen to the point where the dreaded R scenario became more than a reality than a possibility.
And as you’ve intimated clearly on numerous occasions previously, our commercial activity isn’t anything like strong enough to support the spending we’ve done and no doubt will continue to need to do in order to strengthen the squad adequately to become challengers again… spending that the major shareholder has patently supported.
As you suggest, the playing calendar for December and January could be absolutely crucial to the near future of the club, the actions of the Board and the Shareholders in light of the expected gloomy results at the AGM will be crucial to the long term future of the club.
The AGM will be no time for flowery statements, corporate spin or diversionary, sideshow matters – the future of the club is at stake, so honest answers to forthright questions are needed.
The need for true leadership, direction and utter commitment is nigh – will we get it ?
A fair but pretty damning assessment Paul. All the points you have raised, are unfortunately overshadowed by events happening on the pitch. The new dawn of a few years ago, including the re-structuring of the existing middle management tier at Everton, sadly seems a long way away.
We had a massive opportunity with the influx of the Moshiri capital injection, but a series of failed management appointments have left us back at square one.
And here’s the dilemma, Everton’s current status in world football most probably means that any newly appointed team manager, is highly unlikely to come from the pool of around half a dozen (mostly european) much sought after managers, with a proven track record.
It’s more than likely we will be selecting from a much wider circle of promising, highly thought of, but as yet untried candidates available from ‘lesser’ clubs.
And then the process starts again, with each manager wanting to bring with him his own coaching staff, the inevitable evaluation period of assessing the existing squad, and then in the summer of 2020, further departures and arrivals.
I wonder if the Directors and senior management will come under scrutiny as well in the aftermath at the season’s end?