Everton have reported an £89.1million ($112.5m) loss for the 2022-2023 season — almost twice as much as over the previous year.
Their latest set of accounts, quietly published during the second half of the Premier League title-race duel between Manchester City and Arsenal on Easter Sunday, cover the financial year up to July 2023 — a period that was scrutinised by an independent commission last week after the club were charged with a second breach of profit and sustainability rules (PSR).
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It is the sixth successive season where Everton have reported a loss, with the accounts showing the club’s debt has ballooned to £330.6million.
That figure is largely driven by what Everton describe as ongoing “significant investment” in their new stadium at Merseyside’s Bramley-Moore Dock, scheduled to open for competitive football in 2025, with capital costs of £210.9million — up from £154.4m on the previous year — incurred over the financial year in question.
What are the other key numbers?
Everton’s turnover fell to £172.2million, down £8.9m from 2021-22, with the club having lost £20m of contracted income after sponsorship deals with Alisher Usmanov’s USM and affiliates were indefinitely suspended.
Uzbek-Russian tycoon Usmanov was sanctioned by the UK government as part of the response to the 2022 Russian invasion of Ukraine.
The club’s sponsorship, advertising and merchandising revenues totalled £19.2million — £15.8m lower than in the 2021-2022 accounts — largely due to the removal of USM as the club’s training ground sponsor.
Operating expenses, excluding player and management trading, rose to £213.1million (from £205.5m) but the club’s total wage-to-turnover ratio increased from 90 per cent to 92 per cent. Total player costs (wages and amortisation) stand at £124 for every £100 of income.
Everton, who have not won a Premier League game since mid-December and hover three points above the relegation zone, are spending cash at more than £1million per week in terms of the day-to-day running of the club.
Furthermore, over the year covered in this set of accounts, majority shareholder Farhad Moshiri provided interest-free loans of £70million, included in equity, with no agreed repayment date. The balance of interest-free shareholder loan outstanding was £450m. He also gave an interest-bearing loan of £22.5m, included within loans, with no agreed repayment date.
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What about transfer spend?
The club made a profit on player trading of £47.5million in accounting terms — a decrease of £20.2m on the previous year — after banking £61m from sales, including that of academy graduate Anthony Gordon. The England international moved to Newcastle United in January 2023, a transfer that was booked as pure profit in the accounts as Gordon had come through the youth ranks.
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But £91.5million was spent on new players, up from £55m in 2021-22, with Amadou Onana, Dwight McNeil, Neal Maupay, Idrissa Gueye and James Garner joining on permanent deals. As such, amortisation costs rose from £68m in 2021-22 to nearly £78m in 2022-23.
The squad with which Everton finished 17th last season, two points clear of the bottom three, cost almost £375million to create.
Everton are owed an estimated £88million in instalments on player sales, and similarly owe other clubs £70m.
Not included in the accounts are transfer fee add-ons of £78million that would potentially be contingent upon future appearances or signing-on fees, and loyalty bonuses of £27m, though the club insist it is “not considered probable based on management’s best estimates” that those will be triggered.
Were there exceptional costs?
The 2022-23 accounts reveal Everton spent £7.1million on a mid-season change of manager and his staff — with Frank Lampard and his backroom team sacked in the January and replaced by Sean Dyche and his support personnel.
The club also paid out £3.15million to former directors Denise Barrett-Baxendale, Grant Ingles and Graeme Sharp, who left in June 2023, during the accountancy period.
Can any conclusions be drawn regarding the second PSR charge?
Everton’s second charge does relate to the period covered by these accounts and, on the face of it, the numbers make grim reading.
For context, Everton posted a loss of £44.7million in the 2021-22 accounts. Their first PSR breach charge, which initially incurred a 10-point sanction subsequently reduced to six on appeal, related to an overspend of £19.5m above the £105m limit for any three-season period set out by PSR.
In January, Everton were then charged again — along with fellow relegation candidates Nottingham Forest — for alleged breaches in their accounts for 2022-23. An independent commission sat last week to hear the case, with Everton now awaiting their decision. Any appeal could take until May 24 — five days after this season’s final round of fixtures.
The club’s chief executive Colin Chong confirmed last week that he was “not able to share specific details relating to the charge we face, or the commission process”. However, with three points having been established as the starting point for any sanction for a PSR breach, the expectation is that Everton will have breached by a smaller amount this time.
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Unlike the EFL — the competition for the three divisions of 72 teams in the English football system below the top flight — the Premier League does not have rules stopping a club being sanctioned for alleged breaches in financial periods that have already been subject to punishment.
What about the takeover?
Everton’s prospective new owner, 777 Partners, was informed last week that the Premier League “were minded” to approve its takeover so long as certain conditions were met. This included 777 Partners paying off a loan due to fellow U.S. investor MSP Capital by the end of April, proof of funding for the new stadium project at Bramley-Moore Dock and funds to be put in an escrow account to keep the club going until the end of the season.
777 Partners has so far invested close to £200million in Everton — cash which will be turned into equity if the takeover is given the green light. Aside from the promise of a brighter future in a new stadium, these accounts paint a grim picture of what the group would be inheriting.
A takeover deal was first struck in September last year between 777 Partners and Moshiri for the Everton majority owner’s full stake, which accounts for 94.1 per cent of the club’s shares. On Friday, Moshiri declared the protracted sale was on “the home straight”.
This came after Everton’s Fan Advisory Board wrote to Moshiri, the Premier League and 777 Partners asking for more clarity on the deal. These latest accounts show just why fresh investment is needed.
The club’s directors acknowledged in the report that there is “uncertainty” surrounding Everton’s “ability to continue as a going concern”, though efforts “are currently underway to secure funding”. They added that the club “may have to seek further funding from either its majority shareholder or from the prospective new shareholder (whichever was in situ at the appropriate time)” if required, with the board confident funding would be secured.
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(Top photo of Everton’s new stadium: Tony McArdle/Everton FC via Getty Images)