Everton slip into the red despite record revenues of £189m

Everton slipped to an operating loss of £22.9m last year despite bringing in record revenues of £189m.

The club made an operating profit of £25m in 2017 but were hit by a series of cost which included the sacking of managers Sam Allardyce and Ronald Koeman.

As a result the Toffees reported a loss after tax of £13.1m compared with a profit after tax of £30.6m in 2017.

Everton incurred £34m exceptional costs in 2018, not present in 2017, £14.4m of which related to settlement costs for the termination of former employees and other costs in relation to the change Sam Allardyce’s coaching team in the year.

The first team’s wage bill, other operating costs, such as the Academy and first-team support, also increased.

The record revenues of £189m were a ten per cent increase on the previous year.

Commercial revenue from sponsorship, advertising and merchandising grew by 34 per cent from 2017, reaching a record £20.7m.

These included the club’s first African main partner, SportPesa, and the innovative engagement with sleeve partner Rovio and its iconic game, Angry Birds.

Combined with gate receipts, sponsorship and other commercial income increased by 45 per cent from 2017.

Driven by a record 31,282 season ticket members there was an average attendance at Goodison Park of 38,797.

Every home seat was sold for every Premier League match in the 2017/18 season.

Premier League attendances and participation in the UEFA Europa League combined to achieve a 16 per cent increase in gate receipts when compared to the previous season.

Broadcasting revenue – which makes up 69 per cent of the Club’s total revenue, a reduction from 76 per cent in 2017 due mainly to the increase in commercial revenues – dropped only marginally from £130.5m in 2017 to £130m.

An eighth-place finish secured the Club £25.1m and contributed to the eighth highest Premier League broadcasting distribution, down from seventh in 2016/17.

Continued investment in the first-team squad, which included the additions of Michael Keane, Gylfi Sigurdsson, Cenk Tosun, Theo Walcott and Jordan Pickford, led to the doubling of intangible assets from £121m in 2017 to £240m in 2018.

The buys were the main driver for rising staff costs from £104.7m in 2017 to £145.5m in 2018 and an increase in player amortisation from £37.3m in 2017 to £66.9m in 2018.

As a result of this investment, the club’s total wage to turnover ratio has risen from 61 per cent in 2017 to 77 per cent in 2018.

The club also incurred costs from competing in the UEFA Europa League as well as a cost of £11.4m for the design and other work relating to the new stadium. These costs cannot be capitalised until planning permission has been granted.

The shareholder loan, which reached £150m in 2018, is accounted for as equity. Bluesky Capital Limited continued to support the Club post-year end with an additional shareholder loan of £100m received.

Denise Barrett-Baxendale

Everton chief executive Denise Barrett-Baxendale, said: “For the second consecutive year the club has generated record revenue.

“Gate receipts, sponsorship and other commercial income increased significantly by 45 per cent and the continued and quite magnificent support of our fans meant that Season Tickets reached the cap with more than 10,000 on a waiting list.

“This commercial growth demonstrates our progress and we have a vision for the club that is shared on and off the pitch by our majority shareholder,chairman, our board of directors, the Everton Leadership Team, our director of football and manager.”

Everton Chairman Bill Kenwright said: “With Farhad continuing his outstanding commitment, Marcel and Marco driving our first team forward, Unsie continuing to develop some of the best young talent, Denise thrusting our operations ever onward and a fanbase that continues to inspire our ambition, we look forward to the next 12 months with purpose and anticipation.”