Everton left reeling by record losses
Club pay high price for sacking four managers Ancelotti told funds still available for new players
Everton are preparing to announce the biggest losses in their history and will hand Carlo Ancelotti a smaller immediate transfer budget than Marco Silva’s ill-fated splurge in the summer.
Ancelotti will be assured funds remain available to bring in key players, with Juventus centre-back Merih Demiral high on the Italian’s wish list. However, the club will closely regulate spending for the current window and have plans to offload a host of fringe squad members.
Sources close to the club confirmed record losses would be released within days for last season, but maintained they were not at risk of breaching financial fair play rules and long-term investment in the squad and the club’s new stadium would not be affected.
The latest annual report, delayed from its normal December publishing date, will lay bare at the shareholders’ annual meeting this month how the gulf with close neighbours Liverpool has widened again.
While today’s FA Cup third-round opponents broke the world record for the biggest pre-tax profit made by a football club during the 2017-18 financial year, Everton have suffered huge deficits – spending an estimated £450million on players since Farhad Moshiri bought a 49.9 per cent stake in the club in February 2016.
Total player costs, including wages and transfer fees since Moshiri acquired effective control, had already doubled from £106million in 2015-16 to £212 million in 2017-18 as investment accelerated.
The club recorded net debts of £66 million, down from a net cash position of £9.6million in 2016-17. Over the same period, the club made a pre-tax loss of £13 million compared with a profit of £30million a year earlier.
Everton already have the second highest wages-to-income costs in the Premier League, above Uefa’s 70 per cent spending “red line”, and have been unable to offset them by qualifying for Europe, which generated up to £40 million a season for the likes of Chelsea and Arsenal.
Unlike the two London sides, however, Everton’s financial management is no longer monitored by Uefa. Instead, the club are only required to fall within the remit of the Premier League’s FFP system. In England, profitability and sustainability rules allow clubs to lose £15million over a rolling three-year period, but this is increased to £105 million if the owner puts in equity investments of £30million a year, upon which Everton are heavily reliant. Costs have also been offset in recent years through profits on the sales of the likes of Romelu Lukaku, John Stones and Ross Barkley.
The as-yet-undisclosed losses have grown again to record levels in the past year, The Sunday Telegraph understands, with increasing player costs compounded by the club also stepping up investment in their new stadium project at Bramley Moore Dock.
The new figures will not take into account another summer of lavish spending in which the now sacked Silva recruited around £117million of talent, with £84million recouped in sales. Oumar Niasse is among a host of fringe players set to be shipped out.
Kieran Maguire, a football finance expert at Liverpool University, says the accounts illustrate how “management decisions have cost Everton dear”.
“In 2016 the sacking of Roberto Martinez and his staff cost £11.3 million and in 2018 Ronald Koeman and Sam Allardyce collectively cost £14.4million,” he said. With Silva being halfway through a three-year contract when he was sacked, he will have left a significant bill in next year’s accounts too.
Despite huge losses, Moshiri’s ambitions remain unflinching and last month’s appointment of Ancelotti, a three-time winner of the Champions League, is seen as a critical coup in the attempt to balance the books again.
Ancelotti has said he is in no rush to enter the transfer market after being linked with Real Madrid midfielder James Rodriguez.
There is talk of fresh investment from Russian billionaire Alisher Usmanov, who has built a £13billion fortune from Russian metals, telecoms and technology, and is a longtime business partner of Moshiri.