Everton has made huge financial losses under owner Farhad Moshiri. What would relegation mean for the club?
It’s been a long time since Everton last won a trophy.
“Shaking hands with his Royal Highness…and there it is! The cup held aloft! By Dave Watson. Everton’s day.”Everton FC
It was 1995 to be exact, 27 years ago. Some Everton fans won’t even remember it.
That’s a long time to be without silverware for a team that was a founder member of the Football League in 1888, and which has never been out of the top flight since.
So when new owner Farhad Moshiri – worth $2.7 billion – bought a majority stake in the club in February 2016, Everton fans thought they might see an end to their barren spell.
But so far, things have become even worse.
“They’re lazy, spineless cowards. With no character, no leadership. They’re not talented enough, the back four. Andy got it spot on before when he was talking before about Mason Holgate…not good enough. Michael Keane…not good enough. Jonjo Kenny…not good enough. Put them all into one back four and it’s a recipe for disaster.”talkSPORT
Everton sit just one place above the drop zone, albeit with games in hand over their rivals.
Last weekend, they were dumped out of the FA Cup by Crystal Palace in some style.
“Tough day Frank…what went wrong from your perspective?”
“Well, the result, clearly, but it’s never a game we should lose 4-0. And I’m not defending us, what I’m saying is we were good for 20 minutes, the better team. We weren’t much worse in the rest of the game in terms of our play…it was off slightly and every time we concede, our heads go down, we get a bit worse…”ITV Sport
But results aren’t the only problem.
Farhad Moshiri has pumped an estimated £450 million into the club since taking over in 2016.
His money hasn’t made much difference though. In fact, Everton’s performance has steadily got worse.
There’s also a real danger that their spending has breached the Premier League’s Profit and Sustainability rules.
“So they’ve got 260 million worth of losses from 17/18, 18/19 and 19/20. They’ve probably got around about 160 million worth of allowable adjustments, which will bring their losses down over that three year period…17/18, 18/19, 19/20…to a hundred million. We’re inside Financial Fair Play. Then you wallop on 20/21 accounts, which means you’re now going from 18/19, 19/20 to 20/21 accounts. They will be at 200 million worth of losses. They will be a hundred million outside the Financial Fair Play governance.”Talksport
As a result, sanctions – even a points deduction – could be on the way.
How has it come to this?
A high managerial turnover means Everton has paid out £32 million in compensation payments in the last four years, and that’s before you factor in this season’s sacking of Rafa Benitez.
His contract was worth £24 million and ran to 2024, and the two parties negotiated a suitable severance package when he left. It won’t have been cheap.
Between 2016 and 2020 Everton received £272 million from player sales.
The problem is, they spent £566 million on new players over that same period, while the wage bill has doubled to £165.
And if Everton are relegated to the Championship at the end of the season, Farhad Moshiri is going to find that his club is in a whole lot more trouble.
So what would happen to Everton if they dropped out of the top flight for the first time ever?
“Some of the players I know don’t have relegation clauses in their contracts that would see mandatory 20% pay cuts if they were to go down. So you could imagine if the worst does happen then…and god forbid it does…they’d be down paying huge wages in the Championship”Talksport
Paying Premier League wages in the Championship is only one of the problems the club would face.
Dropping into England’s second tier would see its revenue plummet as well.
In 2021, Everton earned around £140 million in broadcast revenue. In contrast, TV money for Championship clubs is around £8 million.
Parachute payments given by the Premier League to relegated clubs help, but at £40 million you can see that it won’t go very far.
The English Football League is also much stricter in terms of Financial Fair Play.
Just last month, its clubs agreed a new rule which means that the League can impose a business plan or appropriate monitoring when a breach is predicted.
In simple terms, their sanctions have become proactive rather than reactive, unlike the Premier League.
So far, Farhad Moshiri has bankrolled the losses at Everton.
But those rules in both the Premier League and the Championship will mean that he can no longer simply cover the mistakes with yet more money.
And if Everton are relegated at the end of the season, those mistakes will be so much harder to recover from.
Today’s story was written by Chloe Beresford and produced by Hannah Varrall.