The reasons for the club’s reluctance to enter the market this January are very clear. The “financial conditions” referred to by Silva are on the basis of very obvious commercial considerations not per se driven by compliance issues relating to FFP.
There has been much talk in the media both locally and nationally regarding Everton’s ability or willingness to acquire new players during this January window.
Marcel Brands commented at the Annual General Meeting on the unlikelihood of doing business in the January window and, in his most recent pre-match press conference, Marco Silva was quoted as saying:
“We don’t have the financial conditions to go into the market at the moment, I have to find different solutions. We will only be using the market if we sell one of our players, but that doesn’t mean I am looking to sell to raise funds.”
It has been suggested the financial conditions referred to by Brands and Silva related to what is commonly called “financial fair play” (FFP). In the strictest sense, Everton as non-participants in European competitions this year are not under the jurisdiction of UEFA’s FFP regulations but, if we are to qualify next season, our financial performance this year would be relevant once more. However, we do obviously fall under the Premier League’s own financial regulations namely Short Term Cost Control and Profit & Sustainability rules.
Short Term Cost Control (STCC) was designed to hold back the increase in player wages, and Profitability and Sustainability rules providing a cap on the maximum losses permitted by a Premier League Club.
Short Term Cost Control
The current STCC rules have been in place for 3 years and expire at the end of this season. From the Premier League Handbook, Rules E.18, E.19 and E.20 cover STCC. Essentially they permit clubs to increase wages year on year by a maximum of £7 million p.a. covering the three seasons 2016-17 through to 2018-19. There is however scope to increase wages using “club own revenue uplift”
Club own revenue uplift (CORU) includes all increases in revenues other than broadcasting revenue, so includes match day, commercial/sponsorship and importantly the average player trading profits over a rolling 3-year period.
As is clear from the accounts wage growth at Everton has been enormous in the time since Moshiri acquired his initial 49.9% shareholding. However, the question that needs answering is whether the STCC regulations would permit our wage bill to grow from last year’s £145.5 million.
In order to grow, we would have to see growth in non-broadcasting income and/or use player trading profits to justify increase over £7 million.
It is difficult to see any scenario where the non-broadcasting income for 2018-19 will be greater than the previous year. Therefore there will be no “contribution” from this source.
If we look at player trading, we have to take the average of the last three years including the current year 2018-19. The two preceding years have seen huge trading profits, £51.9 million (2016-17) and £87.8 million (2017-18). Trading activity has not concluded for 2018-19 but, based on the selling of Klaassen and Funes Mori in the summer we will show a small trading loss of around £2 million.
Therefore the average for the three years is approximately £46 million (assuming we sell no-one in this window).
Thus under STCC rules, theoretically Everton could increase wages this year by another £53 million in 2018-19 and still be compliant. Clearly, as you will see when looking at our projected profit and loss account for this year, we will not be doing this. The objective is to lower the wage bill following the enormous and wasteful increase in previous years, but this calculation demonstrates that STCC is not a barrier to wage growth.
Profit and Sustainability Rules
The Profit and Sustainability Rules are covered in the Premier League Handbook, sections E.53 to E.60.
This section of rules lays out the required responses from a club dependent upon the size of aggregated losses over a rolling 3-year period. The loss figure used in the calculations are different from the published figures in each club’s accounts as they do not take into account expenditure on club academies nor expenditure on stadium development.
The maximum permitted loss (rule E.59) is £105 million over the preceding 3 years. Above that figure, a club would be considered to be in breach of the rules.
Everton’s accounts show the following: 2016-17 profit £30.6 million; 2017-18 loss -£13.1 million. From that we can remove stadium costs (approximately £22 million) and academy costs (I’m going to estimate at £5 million a year).
That gives a positive balance of £49.5 million
Projected losses for 2018-19
Everton’s accounts for 2018-19 will not be published until much later this year, several months after the financial year end of May 2019. However, it is possible to estimate what the final figures might be.
2018-19 will show record losses for the club. With our wage bill remaining high, amortisation costs increasing, a reduction in turnover, continued expenditure on Bramley-Moore and a small negative contribution from player trading, I estimate we will show a loss of around £85-90 million for the full year.
This figure assumes we do not sell anyone in this window but perhaps one can see the temptation to sell Gueye at a substantial profit in order to recover some of the projected losses.
Even a loss of that magnitude will not see us breaching the upper limit set in the current profit and sustainability rules – our 3-year aggregate having removed the permitted stadium and academy costs would be less than -£40 million.
It does, however, demonstrate the absolute requirement from a purely commercial perspective to reduce costs especially player wages and the removal of a large number of non-contributing but hugely expensive signings made in the years 2016, 2017 and January 2018 window.
It also leaves us in a tighter position going into the financial year 2019-20; however, rules beyond 2018-19 have yet to be published.
UEFA Financial Fair Play
UEFA’s rules allow losses over a three year period up to €30 million per year if the excess is covered entirely by a “direct contribution/payment from the club owner(s) or a related party”. Moshiri’s capital injections meet this requirement. They also permit the removal of stadium and academy costs. If we were to qualify for European competition next year we would not fall foul of their regulations.
As I stated in my review of the club’s accounts, the excesses of the last two years are unsustainable. Our cost base is too high given our revenues, and it is unrealistic to expect the majority shareholder to continue to fund operating losses whilst at the same time be preparing to fund a significant element of the capital costs of building Bramley-Moore Dock stadium.
The reasons for the club’s reluctance to enter the market this January are very clear. The “financial conditions” referred to by Silva are on the basis of very obvious commercial considerations. They are not per se driven by compliance issues relating to the Premier League and UEFA’s financial regulations.
Reader Comments (50)
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1 Posted 20/01/2019 at 21:40:39
2 Posted 20/01/2019 at 21:46:50
So far, the best that can be said on the subject is that it is a work in progress. We have to hope that Marcel Brands's influence starts to affect results positively, and that Silva can get the best out of the staff at his disposal. I think both men have a responsibility to try to dojust that.There is no evidence (yet) that they don't.
The club isn't sufficiently funded to have massive net transfer and salary outgoings every season, particularly with the commitment we are looking for from Moshiri; Bramley-Moore Dock is crucial to the future of the club, and must not be undermined. We may have to temper our expectations of what we want on the field for a while.
3 Posted 20/01/2019 at 22:05:20
4 Posted 20/01/2019 at 22:09:53
5 Posted 20/01/2019 at 22:22:09
Plus we have whoever is promoted from the academy... plus by my count about 30 in or around the current matchday squad, minus Gomes and Zouma.
A lot of deadwood...
6 Posted 20/01/2019 at 22:24:09
I still feel a couple of quick fix signings would suffice right this moment in time and give the players and fans a much-needed boost because we are watching a squad and season just dying on its feet.
I know people are always worrying about five years down the line but I'd like to see something on the pitch here and now.
Moyes worked a bit of magic in 2012 when he plucked out Pienaar, Donovan, Gibson and Jelavic; all four of them injected a new lease of life into a horrid season.
Remember the loan signing of Aaron Lennon and Baines saying his work ethic shamed the rest of the team that was sleepwalking through the 2014-15 campaign.
Who can forget the impact of the loan signing Kevin Campbell in 1999?
We should be more shrewd in the market and try and have options rather than blow millions on overseas lads with no Premier League experience and evident struggles with the pace and frenetic nature of it all.
People say leave the signings until the summer but in all likelihood it will just be more punts on untried players from leagues abroad.
Out of the signings we made last summer you'd have to say the only one so far that has consistently fitted like a shoe is Lucas Digne.
The jury remains out on the other lads, even Richarlison for that matter at £45-50 million.
7 Posted 20/01/2019 at 23:09:40
Some of them are out on loan, but you can bet your bottom dollar that we are still contributing to their wages at their loan clubs. We need to sort the wage bill out. Let's get rid of some of these bad eggs who are giving us nothing, and get some good characters in.
I'm still hopeful that we can get a striker in on loan if we can get some of these players off the wage bill. But we need to sort this mess out. Who on earth sanctioned giving Schneiderlin £120,000 a week? Or Sandro £100,000 a week? We desperately need to get our house in order.
8 Posted 20/01/2019 at 23:39:30
9 Posted 21/01/2019 at 01:10:04
The man's a parasite. I thought he was leaving last September.
10 Posted 21/01/2019 at 08:17:46
Marco Silva is not the man for the job. I do not know why he was appointed.
11 Posted 21/01/2019 at 09:34:14
If ever a man threw good money after bad, it is he. He should be awarded a diploma for naivety – a 'double first' at that!
13 Posted 21/01/2019 at 10:23:56
Any manager worth his salt, would screw Silva, several times over, if he came sniffing around his players, then the player's agent would put the boot in, demanding higher wages. Yet, some members make it sound as though it's as easy as going to Tesco's for the milk.
I don't know what the answer is, but buying more players ain't it.
14 Posted 21/01/2019 at 11:20:05
Others want to go and get some short-term fix, but that's more money and risk in a season that a lot of fans have written off as a mid-table finish. So what's the point in paying £25M for an unproven striker when he'll have the same poor service?
It's great to aim high and in sport you just never know but many fans appear to believe, just like last season, because we have spent £100M on a few players, we are going to challenge the top 4 or top 6.
Hopefully, now realising that was an unrealistic dream, we can continue to to support the team and manager until the end of the season.
Remember, Moshiri went very public in announcing Silva was a big risk. IMO, that was a message, if things do not improve by the end of the season Silvas position will be under threat.
We have some talented players and some young promising players being given a chance and a manager that wants to play good attacking football. We are having a rough period but let's just try and offer support and encouragement to the team so Goodison Park is something to look forward too, not dread.
15 Posted 21/01/2019 at 11:34:12
Williams will not be returning. His three year contract expires in the summer.
Moshiri has overseen the most wasteful expenditure on players since the nineties. If he throws any more good money after bad, it will be time to question his sanity. It is hard to think of more than one or two of our players who have increased their value since joining us over the past three years. Gueye is the only one that springs to mind.
The first task now for Brands is to offload the surpluses as quickly as possible. Given the contracts most of them are on that will take another 18 months. In the meantime he needs to continue looking for players in their early twenties who can be expected to develop and increase their value over the period of their contract.
The previous policy of signing so-called proven talents aged 27 or over has been an abject failure from both a financial and a footballing point of view.
16 Posted 21/01/2019 at 16:50:54
17 Posted 21/01/2019 at 17:16:45
Unbelievable this... and, as mentioned above, we're going nowhere fast!
I cannot believe it has come to this!
19 Posted 21/01/2019 at 20:27:19
The dross on the list above cannot be blamed on Silva or even Allardyce for that matter. The only constant for that list is Kenwright and Moshiri.
I can only hope that the promotion of Brands to the board is a signal that Moshiri is stopping taking advice from the buffoon that is Blue Bill.
20 Posted 22/01/2019 at 00:14:41
#17 Ian, I could not agree more, the strategic, recruitment and commercial decisions of the last 3 years are shockingly poor. Belatedly there's a realisation that Moshiri's investment has largely been squandered.
21 Posted 22/01/2019 at 06:43:35
22 Posted 22/01/2019 at 14:05:36
I meant the other Williams (Joe) would be returning, John. I did forget to mention Browning too though.
23 Posted 22/01/2019 at 16:13:47
But, even taking in what has been said, as noted above by a couple of comments and in articles I have posted myself, we still have a whole load of not-fit-for-purpose players to dispose of.
This is a transition season (with, in my dreams, an FA Cup as well), so why have a panicked quick fix in January? Give Silva and Brands this season to fully grasp the job they have on their hands. They know what is needed and will have plans for the summer.
The summer business last year was good and I have confidence they will get it right again this summer. It is a season of transition and learning for them — not a season for any January quick fixes.
24 Posted 22/01/2019 at 16:53:00
Then we had Vlasic letting slip that, as a professional footballer, he'd been startled to see the squad enjoying a daily fry-up for breakfast at Finch Farm after Koeman signed him. He said it wasn't for him. Why are our unfit, weak millionaire athletes able to stodge out in this way in the "training" ground itself? Are they still at it because nothing's visibly changed in nigh on four years on the pitch?
Maybe it ain't ALL the players though (albeit with some of them it definitely is). Maybe it's off-field staff who've been there since, ooh, February 2014 or so. They're the only common denominator after all.
Getting rid of them and the blob who employed them should be Brands's first job.
25 Posted 22/01/2019 at 17:18:03
I am not doubting your source but both are shocking if even remotely true.
26 Posted 23/01/2019 at 12:10:14
Players being kept on longer than they should;
Contracts not available elsewhere;
Koeman & Walsh – mug contracts and purchases;
Allardyce & Walsh – the same.
Appointing / Tapping Up of Silva, before Brands started.
This has all reflected itself in the accounts and in a disregard for regulations or plainly not knowing.
It's going to be a long haul out of this mess. Hopefully Brands knows what he is doing, no-one else sure as hell does. Silva is in a real tight spot, which he may not have the ability to deal with.
A 5-year plan is now looking like a 10-year plan: 5 years to get stability and 5 years to progress after that.
27 Posted 23/01/2019 at 14:58:23
28 Posted 23/01/2019 at 15:16:43
By most accounts Onyekuru shows up about once every six games. The Anderlecht coach and the Gala coach have both criticized him for that. Nigeria don't exactly have a plethora of wordy strikers right now and he cannot get a game.
29 Posted 23/01/2019 at 15:30:31
30 Posted 23/01/2019 at 15:56:03
Unless they are offered parity with what they currently earn, they would rather stay on Everton's books and slaver about on loan or sitting in the stands. Whilst for the fans, Everton is a love affair, for these players it is just a job.
Come the summer (assuming nothing happens in the remainder of this transfer window) we will have the following returning to Finch Farm:
Garbett £20k per week
Besic £45k per week
Bolaise £80k per week
Niasse £50k per week
Martina £25k per week
Vlasic £40k per week
Mirallas £70k per week
Ramirez £100k per week
Holgate £25k per week
Dowell £15k per week
Williams (Joe) £10k per week
Pennington £10k per week
add to that the players that Silva doesn't appear to fancy (many which we as fans don't fancy) or who are coming to the end of their time:
Schneiderlin £80k per week
Tosun £80k per week
McCarthy £55k per week
Jagielka £55k per week
Baines £55k per week
Stekelenburg £30k per week
I've probably missed a few from this list but that is 19 players, of which only three or four would be expected to be retained (Holgate, Joe Williams, Baines for another year maybe, and Dowell as long as his current loan spell shows he has what it takes; maybe Vlasic). None of this list of players are regular starters for the first team so we would be no worse off if we sold all of them and didn't bring any players back in.
I think Brands will be spending most of his time trying to get £850k a week off the wage bill before he can turn his mind to who we will bring in.
31 Posted 23/01/2019 at 16:19:13
The lack of movement so far this month — except for four more loans and one returning home to roost! — just underlines the difficulties facing Brands. All the signs seem to indicate that Moshiri has put a stop to the crazy spending. I can't help feeling that is a warning to Silva, which he is not responding well to so far.
The ones you missed off, by the way, are Robinson and Onyekuru, with Ashely Williams, Joe Hilton and Callum Connolly the only loanees (out of 18 so far this season!) whose contracts expire this summer.
32 Posted 23/01/2019 at 16:26:26
The quote from Baines was in the Echo, “Before Saturday, his (Lennon's) work-rate had, in some respects, been the catalyst for us to get the results.
“We haven't played great but if you think about the games with Newcastle or QPR and the amount of times you see him tracking back and nicking the ball off people and doing that work, it makes a massive difference.”
Baines added: “It starts to embarrass people into doing it as well. If you're not doing it and someone, who is not only giving you loads at the top end of the field but is also coming back and doing that, it embarrasses people into doing that.
“It is infectious but it is also encouraging when you see someone who is renowned for his attacking threat working so hard, it makes the other lads want to match that. He has been infectious.”
It's comments like those that really caused me to turn against the Kenwright lackeys at Finch Farm, as well as some players, as well as Kenwright.
33 Posted 23/01/2019 at 17:23:29
Maybe the weight of this problem and the potential length of time it will take to resolve is part of Silva's issues with finding the right players from what he has to fit into the system that he wants to play.
We all applauded Brands and Silva's approach to buy younger, hungrier players during the summer, but younger players are more inconsistent and can have periods where their form dips. When you try to integrate so many over a short period of time you need the more experienced players to step up and support them; unfortunately ours (Sigurdsson, Coleman, Walcott, Tosun, Schneiderlin) are also playing below par. Couple this with Silva trying to introduce a different style of play and it is easy to see why it is currently not working.
Silva can see, just like the supporters, that we need a pacey, strong centre-forward, we need a sitting defensive midfielder (Carsley style rather than Gueye), and we have to address the right-back situation. But, until we offload a substantial number of the players mentioned in my previous post, we won't be signing anyone despite the obvious need for them, and that could take two years due to the contract lengths on some of the players we need to transfer.
Silva needs different players to fulfill his style of football and he can only coach so much into players who on match days can't string two passes together. No amount of coaching can change poor play and bad decision-making. He has a limited number of players he can choose/rotate and if 6 or 7 are playing poorly every week then it is difficult for any system or team plan to work.
Sacking him will not be a solution as who else will take the reins if they are told they have no transfer kitty and we have to offload 10 or 12 players before sanctioning any incomers? Despite what we would like, we have to stay patient and trust that Brands and Silva can over the next two seasons continue to bring in younger, hungrier players who might just have some re-sale value if they don't work out. I think thoughts of breaking into the top six are not realistic until all the deadwood are gone from the books completely.
34 Posted 23/01/2019 at 21:52:54
The wages that some players are on is ridiculous. . . Ramirez – £100, 000 per week; Bolaise, Scheiderlin, and Tosun – £80, 000 per week. An absolute joke. These are very average players. What a mess.
Definitely 5 years to find stability and 5 years to rebuild.
35 Posted 23/01/2019 at 22:07:28
Aaron Lennon was a good player for Everton, far better than Walcott. He should never been sold; he would make a difference to the present team.
No wonder Vlasic wants out, all the young players will want out. Lookman has his eye probably on a move as well.
The backroom management of Everton is rotten to the core and clearly is not contributing to Everton's play; Silva should have been able to develop players more but, with these backroom boys, there is no chance.
There are reports in Spain that Mina is looking to go back.
36 Posted 24/01/2019 at 11:01:20
Could I just say where is the justification of attacking Bill Kenwright all the time? Look at Mike Ashley at Newcastle Utd, they have an owner who is arguably a lot richer than Bill and contributes nothing.
I am more worried about what happened last season. Under his stewardship we have had some decent attacking teams and we think about who we were purchasing, something that benefitted the team at the time as the change was gradual.
The money we have wasted under Koeman and Walsh is almost criminal. We have had the money now and I feel now we are a bigger laughing stock as we don't know how to spend it or use it to buy out-of-their-depth managers.
Time will only tell if Silva is the right appointment, for me I think not. Scorn me for my comments but I think we should have gone hell for leather for Rafa. He is always consistent and has discipline something sadly lacking at our club since the Moyes era.
Brands I do have faith in, although the football is not great at the moment I do believe, with the right direction, these players we have are capable of at least challenging the top six in games. One last thing: I always thought that playing players in position would get the best out of them, let's put some strikers on the field instead of playing wingers up front!!!
I don't know what you think to that, everyone, just my state of mind at the moment.
37 Posted 24/01/2019 at 12:14:13
38 Posted 24/01/2019 at 19:52:21
39 Posted 24/01/2019 at 20:07:27
How about the renaming of St.James Park for sponsorship purposes?
Or go talk to a Rangers fan about their merchandising woes.
Kenwright is no saint and is a root cause of a lot of our long-term problems. But he is an absolute godsend compared to that Ashley charlatan.
It shows how bad times are/were if we have to use Ashley as a comparison to make Kenwright look good.
41 Posted 24/01/2019 at 20:12:27
42 Posted 25/01/2019 at 03:34:09
Same with the still unproven coaching staff. We had a fearsome man-mountain of a striker in Lukaku who, we can assume, was Big Dunc's remit to turn into the next Drogba type. Never happened...
And it is the same with Calvert-Lewin. His meek half-a-smile after having a good goal ruled out v Spurs proved he's still another timid one. The Red Shite's forwards would've been screaming, chasing the ref, including the manager.
All this is connected to the mentality and acumen of the staff at our club.
43 Posted 25/01/2019 at 16:03:12
44 Posted 25/01/2019 at 16:30:22
Brands has a terrible mess to sort out, no doubt. To have that many average players on high wages speaks terribly of the stewardship under the likes of Koeman, Walsh, Kenwright and Moshiri. I guess retrospective blame is easy.
Plenty of fans on here were celebrating the signings of Bolasie etc with comments like 'it's not our money!'. Except its our club. And now it's in a mess. Expect more loans while those players run down their contracts because no-one else will match those wages whilst paying a transfer fee.
45 Posted 25/01/2019 at 16:49:19
I think we were always about 6th in the league for wages, we didn't pay mega money for anyone, but we did pay them well. This kind of counteracted the fact that we had no money to spend on transfers. It at least enabled us to keep hold of the players when they were here.
Nowadays, we pay huge sums because we can't offer them anything else. And players become lazy because of it.
46 Posted 25/01/2019 at 16:58:12
I did a little cursory research and looks like our wage bill jumped from £56m per year in 2016 to £78m in 2017. That's a 40% increase!! In the league, we went from 11th to 7th.
The big thing that changed in 2016 of course being the arrival of Moshiri. And Koeman and Walsh. Somewhere therein lies responsibility for this mess.
47 Posted 25/01/2019 at 17:01:43
Kenwright was taken off transfer dealings after negotiating the Sigurdsson fee up from £27M initial offer to £45M. Most generous with someone else's money rather than his own.
Now it has been rumoured he is complaining about being sidelined. It was a bad day for EFC when he became involved with the club.
48 Posted 14/02/2019 at 20:36:45
One of the main reasons for our poor results is the lack of a striker. If you agree with the “can't afford to buy any more players” take on things then you are effectively condemning us to mediocrity at best, or the threat of relegation at worst.
Look at where we are. Whether or not we sold any players in January, a striker should have been the absolute minimum to have brought in. Of course, a loan deal would have been fine if the right player was available. Failing that, we should have spent money.
I agree that we have players who we should have attempted to sell. Leading these being Schneiderlin who is very poor. Despite this, it appears that no attempts were made to sell him from the Manager's comments.
I have no idea who is paying the wages of players on loan but not all of those players are poor. Besic, good; Keiran Dowell, good; Holgate, good; Garbutt, career ruined; Williams, promising; Vlasic, promising; Pennington, promising.
If you had a choice between a hardworking Besic and Sigurdsson, who would you choose? Alternatively, Vlasic and Sigurdsson. What about Banigime? Sometimes, we need genuine commitment, drop players like Sigurdsson and Richarlison for a few weeks until they can commit themselves properly and recover some form.
We have problems at the back, particularly Keane, but we send Holgate on loan. We have problems in midfield because of inconsistency but Besic has gone and McCarthy is left rotting on the bench.
We haven't got a striker but we don't buy one and let Niasse go. Niasse is a better striker than Calvert-Lewin, Richarlison and Tosun. He isn't great but does provide a different choice. Niasse has been known to score despite his rather erratic performances.
Keep Moshiri out of football decisions (including Manager appointments), give this to Brands + the manager's job – get rid of the Director of Football idea because we don't need one – and sack Silva.
49 Posted 14/02/2019 at 21:24:43
50 Posted 14/02/2019 at 22:56:57
I might be exaggerating because the European ban killed Kendall's great side, and possibly stopped us dominating for a longer period, but the greatest ever Evertonian, hasn't even had to use all his acting skills, to hoodwink the masses, and make his fortune along the way.
This fella was even prepared to move Everton to Kirkby, although to his great credit, he said he was glad when this move wasn't allowed to happen!
51 Posted 15/02/2019 at 00:19:09
52 Posted 15/02/2019 at 01:20:21
53 Posted 15/02/2019 at 01:39:45
Besic over Sigurdsson? Not only is it lazy to say he isn't hard-working – his goals have been key to us this season. What would Besic add except yellow cards?
Holgate over Keane? Do you remember when Holgate was playing regularly? He looked so far out his depth.
McCarthy rotting on the bench? He's only been fit for a month and his natural position would be Gana's. Are you seriously suggesting he is better than Gana?
Niasse better than any of the 3 mentioned? Now you need your meds, fella.
Baningime has been injured.
Has Brands ever been a football manager? Or is his reputation built around performing in his current role? And in many ways, his influence is already showing.
You're off ya bean, lad!!
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