Opinion

June (or January?) sales

A look at the Everton squad, who needs to be moved and the financial consequences of doing so

“Clear the deadwood”

A charge that’s been made by many members of the press and even more Evertonians since Marcel Brands arrived from PSV Eindhoven in May 2018. It is the apparently obvious route to reducing Everton’s bloated, expensive and in many cases under or non-performing squad.

The need to clear is apparent from both a playing and a financial perspective. From a playing point of view having a large squad filled with under-performing players doesn’t assist the core players; it reduces the effectiveness of coaching, medical and other resources plus from a psychological point of view hardly produces that essential winning mentality throughout Finch Farm.

Financially, it makes little sense either. firstly there’s the issue of wages with several players on bloated contracts, resources that could be used more efficiently elsewhere. Secondly, there’s the cost of amortisation – that’s the cost applied to the accounts by spreading the transfer fee over the length of the contract.

To have some sense of the challenges facing Brands in clearing the deadwood it’s useful to break down the squad, looking at length of contracts, the cost (& therefore value) in retaining certain players, the potential player trading profits from sales and those that, absolutely, the director of football and Ancelotti want to retain.

Contracts expiring June 2020

Let’s start with those out of contract in June 2020. Players aged 23 or over are effectively free agents, permitted to seek new employment elsewhere in the final 6 months of their contract – benefiting from the Bosman ruling. Players under 23 are released free at the end of their contract (if not sold previously), subject to the club not offering a new contract to the player.

In the case of Everton, players entering the final 6 months of their contract are as follows; Baines, Niasse, Stekelenburg, Martina and Garbutt. Of these players only Baines has the potential to be offered a contract extension.

The club will benefit from losing the four remaining players off the wage bill. Niasse was moderately expensive, the others less so (Garbutt also being on loan).

From the U23 squad the following players’ contracts will expire in June 2020: Gibson, Feeney, Ouzounidis, Markelo, Evans and Phillips.

Players with contracts greater than 6 months but not featuring in the first team squad

Player	Years left on contract	Current Book Value £m
Kenny	2.5	0.00
Pennington	2.5	0.00
Dowell	1.5	0.00
Ramirez	1.5	2.00
Tarashaj	1.5	1.35
Bolasie	1.5	7.80

Everton still retain the registration of several players who either were purchased during the Koeman/Walsh reign or haven’t made the transition from promising youngsters to first team squad members:

All the above are currently loaned out and are due to return to Everton at the end of May 2020 (Tarashaj 2021). The obvious question will be who will be retained at the club, who will be offered for sale and who will be lent out again (if possible).

Kenny is clearly the stand out player in this list. He would command a sizable fee if sold (which would represent pure profit for the club in player trading terms) or if Sidibe is not retained, potentially brought back into the first team squad. The selling of Kenny and the acquisition of Sidibe would be a highly profitable trade.

Ramirez remains a significant expense in terms of wages and carries a relatively low amortisation charge. Given the nature of his contract it is unlikely to see him leave for a permanent transfer elsewhere, so a further loan and sharing of wage costs seem most likely. Bolasie meanwhile hits the P&L on both wages and amortisation. The annual cost of retaining him (amortisation and wages) must be greater than £9 million a year. Although Sporting of Lisbon have an option to buy it is most likely he will return to Finch Farm in the summer seeking one final loan before his contract terminates in 2021. Pound for pound one of our most expensive acquisitions relative to value ever (Sigurdsson may challenge that though).

Pennington and Dowell seem likely to be sold on the assumption neither are going to make the first team squad, although their transfer values will reflect their inability to develop once promising careers. Tarashaj’s loan is until 2021, the end of his Everton contract so is unlikely ever to return.

First team squad members

Contracts expiring in 18 months

Of the first team squad, two players have contracts expiring in June 2021. In the absence of offering contract extensions before entering the final year, the assumption must be that buyers would be sought for both players.

Schneiderlin has 18 months left on his contract and assuming someone is willing to meet his current expensive wages, with a current book value (cost minus amortisation) of £6.9 million, may still represent an opportunity to generate a player trading profit for the 2019/2020 financial year.

Walcott similarly is on high wages and has a relatively high book value of £8.68 million. The January window, which is largely a seller’s market, maybe the right time to move him on, again in accounting terms generating a useful profit for the club.

Players not wanted by Brands/Ancelotti?

Of the current first team squad those most likely to be sold or those that have proved possibly unsuitable include Tosun and Sigurdssun. Both have had disappointing Everton careers, both were expensive to acquire and continue to enjoy hugely rewarding contracts:

Player	Years left on contract	Current Book Value £m
Sigurdsson	2.5	30.00
Tosun	2.5	11.39

The question for Tosun is whether he is prepared to move to another club at a fee which suits Everton whilst also matching his current contract. Interest in the player from oversees also seems to stall which suggests meeting both requirements is a difficult task.

Sigurdsson may or may not be wanted by Ancelotti. There is growing frustration from Evertonians as to Sigurdsson’s effectiveness. However the size of his transfer fee and therefore his retained book value might mean there are few buyers at the value Everton would expect to attract. Sigurdsson maybe a player we need to take a loss on in order to move on. Alongside Bolasie, a hugely expensive acquisition.

Both Tosun and Sigurdsson appear to offer little in the way of player trading profits although clearly their disposal would free up value funds in terms of wages.

From all of the above it is clear that from a financial perspective, “clearing the deadwood” apart from reducing wages (thereby benefiting the P&L) does little for Everton’s player trading account.

Not the deadwood

The remainder of the squad are unlikely in anyone’s book to be considered “deadwood”. However, from a financial and possibly playing perspective there’s some opportunities to move players effectively and profitably.

Player	Years left on contract	Current Book Value £m
Pickford*	4.5	15.20
Keane	3.5	18.00
Mina	3.5	23.34
Holgate*	2.5	0.28
Digne	3.5	13.16
Gbamin	4.5	20.95
Gomes	4.5	20.25
Delph	2.5	7.13
Richarlison*	4.5	24.82
Iwobi	4.5	25.47
Keen	4.5	23.04
Calvert-Lewin*	3.5	0.68
Davies*	3.5	0.00
Bernard	2.5	0.00
Coleman*	2.5	0.00
Lossl	2.5	0.00
Baningime	2.5	0.00

players with contract extensions (for the purposes of calculation book value)

From the list above (and this assumes replacements are lined up, replacements which improve the squad position for position) I’d suggest Pickford, Keane, Bernard and even Tom Davies (I know….) might be attractive options to release. All it could be argued have not quite met the expectations made of them at Everton. All would command significant profits – for example Pickford at £35 million, Keane £30 million, Bernard £20 million and Davies at £25 million would produce a player trading profit of approximately £87 million. In the case of Bernard and probably Pickford substantial wage reductions also.

A thin squad requiring significant replacements & up-grades

In the event of the above we’d clearly have a very thin squad and would need significant in-comings and assuming Ancelotti wants more than just potential within his replacements, some expensive acquisitions. Profit and sustainability concerns would probably still impact the latter, but the player profits and wage reductions anticipated above would provide the room to re-shape the squad in the image of Ancelotti and Brands, and finally remove the vestiges of the disastrous 2016-2018 transfer windows.

Whatever happens, the need to dispose of players is paramount, then it’s down to the skills of Brands & Ancelotti to execute their plans well. I suspect it will be the summer before we see the fruits of their thinking, certainly on the purchase side of the ledger.

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