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Tuesday, October 11, 2011

Everton, facing up to harsh economic realities

Supporters may not like the medicine and many Evertonians will claim the club’s malaise has been exacerbated by decades of boardroom underperformance, but at least Everton are clearly facing up to their off the pitch predicament.

Former Everton CEO Trevor Birch, now head of corporate recovery at leading accountants and business advisors PKF, reveals that football clubs are taking unprecedented steps to try to keep their costs under control as pressure continues to build on revenues.

In their tenth annual survey of “Football Club Finance Directors" Trevor explains, “The absence of a meaningful economic recovery and looming financial fair play rules are forcing clubs at all levels of the professional game to peg their costs more closely to revenues, which remain under serious pressure. As a result, football clubs have realised that they need to make tough choices with wage-related costs to get their finances back on track - albeit several years later than most other British businesses”

The report also reveals that the percentage of football clubs which have increased the level of bank facilities over the past decade has fallen steadily from more than half to just 10% in the past two years as banks have become reluctant lenders to football clubs.

With almost 70% of Premiership Clubs agreeing to abide by UEFA’s financial fair play regulations, and a depressed economy, the pressure on a clubs ability to cut costs in the face of difficulty in developing matchday and commercial revenue streams is paramount.

The cost cutting measures at Everton, particularly in the staff costs area, were highlighted at the recent Blue Union meeting at Zeligs; as were the difficulties the club face in making significant developments in their commercial and matchday revenue streams; a result of the complex issue of the stadium remaining unaddressed by the current board of directors. The conclusion arrived at being that cutting costs as opposed to making significant increases in revenue was the more achievable and effective strategy.

A copy of PKF’s report titled, “Open To Attack – The Annual Survey of Football Finance Directors 2011” can be obtained here.

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