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Potless In Poundland

Although Bill Kenwright’s search for investment goes on, and on…and on, David Moyes recently suggested Everton are a more attractive prospect to buyers than Liverpool. So, following the release of a recent report breaking down Premier League clubs’ finances – and having recently focused on Kenwright as part of the Know Your Owner feature – it seems fitting to compare and contrast the (mis)fortunes and financial figures of Merseyside rivals Everton and Liverpool.

(Published club finances: Everton accounts for the year to 31 May 2009. Liverpool accounts for the year to 31 July 2009)

The debts for Premier League clubs generally and cumulatively are quite staggering, though certain clubs clearly hoard a greater share; yes, yes, I’m looking at the likes of you, you naughty red devil – or, more specifically, a Glazer shaped devil – with a net debt of nearly £717 million and interest payable of £69 million (but that’s a gruesome horror fable for another night). In terms of the Merseyside clubs in question, there are a few standout figures areas of interest.

It should be noted here, this is not really an appraisal of on-field performance (though that may well bear consequential significance) or a broader analysis of long-term history and financial structures, but rather a succinct comparison of the recent financial figures and situation (For a more specific analysis of Everton Chairman Bill Kenwright and his tenure at the club, Click Here).

Both clubs have debt. Whether there is such thing as a ‘good debt’ is dubious, and fans certainly don’t want to compare their situation to the sickness of others (they want success and a steady ship on their own terms), but Everton’s debt is ‘mediocre’ by Premier League standards. Nevertheless, at £40 million is still a perturbing liability; particularly since – in addition to the chairman’s funds being notoriously scant – the expected safeguarding of increased match-day revenue, through the controversial Kirkby project, was thwarted by a Government rejection of the proposal. On top of this debt, interest of £4.1 million was payable.

According to the report, Liverpool’s debts reached over £390 million, with interest payable of £40 million. This is, of course, a consequence of the appalling debts Tom Hicks and George Gillett have saddled the club with through their leveraged buyout. Loans to complete the takeover and further exorbitant interest rates are the major crippling causes, whilst failure to qualify for the Champions League and slipping to seventh this year is thought likely to cost Liverpool over £30 million.

Everton’s turnover rose by 5.3 % on the previous year, totalling just shy of £80 million. This was largely due to improved team performances during the period and subsequent increased TV rights, but, despite all this, a pre-tax loss of almost £7 million was actually recorded. An area where Everton are noteworthy – ensuring this pre-tax loss and net debts are maintained at ‘manageable’ levels – is with regards to wage bills. Given they are now consistently challenging for European places and boast a considerable array of talent – often attracting attention from elsewhere – wages of £49 million seem to be at a sustainable level.

This all suggests the club is run in a relatively stable manner, though debt and interest payments are continually taking their toll. In regards to the transfer market and wages required to further attract players, the funds are simply not available to persistently contend with the Premier League money-men and thus break the structural barrier. It is testament to David Moyes that he has fashioned a side capable of on-field advancement given these constraints; though he is often required to cash in on playing staff in order to pursue further transfer targets. Again this illuminates the investment and expansion required for Everton to consistently compete at the ‘next level’; investment Kenwright has apparently long been ‘searching’ for, investment Moyes clearly craves.

Liverpool also saw an increase in turnover, greater than that of Everton, standing at around £185 million; an increase of nearly 13% on the previous year. Moreover, at only 56%, the wage bill as proportion of turnover is also admirable. This would all look quite lovely if only it wasn’t for the great big monstrous looming shadow of debt which is an inescapable point of return. The leveraged buyout has left the previously relatively healthy operating profits of 2007/08 wiped out by interest payments. These are evidently worrying times for Liverpool; the hope has to remain that they can rid themselves of the nightmarish Hicks/Gillett co-ownership and secure a takeover as swiftly and painlessly as possible.

Finishing seventh and eight respectively, both Liverpool and Everton have recorded lower final league positions than the previous season; the gap visibly seems to be closing. In regards to who is a more attractive prospect to would-be buyers, clearly other variables are vital and so this competitively framed conundrum and point scoring is not the crux of concern here. Everton currently seem to be the more stable club, but both clubs reside over debt, both are actively seeking opportunities for ground development or relocation, and both clearly need investment. It’s an old cliché – but a cliché of substance and one I will wield out nonetheless – that the city Liverpool is a great football city. You get the feeling something drastic is needed to push it forward and see both its major residents returned to the days of glory past.

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