The final months of last season proved to be among the most challenging in recent memory for Everton.
Mired in a relegation battle few had anticipated, they – like many other clubs – were also forced to contend with growing financial uncertainty brought about by the pandemic and Russian invasion of Ukraine.
Given the nature of their links to Uzbek billionaire Alisher Usmanov, a close business associate of the club’s owner Farhad Moshiri, the latter hit Everton harder than most. Ties had to be severed – or in some cases indefinitely suspended – with a host of sponsors linked to Usmanov.
As those deals are worth an estimated £ 20 million a year, a sizeable hole was left in the finances of a club who had already posted three consecutive losses of more than £ 100 million.
There were question marks around Everton’s finances before those partnerships were suspended. Without them, even more so.
For the financial year 2019-20, at least £ 42 million of Everton’s £ 64 million sponsorship receipts came from USM Holdings (the company in which Usmanov holds a 49 per cent stake) alone.
Then there is the anticipated loss of USM as a potential sponsor for the club’s new stadium. Included in the same set of accounts was a £ 30 million sum from USM which granted it first option on naming rights at the new facility at Bramley-Moore Dock. The direction of travel at the moment is that such an option is highly unlikely to be exercised.
Everton knew existing revenue streams would need to be improved, and partnership portfolios diversified. With the USM arrangement suspended indefinitely, and unlikely to get reinstated, that is almost certain to include looking for a new stadium naming-rights partner as well as a new training-ground sponsor.
The first formal hint at a pivot in strategy came from chief executive Denise Barrett-Baxendale in April.
“In trying times, it means acknowledging a need to be pragmatic in order to serve the club as best we can,” Barrett-Baxendale wrote.
Richard Kenyon, Everton’s director of communications, revenue and international growth put further meat on the bone soon after.
“Across the club, we’re looking at areas where we can generate more income,” he said. “We need to be bringing more revenue into the football club so we can compete with the clubs at the very top end of the division.
“We have a greater focus on maximizing commercial revenue.”
“Pragmatism” has been a buzzword for Everton ahead of a summer in which they are looking to drive growth and are expected to announce a number of new commercial partners.
They have reviewed all of their existing partnerships in an attempt to maximize revenue opportunities, with the decision taken earlier this season to take up the break clause in their agreement with current main partner Cazoo.
That deal with the car-sale company ends soon, with a new front-of-shirts partner expected to be finalized in the near future and on improved terms.
Out of necessity, though, the approach and tone have noticeably shifted in recent months.
Where once Barrett-Baxendale said that “in an ideal world” the club would not be sponsored by a gambling company, referring particularly to the decision to part ways with Sport Pesa, now there is a feeling internally that very few sectors can be ruled out completely – that, in simple terms, securing the maximum amount possible for the 2022-23 season is the priority.
It opens up the possibility of Everton working again with a gambling firm, or indeed moving into new space with a crypto partner.
There is also clear room for growth elsewhere.
Everton were the only side in the Premier League not to have a sleeve sponsor last season. Despite interest, no party has yet met their valuation for that patch of their kit. The chances of them budging on their price are minimal, for fear of potentially devaluing other commercial assets.
It is one of a number of strands that will be explored as they look to plug the gaps left by the loss of USM’s funds.
The aim internally has been to put foundations in place for growth ahead of the move to the new stadium in 2024.
Over the past 18 months, a new structure has been introduced to Everton’s UK-based commercial team, with a multi-tiered strategy laying out growth plans over a five-year period.
Informed by industry experts, the strategy will be carried out by dedicated staff on multiple continents. Everton now have bases not just on Merseyside but also in North and South America.
They have also followed fellow north-west-of-England sides Manchester City, Manchester United and Liverpool in having a London-based commercial presence, which is focused solely on securing partnerships. Staff at Everton’s London office have been tasked with drawing on their experience working with / at other clubs, including Paris Saint-Germain and Manchester United, as well as in other sports such as the NFL and Formula 1.
In the US, Everton are working closely with Miami-based Pulse Sports and Entertainment, which is headed up by Jurgen Mainka, a former CONCACAF chief commercial officer who has also worked with new MLS team Inter Miami.
Everton are close to securing a tenth partner for their International Affiliate Program, while they expect to stage soccer camps in around 20 US states this summer. Both are said to have brought in seven-figure revenues.
As part of a wider international growth plan, strategic partnerships have also been secured with consultants across South America with a view to increasing Everton’s media presence and fan base in countries such as Brazil and Colombia. Globally, the number of Everton supporters’ clubs has increased to more than 250.
Much closer to home, Everton announced their first season-ticket price increase in a decade earlier this year. With annual retention rates higher than 98 per cent, it is expected this rise will generate up to £ 1.5 million in extra revenue.
Despite a season of stark underperformance on the pitch, there continues to be substantial demand for match tickets. In the past three seasons, Everton’s season ticket waiting list has gone from zero to more than 25,000.
A quarter of Goodison’s capacity on a match day is now taken up by fans under the age of 22.
Yet the need to diversify and drive further commercial growth is clear here, too.
Goodison, for all its allure, does not offer the same commercial opportunities as other top-flight stadiums. It has far fewer corporate boxes and lacks the scope for selling premium packages in the way that, say, Tottenham’s new stadium does.
Nor do Everton as yet pack the same commercial punch as some of the clubs they are looking to emulate. They were 18th in the latest Deloitte Money League table, with revenue of € 218 million. Not only did they lag far behind some of the Premier League’s traditional elite, but they also finished behind West Ham, Leicester and Wolves.
Even with those USM sponsorship deals, there was an acceptance in some quarters that Everton were only ‘at par’ commercially for a club of their status and tradition. Without those funds, substantial questions remain.
The hope is that the Bramley-Moore Dock move can be a “game-changer,” as Kenyon puts it.
“The biggest benefits will be when the stadium actually opens its doors but, in that lead up to it, we’re already seeing a lot more interest in Everton and the partnership opportunities the new stadium presents,” Kenyon said.
Before then, the aim is to navigate back onto firmer financial ground.
Across all aspects of the club, particularly the footballing and commercial ones, a big summer awaits.
(Top photo: Emma Simpson / Everton FC via Getty Images)