The departure of Marcel Brands has been yet another period of tumult in what has been a wretched few months for Everton.
The Toffees' director of football l eft the club at the weekend, his significant part in the failed recruitment policy at the club in recent seasons the source of much ire from Evertonians angry with the state that their club currently finds itself in under Farhad Moshiri's ownership.
Almost £300m spent on 26 signings, Brands' time at Goodison Park has not been a successful one and has certainly not delivered what was hoped for when he first arrived from PSV Eindhoven back in 2018. His arrival was supposed to usher in an era of strategic recruitment that would allow them to build a team capable of challenging with Moshiri's money against the deeper pockets of the so-called 'big six'.
Eighth, 12th and 10th placed finishes have shown Everton to be even further away from their stated aim in the past three seasons than even before Moshiri's takeover in 2016. Finishing 10th or below has occurred twice in the last two seasons, before Moshiri's takeover it was twice in the previous 10 seasons.
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Moshiri's takeover at Everton was supposed to signal a new dawn and usher in a new era where they would be able to become bona fide challengers for honours. Of course, a new stadium was key to the plans for all of this and that is something that has made great strides at Bramley Moore Dock, but on the field there has been nothing in the way of improvement, and the money ploughed into the playing squad over the past five years, money that was supposed to be able to help them bridge the gap with the top sides in the short term until Bramley Moore Dock was realised, money that it was hoped would deliver at least one Champions League qualification, simply hasn't manifested into any kind of success.
Everton are a club lacking strategy from the very top, something that is clearly illustrated by the very fact that they have had managers so diverse in approach as Roberto Martinez, Ronald Koeman, Sam Allardyce, Marco Silva, Carlo Ancelotti and, presently, Rafa Benitez. The focus has been on spending as much as is needed and finding the quickest route to success. It has been a policy that has backfired to the point where the club now have Financial Fair Play rules they have to be concerned about breaching, reflected in the summer transfer spend of £1.6m on Demarai Gray and the rest of the recruits made up by the likes of free transfers such as Andros Townsend and Salomon Rondon.
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The football side has reflected the financial side, too, with the lack of structure dragging Everton from a fairly comfortable place into being a club that has posted two of the top five when it comes to the worst economic losses in Premier League history.
Economic profit and loss is the method used by financial analysts Vysyble when measuring the financial performance of a business and is different to the commonly used metric of EBITDA (earnings before interest, tax, depreciation and amortisation).
The formula for working out economic profit and loss is taking the net operating profit figure and subtracting all of the capital invested into the business. Until a business turns a profit greater than the cost of its capital then it is a business that runs at a loss.
Under Moshiri, Everton have seen some £450m of capital come into the business in a bid to make them competitive on the field and also to realise the ambition of a new stadium.
Had the bid to be competitively successful worked through Champions League qualification during the past five years, with group stage participation now worth a minimum of £50m, then it would have made for more pleasant reading on the balance sheet, although likely not enough to turn the tanker.
Everton have posted three loss-making periods in the last three financial years. Last season's pre-tax loss was the worst in club history at £139.9m. Over the past five years the club have made a pre-tax loss of £258.4m, the economic loss over the same period is £292.2m, with £156.3m of that falling in the most recent accounting period.
Revenues in 2016/17, the first full year of Moshiri's ownership, stood at 171.3m, with staff costs during that campaign at £104.7m Fast forward to 2019/20 and turnover was just £14.6m higher and staff costs had risen further to £164.8m. That was, however, coping with the first three months of a pandemic impacted season and deferred media payments, with the club having been on course for record revenues of £220m.
But while revenues have slightly increased, not at the same pace as staff costs, economic losses have stacked up at the football club over the past three years with the decade before that having seen the club hover in a relatively comfortable financial position, although one that hampered its ability to compete with the biggest clubs in the transfer market.
But the lack of footballing strategy, investing into competitive success without business building to support that endeavour, has left them with their current FFP issues and has hampered the Moshiri project greatly.
"Everton was a pretty profitable football club but they have invested heavily," John Purcell, co-founder of Vysyble told the ECHO.
"They have had that spend and the initial excitement that came with it all and it hasn't worked out as Farhad Moshiri would have planned and now it is fear and recrimination time.
"If football is to be sustainable going forward then you have to drive down the economic profit and loss levels.
"We have been pretty accurate and predicted what would happen. We were the first to really crystallise the economic need for the biggest clubs to try and form a breakaway European Super League as they are businesses that, although bringing in big revenues, were mostly operating at an economic loss.
"As football fans we didn't agree with it but the business case for it was there."
The pandemic created major financial issues for all football clubs. For context, Liverpool, whose economic profit over the past five years stands at £21.5m, made an economic loss in the 2019/20 period of £71.6m. The Reds, though, had turned an economic profit in three of the last four reporting periods, compared to Everton's one.
Data provided by Vysyble showed that for every £100 of revenue that Everton bring in there is an economic loss of £34.16.
It shows the scale of the challenge that Everton currently face in trying to find the balance between bringing themselves out of something of a financial hole that has been exacerbated by the pandemic but is not wholly attributed to it, and trying to put together a side that can be competitive and challenge on the pitch.
Burnley are the most economically profitable football club in the Premier League through their financial management and ability to keep on remaining in the Premier League despite limited spend. Their revenues, however, are dwarfed by the likes of Everton and the rest. Tottenham Hotspur were the club to hold that crown before their major Covid losses and capital investment into their new stadium that was shuttered throughout the pandemic.
Everton's lack of strategy has created significant problems for them in the here and now after they chased competitive success without having other facets of the operation strong enough at the time to underpin it all. For Moshiri and the club, a new focus will likely be needed on how to address these issues so that they can begin life at Bramley Moore Dock in 2024, which will aid their revenues significantly, in a positive place.
