The financial impact of relegation that could hit Everton hard amid years of profligacy

The threat of Premier League relegation looms large for Everton fans.

Thumped 5-0 by Tottenham Hotspur on Monday night, the Toffees sit just one point and one place above the drop after an insipid run of two wins in 19 Premier League games

It took just 14 minutes for Michael Keane’s own-goal to give Spurs the lead in the capital.

Frank Lampard side’s then capitulated - and not for the first time this season.

Everton found themselves 3-0 down by half-time and within 10 minutes of the restart, their misery was compounded.

Frank Lampard replaced the much-maligned Rafa Benitez as manager in January.

He was tasked with shifting the mentality at the club, getting the best out of a decent group of players and, ultimately, staving off relegation.

So far, though, Lampard has managed just one win in his first five league matches. His players’ confidence, after an initial fillip, is still downtrodden.

The predicament is against the backdrop of huge sums of money that have been thrown at players who’ve fallen well short of the standards to forge a challenge at European football and are not mentally strong enough to fight it out among the rest.

Relegation is a problem for Everton.

Supporters are proud their club is just one of the six that’s been ever-present during the Premier League era.

The Blues have also boasted their top-flight status for 71 years and counting.

Potential financial impact

It would be a disaster for a side steeped in so much history to be banished to the Football League.

More worryingly, perhaps, is that demotion from the top-tier can - for clubs run poorly and with no contingency plan - cause financial disaster.

The archetypal ‘run poorly’ and ‘no contingency plan’ phrases will ring pertinently after six years under the stewardship of majority shareholder Farhad Moshiri.

Since taking over the club in 2016, Moshiri has spent circa £500 million on transfer fees.

Indeed, the Iranian hasn’t been afraid to flex his financial muscle and assemble an expensive yet underachieving Premier League squad.

Reports have claimed that Everton are teetering on the edge of a breach of the Premier League’s profit and sustainability rules.

Granted, struggles meant Benitez was afforded just £1.7 million to splash out in transfer fees last summer.

But given significant spending in January, guidance and assurance was given to the Toffees by the Premier League, per the Liverpool Echo.

However, the figures cannot be confirmed until the club release their latest financial statements later this month.

And with relegation now a very real possibility, the financial impact it could have is becoming increasingly concerning. Past decisions have come under scrutiny.

Alisher Usmanov and USM

A decision - and one surely backed universally by Everton fans - was made to cut links with Alisher Usmanov amid his ties to Vladimir Putin following Russia’s invasion of Ukraine.

Usmanov’s firm, USM, had a sponsorship deal in place with Everton’s Finch Farm training ground.

Meanwhile, two other Russian companies, Megafon and YOTA, were branded at Goodison Park and have since been removed.

The former was also was shirt sponsor of the women’s teams.

According to The Athletic, USM had a deal in place to have first claim to the sponsorship rights of the new stadium for a one off payment of £30 million. That deal has subsequently been suspended.

It’s a potential big financial hit to Everton.

In addition, a deal with main shirt sponsor Cazoo - worth a reported £10 million per year - will end this season.

New commercial revenues and now being explored by Everton. However, the figure as a Championship club would be markedly less than retaining their top-flight status.

Income from television streams will also plummet in the second tier.

It’s reported that in the 2020-21 season, TV rights money brought £115 million to Goodison Park.

The average Championship club, on the other hand, nets between £7-8 million.

Relegation clause

Relegation clauses are commonplace among teams who expect to languish in the lower regions of the Premier League.

In essence, they allow a club to cut a player’s wages by a percentage if relegated.

They’re in place to allow sides to offset the steep drop in income and protect against financial ruin.

Whether relegation clauses are awash at Everton remains to be seen.

Given many players have been recruited to mount a top-six challenge, certainly some won’t have such stipulation in their contracts.

That may lead to the Toffees having to sell prized assets in the summer such as Dominic Calvert-Lewin, Richarlison and Jordan Pickford to balance the books.

With that said, would any of them even want to stick around in the Championship? With the World Cup at the end of the year, it’s highly unlikely.

Survival the key to financial stability

There is one simple solution to avoid these problems - remain in the Premier League.

Lampard’s troops have a game in hand on 18th-placed Burnley and two over 16th-placed Leeds United.

Plenty concur Everton’s survival bid will come down to the importance of Goodison Park.

The Toffees have won just once on the road all season, so picking up points at home will be imperative.

The next two games - against Wolves and Newcastle - have been tipped as make or break Everton’s survival chances.

After that, their run-in contains trips to West Ham, Liverpool, Leicester and Arsenal - as well as home games against Manchester United and Chelsea.