Where Everton Stand Under Squad Cost Ratio

A clear supporter-led breakdown of Everton’s finances under the new Squad Cost Ratio, explaining amortisation, wages and player-sale profits, plus how stadium and commercial revenue can change spending room.

I thought I'd try to put together a simple explanation of where Everton actually stand financially and, more importantly, how the new Squad Cost Ratio (SCR) works.

I'm definitely not a financial expert, but there seems to be a lot of confusion around the idea that Everton have to sell before we can buy, so I've tried to understand how it actually works rather than just looking at the headline transfer fees.

The biggest thing to understand is that SCR isn't simply "Everton have spent £X million, so we need to sell £X million before we can spend again".

Under the new system, the cost of the squad is broadly made up of player wages, transfer fee amortisation, agents' fees and certain other player-related costs. This is then compared with the club's relevant football revenue.

The easiest way to explain transfer amortisation is with an example. If Everton buy a player for £30m and give him a five-year contract, we don't simply take a £30m hit to SCR in that season. The £30m transfer fee is generally spread over the five years, so that's £6m a year in amortisation, before adding his wages, agents' fees and other costs.

So if that player was earning £100,000 a week, that's another £5.2m a year in wages. The £30m signing could therefore be adding roughly £11.2m a year to our squad costs before agents' fees and other costs, rather than £30m in one go.

This is why looking at transfer spending alone can be very misleading.

Take our summer signings. We've brought in players such as Merlin Röhl, Hayden Hackney, Tyrique George and Christian Nørgaard, with the reported fees adding up to a significant amount. But those transfer fees are being spread over their contracts. What actually matters to SCR is the annual amortisation, their wages, agents' fees and other relevant costs.

The same applies in reverse when we sell players, but this is where it gets really interesting.

When we sell a player, the transfer fee isn't normally spread over another five years for us. Instead, we look at the player's remaining book value.

For example, imagine we bought a player for £20m on a five-year contract. After three years, £8m might remain on his accounting book value. If we then sold him for £60m, we'd potentially make a £52m accounting profit on the sale. That profit is recognised in the relevant accounting period rather than being spread over five years like a new signing.

This is why selling players can be so valuable under the financial rules.

If Ndiaye were sold for £60m, for example, we wouldn't simply be getting £60m to put in the bank and then spreading that £60m over five years. Depending on his remaining book value, a large part of that £60m could be recognised as a player sale profit in that period. We'd also remove his wages from our squad costs.

Academy players can be even more attractive financially. If a player such as Harrison Armstrong has little or no remaining book value because he came through our academy, a £35m sale could potentially create a very large accounting profit. That's one of the reasons academy sales are so valuable to clubs under these rules.

This is also why the Beto deal is useful financially. We've agreed a sale for around €18m, or roughly £15m. His remaining book value should be considerably lower than the sale price, so the club should make a profit on the sale, while also removing his wages from the squad. Again, that doesn't mean £15m automatically becomes £15m of SCR headroom, but it can have a very positive effect on the calculation.

The Dwight McNeil/Brennan Johnson deal is slightly different because it's effectively a player exchange rather than a straightforward cash purchase. Both players have their own accounting values and wages, so the SCR impact depends on how the transaction is valued and the difference between their existing book values, wages and the terms of their contracts.

Wages are another massive part of this.

If Everton sign a player on £100k a week, that's £5.2m a year added to squad costs just from his salary. If we sell a player earning £100k a week, we potentially remove £5.2m a year from our squad costs.

That's why getting rid of several high earners can be just as important as bringing in transfer fees.

Agents' fees also have to be considered. When a club signs a player, there can be agent/intermediary fees, signing-on payments and bonuses. These can also contribute to squad costs, so a £20m transfer isn't necessarily the full cost of bringing that player into the club.

This brings us to the new stadium, which I think is another part of this conversation that gets overlooked.

Hill Dickinson Stadium isn't just a place where Everton play 19 home league games a season. It's a commercial asset. We can generate additional revenue through bigger attendances, hospitality, corporate boxes, food and drink, conferences, concerts, other sporting events, stadium tours, venue hire, sponsorship and other commercial activity.

Obviously, not every pound generated by an event is pure profit because there are costs involved in running and hosting those events. But the important point is that increased qualifying football-related revenue can increase the amount of squad cost we can carry under SCR.

For example, if Everton generated an additional £20m of qualifying football revenue, an 85% squad cost allowance would theoretically represent another £17m of potential annual squad cost capacity. That's not £17m to spend on transfer fees, it's £17m of additional annual room for things such as wages, amortisation and agents' fees.

And the stadium isn't the only source of revenue. Everton also generate money from Premier League broadcasting, matchday tickets, hospitality, commercial partnerships and sponsorships, merchandise, prize money and European competition if we qualify in future.

The more revenue Everton generate, the bigger the base against which our squad costs are measured.

This is why I think it's important to understand that Everton's financial situation is not simply about how much money we have in the bank today. It's about how much revenue we're generating, what our wages are, how much transfer amortisation we're carrying, what we're paying agents and what profit we're making on player sales.

The latest independent estimates put Everton at around 102% under the new SCR system, with the red threshold at around 115%. That doesn't mean we're completely unrestricted, but it also doesn't mean we're on the verge of financial disaster. It suggests we still have some room before reaching that red threshold.

And importantly, that room can change.

Sign a player and we add his amortisation, wages and other costs.

Sell a player and we can remove his wages and potentially make a sizeable accounting profit.

Sell an academy player and the profit can be particularly significant because there may be very little book value left.

Generate more stadium, commercial or broadcast revenue and we increase the revenue base against which our squad costs are measured.

That's why I don't think it's accurate anymore to say "Everton have to sell before they can buy".

We clearly have financial limits. We're not suddenly one of the richest clubs in Europe and we can't just spend whatever we want. But we're also not in the same position we were a few years ago when PSR was hanging over practically every transfer decision.

We've already spent significant money this summer on Röhl, Hackney, George and Nørgaard, brought in Johnson as part of the McNeil deal, and we're now getting around €18m for Beto while also removing his wages. We've also moved on other players and their wages.

So the question isn't simply "have Everton sold enough players to pay for the players we've bought?"

That's not really how the new system works.

The better question is: "What is the total annual cost of our squad compared with the revenue Everton generate?"

And that's why I think Everton are in a much healthier position than some people realise.

Selling Ndiaye would obviously give us a huge financial boost and create considerably more flexibility because of the size of the potential profit and the wages we'd remove. But that is very different from saying we literally cannot buy anyone unless he is sold.

We're no longer living in the old Everton world where every transfer had to be funded by another transfer. The new stadium, increased commercial revenue, player trading, reduced costs and the new SCR system have fundamentally changed the financial picture.

We're not broke.

We're not unrestricted either.

But I think it's important that we understand the difference.

Written by OptimumShots August 31 2026 09:28:07