The deal
English Premier League (EPL) club Everton were handed a 10-point deduction last week (November 17) for being in breach of the league’s Profitability and Sustainability Rules (PSRs) – the biggest sporting sanction in the competition’s history.
The punishment leaves Everton 19th in the table, two points adrift of safety.
Top-flight clubs in the EPL are only permitted to lose £105 million ($131.69 million) over three years, and an independent commission found Everton’s losses up to 2021-22 amounted to £124.5 million.
The case centers around interest payments on the club’s new £760 million stadium at Bramley Moore Dock, which they said should have been regarded as expenditure for PSR calculations in the 2021-22 financial year.
However, the commission rejected the club’s claim of mitigating factors including being fully compliant with the EPL over the past two years, the impact of the Russia-Ukraine war on its lucrative USM sponsorship, and the impact of the Covid-19 pandemic on the transfer market.
The club is set to appeal against the decision.
Everton posted financial losses for a fifth successive year, with their deficit totaling more than £430 million over that period.
Why it matters
The sanction has caused a public backlash against the EPL’s focus on Everton, given financial charges against league giants Chelsea and Manchester City, as well as the inconsistent verdicts reached on financial violations.
Many have pointed to the alleged breaches of financial rules by reigning champions Manchester City. The club faces 115 charges of breaching financial rules and has had a microscope held up to its overwhelming success over the past decade for ties to Emirati state-owned companies.
UK Labour MP Ian Byrne this week tabled an early day motion (EDM) in the House of Commons condemning the 10-point deduction and called for an independent regulator to be established immediately, adding: “This House contends the Premier League can no longer fairly govern top-flight football without independent scrutiny and legislation.”
In February, the government announced plans to appoint a regulator following a fan-led review last year, and plans for a regulator were outlined in the King’s Speech this month. King Charles III said the Football Governance Bill, will “safeguard the future of football clubs for the benefit of communities and fans.”
Commenting on the sanction, Conrad Wiacek, head of analysis and consulting at GlobalData Sport, said: “Everton’s 10-point deduction for breaching Premier League FFP rules highlights the lengths that clubs will go to achieve success in the Premier League. While breaching FFP has not stopped Everton from overspending, the punishment seems counterintuitive given the reason for the rule – to prevent situations like Leeds United and Portsmouth, where clubs have faced the prospect of being wound up because they financially could not run as a going concern.
“With Everton committed to building their new stadium, which forms part of the Euro 2028 bid, relegation from the Premier League would remove their one safety net which is the vast media rights fees the league generates, which in turn would bring them closer to going out of business and would come full circle as it is what FFP was designed to prevent.
“What is more worrying is how swiftly the Premier League have moved against Everton, who are not backed by a state and therefore of little to no concern to the Commonwealth and Foreign Office, when compared to the likes of Manchester City and Chelsea. Everton’s charges relate to the period of Frank Lampard’s management of the club, where Everton spent over $80 million from 2022 to 2023. Where the Premier League has an issue, is regarding its disciplinary procedure.
“While Everton were brought swiftly to justice, Manchester City’s charges relate to a period beginning in 2009 to 2018 and account for far more trophies and success, which casts doubt over how swiftly the Premier League acts against ‘bigger' clubs and allows for conspiracy to take hold and whether there is undue influence from external groups, such as the UK Foreign Office looking to protect international relationships.
“The lack of transparency across the process, and the lack of clarity regarding the disciplinary process from the Premier League, means that the sporting integrity of the league is called into question and highlights the issues of state ownership of clubs.”
The detail
The commission, in its full report, claimed that the club was “less than frank” with the league regarding the PSR calculation relating to interest payments to be paid on its new stadium development at Bramley Moore Dock.
While the Premier League did not allege Everton of dishonesty regarding the interest on the stadium, the committee states that “Everton did not consciously intend to circumvent the rules,” it adds that it believes the club “failed to discharge the duty of utmost good faith”, which it adds increased the club’s culpability.
The independent committee stated: “The position that Everton finds itself in is of its own making – it is Everton’s responsibility to ensure that it complies with the PSR regime. The excess over the threshold is significant. The consequence is that Everton’s culpability is great […] the failure to comply with the PSR regime was the result of Everton irresponsibly taking a chance that things would turn out positively.”
The Merseyside outfit, for its part, has responded to the charges to express disappointment at the “wholly disproportionate and unjust sporting sanction.”
In a statement, the team said: “Everton maintains that it has been open and transparent in the information it has provided to the Premier League and that it has always respected the integrity of the process.
“[Everton] does not recognize the finding that it failed to act with the utmost good faith, and it does not understand this to have been an allegation made by the Premier League during the course of proceedings. Both the harshness and severity of the sanction imposed by the Commission are neither a fair nor a reasonable reflection of the evidence submitted.”
Further reading
The Business of the Premier League 2023-24
