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Premier League season in chaos as Everton face further points deduction
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The Premier League relegation fight has been thrown into chaos as an ongoing investigation threatening a further Everton points deduction will extend beyond this season.
Everton were hit with a further two point sanction on Monday – taking their year’s total to eight docked points for breaching English football’s profit and sustainability rules – but will go into the summer under the shadow of another penalty after the Premier League confirmed unresolved issues in the club’s latest disciplinary hearing.
Those in a fight against relegation with Everton will be especially concerned that a retrospective punishment will be too late in the event of the Merseyside club staying up at others’ expense.
In a written submission explaining their decision, an independent commission on behalf of the Premier League revealed they were delaying judgement on a key facet of the case related to breaches up to June 2023.
“At a later time, the commission will determine whether there has been any further breach of the PSR,” the report stated.
The unresolved dispute relates to interest payments on loans which Everton insist are paying for their new stadium on Liverpool’s docks, but the Premier League argues have been used for the day-to-day the running of the club.
Everton would be permitted to incur such costs for a major infrastructure project, but not to subsidise other expenditure such as club salaries.
The commission acknowledged the delay reaching a conclusion on that aspect of the case will frustrate ‘many stakeholders interested in the speedy determination of these disciplinary proceedings’.
“In fairness to the parties in these proceedings, the commission decided that the issues which remain cannot be dealt with in accordance with the timetable set out in the Standard Directions,” the commission concluded.
It means even if Everton avoid relegation this season, they must fend off further punishment with another commission hearing expected this summer.
The club’s immediate priority is remaining in the Premier League, their prospects dealt another blow as Sean Dyche’s side dropped to 16th in the table, two points above third-bottom Luton Town.
Everton will appeal in the next seven days, with the hearing date for the two point deduction arranged for May 24 at the latest. The Premier League season ends on May 18th, raising the possibility of relegation being decided by an independent commission should Everton finish in the bottom three by one or two points, only to be given those points back.
In a club statement, Everton said they felt many of their mitigating arguments for the latest breach were heard in last week’s three-day commission hearing.
The statement read: “While the club’s position has been that no further sanction was appropriate, the club is pleased to see that the commission has given credit to the majority of the issues raised by the club, including the concept of double punishment, the significant mitigating circumstances facing the club due to the war in Ukraine, and the high level of co-operation and early admission of the club’s breach.
“Everton remains committed to working collaboratively with the League on all matters relating to PSR but is extremely concerned by the inconsistency of different commissions in respect of points deductions applied. The club and its legal representatives have begun the preparations to appeal the commission’s decision.”
Everton have broken new ground by having two points deductions in the same season, with separate commissions reaching different conclusions as to how heavily they should be punished for overspending
In November, Everton were deducted ten points because their losses exceeded £105 million over a three-year accounting period until 2022.
The club appealed that decision and had their penalty reduced to six points.
However, they were hit with an additional charge having submitted their accounts to 2023. Everton argued their latest breaches were a consequence of the same issues which led to their previous charge. Their lawyers submitted it would be unfair to impose punishment for the same offence and stressed the impact of loss of revenue due to government sanctions against their former main club sponsor, Uzbek oligarch Alisher Usmanov.
Nottingham Forest were deducted four points last month. Forest remain two points behind Everton in the race for survival.
The verdict means Everton’s fate remains in their own hands over their final seven games. They face Forest, Sheffield United and Brentford at Goodison Park in the coming weeks. They will also travel to Luton Town.
Everton’s predicament follows years of what a previous independent commission described as ‘reckless’ spending by the club under the stewardship of majority shareholder Farhad Moshiri.
In their most recent accounts, Everton announced losses of £89.1 million for the year 2022-23.
The latest setback comes with Everton still awaiting a decision on whether a takeover by US-firm 777 Partners will go ahead.
Far from the end of the matter
So another two points deducted from Everton’s tally this season today, but a fresh dispute between the club and the Premier League about the scale of the breach - to be considered “at a later time” - suggest the outstanding matter will not be resolved before the end of the season.
It all creates plenty more questions for both Everton and their relegation rivals and supporters, and not a great deal of answers for anyone. This one will run and run.
Everton’s arguments for mitigation
The Premier League initially asked for a five-point deduction for Everton but the commission eventually settled for two, accepting Everton’s arguments for mitigation based on:
- The club already having been charged and deducted points this season
- The club suffering a loss of revenue following the suspension of a sponsorship deal with Russian company USM as a result of Russia’s invasion of Ukraine
- The club admitting their guilt ‘at the earliest opportunity’
Everton’s remaining fixtures
Today’s points deduction has dropped Everton down one place to 16th in the Premier League table, two points clear of the bottom three.
They have seven games remaining to make sure they stay above that drop zone and preserve their Premier League status. Here’s how those fixtures look:
Chelsea (A)
Nottingham Forest (H)
Liverpool (H)
Brentford (H)
Luton (A)
Sheffield United (H)
Arsenal (A)
Further breaches will be considered ‘at a later time’
Remarkably, the written reasons revealed that this was not the end of the case against Everton following a dispute between them and the Premier League about the scale of their breach, which the latter asserted was almost £23.2m.
The commission said the additional £6.56m would be considered “at a later time” and that “a further hearing will follow”, suggesting the outstanding matter would not be resolved before the end of the season.
It added: “The commission is acutely aware that there are many stakeholders – to name some: the PL, Everton, the Everton fans, all other Premier League clubs, the public – interested in the speedy determination of these disciplinary proceedings. Nevertheless, in fairness to the parties in these proceedings, the commission decided that the issues which remain cannot be dealt with in accordance with the timetable set out in the Standard Directions. The Standard Directions will not, therefore, apply to the remaining issues.”
Commission accepted certain Everton arguments
The commission was made up of James Drake KC, lawyer Kwadjo Adjepong and chartered accountant and chartered tax advisor Michael Kaltz.
Their written judgment revealed Everton were found to have exceeded allowable losses of £105 million over three years by £16.6m.
It said that made the starting point for Everton’s breach a five-point deduction; three for contravening the rules and two for doing so by 15.8 per cent.
The commission accepted Everton’s argument in mitigation they had already been penalised for losses in the first two of the three years over which they had been charged, they had suffered a dramatic loss of revenue following Russia’s invasion of Ukraine which cost them sponsorship from USM Service Limited, and that they had admitted their breach at the earliest opportunity.
But it rejected other grounds which it said “generally reflect the ordinary vicissitudes of a professional football club and/or the results of Everton’s own commercial decisions”.
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It said it had taken account of the four-point deduction imposed on Nottingham Forest – who have appealed their own sanction – saying that it was “broadly consistent with the penalty imposed by the commission here”.
It added: “The penalty imposed on Nottingham Forest before mitigation was six points. Everton’s sanction in the two cases, FY22 and FY23, after taking account of the effect of ‘double counting’ but before any further mitigation, is nine points, which is justifiably higher as Everton has exceeded the Upper Loss Threshold in two consecutive years.”
Everton’s appeal decision
There will be some surprise beyond Merseyside that Everton have decided to appeal, especially given they admitted their breach.
Given previous punishments - the most recent being a four point penalty to Nottingham Forest - many will consider being docked just two points represents the best of a series of bad scenarios.
Why appeal is a shot to nothing
Rewind to last November and Everton will feel greater vindication for their furious reaction to the first 10-point penalty they were handed, and questions must be asked about the lack of a coherent policy on suitable punishments.
The Premier League originally wanted 12 points deducted for Everton’s breaches up to 2022. That was reduced to 10, then six on appeal. Nottingham Forest were docked four points. Now Everton have been docked two. By next season, can guilty clubs anticipate suspended penalties?
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The most pointed comment in Everton’s statement today is the following.
“The club is pleased to see that the commission has given credit to the majority of the issues raised by the club, including the concept of double punishment, the significant mitigating circumstances facing the club due to the war in Ukraine, and the high level of co-operation and early admission of the club’s breach.”
The club believed mitigating factors were ignored in November, but were then considered in the appeal, reducing their penalty to six points. That made Nottingham Forest’s four point penalty baffling to Everton. Forest were given credit for co-operating with the Premier League investigation. Everton say they were told that cooperation was a compulsion and no reason to have their punishment reduced.
One wonders if Everton have decided to appeal because there is nothing to lose from doing so, their risk assessors presumably certain another commission will not increase the latest punishment.
Premier League statement on the panel’s ruling
An independent commission has given an immediate two-point deduction to Everton FC for a breach of the Premier League’s Profitability and Sustainability Rules (PSRs) for the period ending Season 2022/23.
Over a three-day hearing last month, the independent commission heard evidence and arguments from the club in respect of a range of potential mitigating factors for its admitted breach of £16.6million, including the impact of its two successive PSR charges. Having done so, the commission determined the appropriate sanction to be a two-point deduction, taking effect immediately.
The independent commission reaffirmed the principle that any breach of the PSRs is significant and justifies, indeed requires, a sporting sanction.”
Everton’s official statement: club to appeal
In January 2024, Everton were charged by the Premier League for breaching the permitted Profit and Sustainability thresholds for the assessment period ending 2022-23.
The matter was referred to a Premier League Commission, which has today announced Everton will receive an immediate two-point deduction. While the Club’s position has been that no further sanction was appropriate, the Club is pleased to see that the Commission has given credit to the majority of the issues raised by the Club, including the concept of double punishment, the significant mitigating circumstances facing the Club due to the war in Ukraine, and the high level of co-operation and early admission of the Club’s breach.
Everton remains committed to working collaboratively with the League on all matters relating to PSR but is extremely concerned by the inconsistency of different commissions in respect of points deductions applied.
The Club would like to place on record its thanks to the Fan Advisory Board and other fan groups for their submissions during this process, and to all Evertonians for their ongoing patience and unstinting support.
The Club and its legal representatives have begun the preparations to appeal the Commission’s decision.
No further comment will be made at this time.
Will Everton appeal?
Everton will not be happy to have lost more points, but there may also be some relief that they have not been hit with a stronger sanction although they will appeal it.
Nottingham Forest were deducted four points last month. Forest remain two points behind Everton in the race for survival.
The verdict means Everton’s fate remains in their own hands this season. They face Forest, Sheffield United and Brentford at Goodison Park in the coming weeks. They will also travel to Luton Town.
Everton’s predicament follows years of what a previous independent commission described as ‘reckless’ spending by the club under the stewardship of majority shareholder Farhad Moshiri.
In their most recent accounts, Everton announced losses of £89.1 million for the year 2022-23.
The latest setback comes with Everton still awaiting a decision on whether a takeover by US-firm 777 Partners will go ahead.
Everton’s predicament
Welcome to coverage of the second Premier League investigation into Everton for breaches of its Profit and Sustainability regulations, this one covering the three seasons up to and including 2022-23 following their 10-point penalty, subsequently reduced to six, for overspending in the three seasons up to 2021-22. Nottingham Forest have already been docked four points for breaches during their first season back in the Premier League, making this the first time two top-flight clubs have been sanctioned in the same season. In fact there have been only two other cases of points deductions being applied in the Premier League, Middlesbrough’s three for not fulfilling a fixture that led to their relegation in 1996-97, and Porstmouth’s nine for going into administration in 2010.
Having dealt with Everton and Nottingham Forest so swiftly, the elephant in the room for the Premier League remains the 115 charges the governing body has levied at Manchester City for alleged breaches of financial fair play regulations between 2009 and 2018. Indeed the Everton manager, Sean Dyche, argued that it was not just a case of double standards but centuple et quindecuple standards: ““Just like everyone else, we are all wondering what makes one rule for one and one rule for the other. I think that’s the only thing,” said Dyche.
“I don’t know the ins and outs for every reason, but I think we are all asking that. The people in the street are asking: ‘Why is it particularly Everton?’
“I don’t know what the exact number is, but they reference over 100 charges [for City]. I don’t know the implications of that either. I don’t know the details of the charges but you go: ‘Well, we have one.’
Put simply,as Chris Bascombe explais, the Premier League argues that it is “because of the depth, scale and complexity of the 115 charges against Manchester City when compared to the single charge against Everton. The Premier League says that logistically the City case is inevitably more time-consuming. Everton argue this is an unreasonable explanation and believe they opened themselves up to speedier and politically motivated punishment by being cooperative and compliant.