EVERTON IN DOCK
Rivals fear they are bending rules with £30m stadium naming rights payment Premier League set to examine deal
The Premier League are set to scrutinise Alisher Usmanov’s extraordinary naming rights deal for everton’s proposed stadium amid concerns from rival clubs that it could constitute a breach of the organisation’s rules.
The announcement that Usmanov’s holding company USM has spent £30million on the option to buy the naming rights for a ground that is due to open in 2023 — building work is yet to begin — was greeted with incredulity by everton’s top-flight rivals yesterday.
Club executives told Sportsmail that they feared the unprecedented arrangement, if carried out, could raise questions over everton’s compliance with profit and sustainability rules. A number of clubs want the Premier League to investigate, which could lead to everton being forced to repay some of the £30m.
Premier League Rule e.54 states that any commercial deal ‘arising from a related party transaction’ must be ‘recorded in the club’s annual accounts
at a fair market value’. Usmanov, an Uzbek-born Russian tycoon, is a business partner of Everton’s majority shareholder Farhad Moshiri, who is also the chairman of USM, a company set up by Usmanov in 2012 which has sponsored the club’s Finch Farm training ground since 2016.
Under rule E.1 all 20 clubs are required to file accounts to the Premier League for the financial year each March, and Everton’s submission in two months’ time is likely to lead to scrutiny of the Usmanov deal.
Everton could face questions over whether £30m for the option to purchase naming rights is a fair market rate and whether Usmanov is an independent party. Rule E.54 further states that if the Premier League determine a sponsorship deal is above the market rate ‘ the Board shall restate it to fair market value’.
Everton are understood to have made the Premier League aware of the deal before the contract was signed last week, and are confident it will comply with their regulations. The £ 30m deal includes a Head of Terms agreement for a multi-year naming rights package when the stadium is built, if USM choose to activate it. Although a first for football, such deals have been used in commercial property.
Everton announced the deal on Tuesday, the same day they published record losses of £112m for 2018-19, including an operating loss of £29.7m. Although Everton are currently compliant with the Premier League’s rules, which prohibit clubs from losing more than £105m over a three-year period, they have little margin for error so the injection of £30m from Usmanov could prove vital.
Everton made a profit of £30m in 2017 followed by a loss of £13m last year so are inside the maximum loss figure over the current three-year cycle, but will need to post a significant profit to comply next season. Everton have yet to receive planning permission for the stadium they are hoping to build at Bramley-Moore Dock, a project that has been in development since former chairman Peter Johnson revealed plans for a new ground in Kirkby in 1996.
Premier League clubs are asking how Everton can bank cash related to a sponsorship deal for a building that does not exist.
One source at a Premier League club who did not wish to be named told Sportsmail that he thought it was like ‘financial doping’, claiming Usmanov would be effectively injecting money into Everton in the guise of a sponsorship deal, and pointing to the similarity between the £30m deal and the club’s £29.7m operating loss.
Clubs’ financial operations are under increased scrutiny from the authorities amid claims many are finding loopholes to get round profit and sustainability rules.
Manchester City are the subject of a UEFA investigation following allegations that they disguised investment from their owners as a sponsorship deal. And Sheffield Wednesday are facing a points deduction after being charged by the EFL with breaching rules by including the £ 60m sale of Hillsborough in their accounts a year before it took place.
Everton and the Premier League declined to comment.