Everton could face further punishment after being hit with two-point deduction
Everton face another hearing into their second breach of Premier League profitability and sustainability rules, raising the possibility of a third points deduction, despite being docked two points for a £16.6m overspend up to 2023.
The financially troubled club were hit with their second points deduction of the season on Monday to leave Sean Dyche’s team 16th, two points above the relegation zone. However, owing to a dispute between Everton and the Premier League over stadium interest payments, the case is unresolved and expected to drag into next season.
That raises more questions over the integrity of this season’s relegation battle and the prospect that Everton could face legal action from a demoted club if they survive and then have a decisive point deducted next season.
The Premier League claims Everton exceeded the permitted threshold of £105m of losses across a three-year period by just over £23m up to June 2023. Everton, however, insist £6.5m relates to interest payments directly attributable to their new stadium at Bramley Moore dock and is therefore outside the scope of PSR. The Premier League also alleges that Everton were entitled to capitalise only £2.06m of £19.02m in interest payments in its accounts for 2022/23 and has therefore exceeded the threshold by a further £16.96m.
The independent commission that heard the case was able to rule only on Everton’s admitted breach of £16.6m and will consider the stadium dispute at a later date.
The written reasons for the commission’s decision state: “It therefore remains to be determined whether Everton has exceeded the upper loss threshold by any further amount regarding the interest capitalised in FY21 [financial year 2021], FY22 and FY23. We accept that this defers the resolution of part of this dispute. 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.” Those directions, introduced last summer, dictate that cases should be dealt with before a season ends.
Everton would have been docked five points for their latest breach, plunging them into the relegation zone with seven matches remaining, but two points were taken off that starting point owing to the club being punished twice for overlapping years. Everton have already been docked six points for the four-year period up to 2022 – when two year’s figures were taken on aggregate due to the Covid pandemic – and their second breach covered the three financial years from 2020-2023.
An extra point was taken off the punishment for Everton’s early guilty plea and the loss of a £20m sponsorship deal on the club’s Finch Farm training ground with USM, a company owned by the oligarch Alisher Usmanov, who was subjected to sanctions after Russia’s invasion of Ukraine.
The Premier League did not accept the principle of double jeopardy, argued the collapse of the USM deal was not a mitigating factor and insisted Everton had not been cooperative over the charge. The commission, though, found in the club’s favour on all three points. “In our view,” wrote the commission on the issue of cooperation, “many if not most of the criticisms levelled against the club in this respect by the PL are unwarranted, overstated, or both.” Everton failed to convince the three-man panel that a benchmark of five points was disproportionate compared with the four-point deduction Nottingham Forest received for a £34.5m breach.
Everton intend to appeal against the two-point deduction and that must be heard before the end of the season. The club believes the £105m threshold is outdated and has not kept up with inflation in wages and transfer fees over the past 10 years. The Premier League plans to change the rules in August.
Everton said in a statement: “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 cooperation 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 Premier League said: “The independent commission reaffirmed the principle that any breach of the PSRs is significant and justifies, indeed requires, a sporting sanction.”
Everton will be at increased risk of administration should they suffer relegation. The latest set of accounts for the year ending 30 June 2023 revealed a loss of £89.1m and contained another warning over the club’s ability to continue as a going concern.
The accounts also disclosed that Everton, subject of a proposed takeover by the controversial US investment firm 777 Partners, have not secured the complete financing needed to finish the construction of their new stadium.